TFSA Contribution Room Calculator (2023)
Get the best rates on your TFSA
Tax-Free Savings Accounts (TFSAs) are a game changer in banking. Not only can you build interest off of your cash savings, but you also have the flexibility and convenience to heighten your income potential through investments, making the TFSA one of the best investment and savings tools available to Canadians.
Did you know that you can choose to either deposit both a lump sum or make incremental deposits into a TFSA account throughout the year? This allows it to be a fan-favourite among savers as it fits many different lifestyles.
In this guide, we will take the guesswork out of TFSA contribution limits and help start your TFSA journey on the right foot from the get-go.
What is TFSA contribution room?
TFSA contribution room can sound more complicated than it is, but simply put it is the amount you are allowed to deposit into your account without being taxed.
If you are a Canadian Resident and were 18 or older in 2009, your contribution room will have continued to accumulate each year you have not reached your total limit, including if you have never opened a TFSA before.
Each year on January 1st, the CRA sets a TFSA contribution limit ($6,500 for 2023), and your contribution room will include the ‘rollover’ of any prior years (currently a lifetime limit of up to $88,000).
If you have had an open account and made contributions in the past, the unused contribution room from your previous years will still be carried forward, and also taking into account any withdrawals you made in those prior years as well.
How to calculate TFSA contribution room?
We designed our TFSA contribution limit calculator to take the guesswork out of your TFSA contribution limits. By filling in the details applicable to you, you get a clear indication of your TFSA limit without worrying about over-contributing.
There are, of course, alternative methods to calculating your TFSA contribution limits, such as a manual calculation of:
- This year’s TFSA limit ($6,500)
- Leftover or unused contribution room from prior years (starting in 2009)
- Previous year’s withdrawals from your TFSA, if applicable
Let's look at an example:
The CRA also has some tools on their own website, including a TFSA tracker.
How much is the TFSA contribution limit in 2023?
The CRA sets the TFSA contribution limit each year. In 2023 the limit increased to $6,500, but your personal contribution limit will depend on your own circumstances and your previous history with a TFSA.
If you have never had a TFSA before but were over the age of 18 (19 in select provinces) in 2009, then your lifetime contribution limit is $88,000 because the CRA allows for you to bring forward any unused contribution room from the time TFSAs were introduced into the market.
We have compiled a handy chart for you to further understand the contribution limits for your own circumstances. Still, we highly recommend using our TFSA contribution limit calculator above to give you the most accurate and personalized understanding of your TFSA contribution limits.
When does TFSA contribution room reset?
The CRA updates the TFSA contribution room on January 1st of each year, meaning that your annual contribution deadline must be the day before, on December 31st.
Unused contributions from prior years are carried forward in a cumulative way, so you don’t have to worry about missing out.
If you made withdrawals during the year, the amount you withdrew would also be brought forward on January 1st to further add to your contribution room.
When can you contribute to TFSA after making a withdrawal?
Your annual TFSA contribution limit for the year does remain the same, even if you do decide to make a withdrawal. Thankfully this contribution room is pulled forward when the TFSA year resets on January 1st, allowing you to add these funds back into your lifetime contributions ($88,000 to date).
Can you contribute more if you have multiple TFSAs?
Having more than one TFSA may be of interest, especially when each bank or financial institute has independent offerings and promotions for TFSAs, but it is important to know that no matter the number of accounts you have open your annual contribution limit remains the same.
We recommend proceeding with caution when opening more than one account with multiple banks or financial institutions as this increased the risk of mistracking your annual TFSA contribution against your TFSA limit and owing additional fees or taxes for overcontributing.
If you are relying on the financial advisors of multiple institutes to manage your TFSA for you, they are unlikely to work in unison.
How to check TFSA contribution room?
If you’re unsure of where to find TFSA contribution room for yourself, the CRA does have tools to assist you further.
You should have an account on the CRA website upon filing your income tax return. By logging into the website, you will find your TFSA details under the secure portal “My Account for Individuals,” but you can also view this on the MyCRA mobile app or even by calling and speaking to a representative (1-800-267-6999 for Tax Information Phone Service).
It also provides a form to help you check your contribution details called the RC343 Worksheet
Good to know
In addition to using these tools, it is a good idea to also keep track of your contributions personally.
Does interest count towards a TFSA contribution limit?
One of the best features of a TFSA is that the interest and capital gains made on your contributions are tax-free. This is inclusive of the TFSA withdrawal rules, meaning that if you take money out of your account, you are not taxed as income, again, one of the major benefits of a TFSA vs. RRSP.
What happens if you contribute too much to your TFSA?
The CRA will charge a 1% monthly TFSA over-contribution penalty if you accidentally deposit too much into your account.
The TFSA over-contribution penalty is one of the only disadvantages of having a TFSA. Fortunately, it is also easily avoidable with some planning and caution.
Avoid the risk of overage charges by:
- Using our curated list to compare the Top 10 TFSAs to ensure you get the best interest rates for your needs, meaning you just need one TFSA with one financial institute or bank.
- Find out your contribution limit using our TFSA contribution calculator above so you know exactly how much you can personally contribute without paying taxes or penalty fees.
- Create a financial strategy using our TFSA growth Calculator to predict your return based on your circumstances.
What do you do once your TFSA is maxed?
If you have reached the maximum amount you can contribute to your TFSA, then congratulations! You’ve done an impressive job of saving.
While many people who reach this point can find it a bit stressful to know what to do next, we have created resources for other investments in Canada. It covers multiple options that could be a good fit for you.
Some popular options include:
- Guaranteed investment certificates
- Exchange-traded fund
If your finances are mixed with family members, it could also be beneficial to review your financials from the perspective of minimizing your household tax on investments.
If you are in a common-law partnership, are married, or have children, you can discuss with your financial advisor (and partner) the options to invest the funds under their name if they still have contribution room left for the year. The caveat to this is that the TFSA does technically belong to them, but many families find that this does balance out in the long run as the funds they allocate into a TFSA for their family are equal to future funds that would have been spent later, such as education, purchasing of a vehicle, wedding funds, or house payments.
There is also the option for a Registered Education Savings Plan (RESP) which is a great alternative to a TFSA if you have children. The RESP does have different rules and regulations to the TFSA, but there are some kickbacks you might find attractive (such as the Canadian Education Savings grant of 20%) so many of our readers find it is worth investigating if depositing into your TFSA is no longer an option.
Before contributing your funds to a taxable account, have you considered paying off any debts you currently owe?
Making an effort to make additional payments towards anything you are currently paying out interest on can only be beneficial when trying to make the most of your money in the long run.
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