Contribution limit and unused contribution room
Contributions to a TFSA may only be made by the Holder and the amount is not tied to the income of the Holder.
- The annual TFSA dollar limit for 2019 is $6,000; the maximum a Holder may have is $63,500.
- The maximum contribution limit may increase in future years depending on the rate of inflation and other factors.
- Contributions are not tax deductible.
NOTE: The Holder is responsible for ensuring the maximum contribution limit is not exceeded. An excess contribution will result in a penalty tax of 1% per month for each month that the excess contribution amount remains in the TFSA.
Unused contribution room
When a TFSA Holder contributes less than the maximum contribution limit, the difference is referred to as `unused contribution room'.
- Unused contribution room will accumulate each year.
- Unused contribution room is carried forward indefinitely, allowing the Holder to 'catch up' by contributing more than the maximum contribution limit in a future year.
- A TFSA withdrawal will increase the contribution room for the year after withdrawal. As a result, when amounts are withdrawn from a TFSA they can be re-contributed in the future when funds become available. Canada Revenue Agency will confirm the contribution room on the annual Notice of Assessment.
NOTE: Individuals who do not have taxable income and who do not file a tax return do not receive the annual C//A Notice of Assessment. Those individual should file a NIL TI Tax Return so CRA can issue a Notice of Assessment that confirms the TFSA contribution room.