TFSA Contribution Limits & Withdrawal Rules
Whether you're saving for a big purchase, your first home, or an extended vacation, a Tax-Free Savings Account (TFSA) can help you get there. Once you’ve opened a TFSA, you can contribute at any time and earn interest or returns, tax-free — unlike a non-registered savings account.
How much you can contribute once you've opened an account is determined by your contribution room - the maximum amount that you can contribute to TFSAs in any given year. Your contribution room accumulates each year in which you are 18 years of age or older and a resident of Canada, even if you don't file an income tax return or open a TFSA.
Your contribution room consists of the current year's contribution limit, any unused contribution room that you have accumulated from previous years and the total value of TFSA withdrawals made in the previous year.
All contributions made during the year to your TFSA, including the re-contribution of withdrawals, count against your contribution room.
Contributing to a Tax-Free Savings Account (TFSA)
How much can I contribute to my TFSA?
The TFSA contribution limit for 2020 is $6,000. You can also carry forward any unused contribution room from previous years. The annual TFSA contribution limits per year, since TFSAs were introduced in 2009, are listed below.
- The annual TFSA dollar limit for the years 2009-2012 was $5,000.
- The annual TFSA dollar limit for the years 2013-2014 was $5,500.
- The annual TFSA dollar limit for the year 2015 was $10,000.
- The annual TFSA dollar limit for the years 2016-2018 was $5,500.
- The annual TFSA dollar limit for the year 2019 was $6,000.
- The annual TFSA dollar limit for the year 2020 is $6,000.
The annual TFSA contribution limit is subject to change by the federal government.
How will I know what my TFSA contribution limit is for each year?
Every year, the government calculates how much TFSA contribution room you have available.
What if I can’t contribute the maximum contribution room amount?
You can-carry forward any uncontributed amounts into future years indefinitely. For 2020, you can contribute up to $6,000 (annual contribution limit for 2020) PLUS any unused contribution room from previous years.
What happens if I over-contribute to my TFSA?
If you contribute more than your contribution limit, you may be subject to a penalty tax of 1% per month based on the highest excess TFSA amount in that month.
Full details on the implications of over-contributing to your TFSA can be found on the CRA website here.
Can I contribute to my spouse’s TFSA?
No, you can’t contribute directly to your spouse’s TFSA as you can with a spousal RRSP. However, you can give your spouse money, which they can then contribute to their own TFSA. Any income your spouse earns on the money in their TFSA is theirs and will not be attributed back to you.
Withdrawing from a Tax-Free Savings Account (TFSA)
When can I withdraw money from my TFSA?
You can withdraw funds from your TFSA any time you want1 and you don’t have to reach a certain age before you withdraw your money. Withdrawals made from your TFSA will be added back to your TSFA contribution room the following year.
How much can I withdraw from my TFSA?
There is no limit on how much you can withdraw from a TFSA.
Once I’ve withdrawn money from my TFSA, is that contribution room lost?
If you withdraw from your TFSA, you do not permanently lose your contribution room. You can recontribute amounts you have withdrawn in the following year or years and your contribution room carries forward indefinitely.
Do I have to pay income tax on my TFSA withdrawals?
No, you don’t have to pay income tax on the amounts you withdraw.Because TFSA withdrawals don’t count as taxable income, they don’t affect federal income-tested benefits or tax credits you may receive, including the Canada Child Benefit program, the Canada Workers Benefit, the Good and Services Tax / Harmonized Sales Tax (GST/HST) Credit, and the Age Credit.
TFSA withdrawals also won’t reduce benefits based on your income levels, such as Old Age Security, the Guaranteed Income Supplement and Employment Insurance benefits.
What can I spend the money on?
Anything you want. You could wait until you retire and use it to supplement retirement income you may have from pensions, RRSPs or other sources, you can also use it for short-term savings goals like a new car or a vacation, or for needs that arise suddenly like repairs to your home.
How much can I save with a TFSA?A TFSA means you won't be taxed on any of the growth or income earned within the account. Which means your savings can grow even more. Want to know by how much? Use our TFSA Calculator to calculate now .
How Can I Open a TFSA at TD?
See what types of TFSAs TD offers and start growing your money tax-free. Get started.
For more information on how investing in a TFSA can help you reach your savings goals, book an appointment and visit a branch at a time that’s convenient for you. A TD Financial Advisor can help you find out whether a TFSA can meet your savings and investment goals.
Already have an EasyWeb account? Apply online and fill out an online application if you already have a TD Canada Trust chequing or savings account.
1 Subject to any restrictions on the investments chosen.
The above information about the Tax-Free Savings Account is based on the information currently available from the Canadian government. To learn more or to check for updates, visit the TFSA information page on the Canada Revenue Agency website.
Date Published: April 2019
Date Modified: November 2020