TFSA Contribution Room Calculator – MoneySense

Check out our contribution room calculator to understand your TFSA contributions:

What is a TFSA?

A TFSA is a savings account similar to an investment account that generates tax-free income. Qualifying investments include cash, guaranteed investment certificates (GICs), mutual funds, exchange-traded funds (ETFs), bonds and stocks. The government oversees the TFSA, but banks and financial institutions manage it.

There are three types of TFSAs you can open:

• Deposit a TFSA: This is what most people think of when they think about a TFSA. A bank or credit union holds a savings account or GIC that you can deposit into.
• Annuity contract: You enter into an arrangement with your insurance provider and provide a lump sum investment in exchange for guaranteed payments over a set period of time.
• Trust arrangement: You arrange for a financial institution to hold your investments in a mutual fund account or a trading account.

While there are differences between these accounts, you fund them with money that has already been taxed, which is why you don’t pay taxes on the money you withdraw.

How much can you contribute to a TFSA each year?

The government sets limits on how much you can contribute, this limit is called your contribution room. Any Canadian resident over the age of 18 with a valid social insurance number can open a TFSA.

While you must comply with the required contribution room each year, any growth you receive in these investments will not affect your contribution room that year or in future years.

How the TFSA Contribution Room Works

Your contribution room is based on you and your circumstances; it changes each year and depends on whether you make contributions or withdrawals. Note that if you have multiple TFSAs, your contribution room is the total amount available for contributions in all your accounts.

Let’s take a look at how TFSA financing works. First, you need to use the calculator to find your TFSA room. For example, let’s say you were a resident of Canada before 2010 and were born in 1975. If you made no contributions, your room would be $102,000. This is the total amount you can donate this year.

Now, let’s say you have similar demographics, but you’ve contributed $50,000 to a TFSA over the past few years and haven’t withdrawn any funds. Your current room price is $52,000.

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If you have been contributing steadily to a TFSA, you must pay close attention to your annual contribution limits. For example, if you start contributing to a TFSA as soon as you turn 18 and always contribute the limits, you can only contribute $7,000 in 2025.

Annual TFSA contribution limits

Below are the annual contribution limits for each year since the TFSA was established in 2009. Each year, the new annual limit is indexed for inflation and rounded to the nearest $500. There is one exception: In 2015, the limit increased from $5,500 to $10,000; it dropped again to $5,500 the following year.

What happens if you contribute too much to your TFSA?

If you accidentally overcontribute, withdraw the excess funds as soon as you realize it. The Canada Revenue Agency will notify you if you overcontribute, but the excess is taxed at 1% per month until you remove it. If you intentionally overcontribute, you may face additional taxes or fees.

Once you withdraw the excess funds, report the excess amount to the CRA by filing a TFSA return. No need to call the CRA as your bank will send them proof of withdrawal.

FAQ

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About Jessica Gibson

Jessica Gibson is a personal finance writer with over a decade of experience in online publishing. She loves helping readers make informed decisions about credit cards, insurance, and debt management.