Your annual contribution room is set by the Canada Revenue Agency and changes with inflation
The amount you can contribute to a Tax-Free Savings Account (TFSA) each year depends on your age and the year itself. For 2024, the annual limit is $7,000. This limit was $6,500 from 2023 through 2024, and it was $5,500 before that. The CRA adjusts the limit every five years when inflation reaches a certain threshold, rounding to the nearest $500.
You do not need to contribute the full amount every year. If you contribute less than your limit in one year, the unused room carries forward to future years. This means if you skip a year, you can catch up later without penalty. The CRA tracks your total available room and tells you the exact number when you file your tax return or check your CRA My Account online.
Your contribution room is personal to you and does not depend on your income, employment status, or how much money you actually have. You can open a TFSA at any age once you turn 18 and have a valid Social Insurance Number, but you cannot contribute until you are 18.
Key Takeaways
- The 2024 annual TFSA contribution limit is $7,000, and unused room carries forward to future years so you can catch up later.
- The CRA adjusts the limit every five years based on inflation, rounding to the nearest $500.
- You can check your exact available contribution room on CRA My Account or on your Notice of Assessment after you file your tax return.
- Contributing more than your available room triggers a 1% penalty tax per month on the excess amount, even if you withdraw it the same day.
- Withdrawals from your TFSA restore your contribution room on January 1 of the following year, not when ready.
How the CRA tracks your room year to year
The CRA maintains a running total of your contribution room. When you open a TFSA, you start with room equal to the annual limit for that year plus any unused room from previous years back to 2009 (when TFSAs began). If you were born before 2009, your first available room is the limit for the year you turned 18.
Each time you contribute, the CRA subtracts that amount from your available room. Each time you withdraw, the CRA adds that amount back—but not until January 1 of the next calendar year. This timing matters. If you withdraw $5,000 in November, you cannot re-contribute that $5,000 until January 1. Trying to put it back in December will trigger an overcontribution penalty.
You can see your available room in CRA My Account under "TFSA transactions and balances" or on your Notice of Assessment, which arrives after you file your tax return. The CRA also sends you a notice each year showing contributions and withdrawals from the previous year.
What happens if you contribute more than your limit
Contributing more than your available room is called an overcontribution. The CRA charges a penalty of 1% per month on the excess amount. If you overcontribute by $1,000 and catch it after three months, you owe $30 in penalty tax. The penalty continues to accrue each month until you withdraw the excess.
The penalty applies even if you withdraw the excess when ready. If you put in $8,000 when your room is $7,000 and withdraw the $1,000 the same day, you still owe the 1% monthly penalty. The only way to stop the penalty is to withdraw the excess amount, and even then, the penalty for the months it sat there is still due.
If you overcontribute by accident—for example, because you miscalculated your room or did not realize a withdrawal had not yet restored your room—you can contact the CRA to request relief from the penalty. The CRA has discretion to waive penalties in cases of reasonable error, but you must request this in writing and explain the circumstances.
Contribution limits across different years
| Year | Annual Limit |
|---|---|
| 2009–2011 | $5,000 |
| 2012–2014 | $5,500 |
| 2015–2024 | $6,500 |
| 2024 onwards | $7,000 |
The limit increased to $7,000 in 2024 because inflation since the last adjustment in 2015 crossed the CRA's threshold. The next adjustment will occur in 2029 or later, depending on whether inflation pushes the limit high enough to round to the next $500 increment.
If you have been a Canadian resident since 2009, your total available room includes unused amounts from every year since then. Someone who turned 18 in 2009 and never contributed would have accumulated room of roughly $65,000 by 2024 (the sum of all annual limits from 2009 through 2024). You can contribute all of that in a single year if you have the funds, as long as you do not exceed your total available room.
How withdrawals affect your room the following year
When you withdraw money from your TFSA, that amount becomes available to contribute again—but the timing is important. The withdrawal restores your room on January 1 of the next calendar year, not on the day you withdraw. This is a common source of confusion and accidental overcontribution.
If you withdraw $10,000 in December, you cannot re-contribute that $10,000 until January 1. If you try to put it back in December, the CRA will treat it as an overcontribution. The same rule applies if you withdraw in October or any other month—the restoration always happens on January 1.
The CRA notifies you of withdrawals in the year they occur, and your available room updates on your next Notice of Assessment. You can also check CRA My Account to see your current available room, which reflects all contributions and withdrawals up to the date you check.
Contribution room if you move to or from Canada
Your TFSA contribution room only accrues while you are a Canadian resident for tax purposes. If you move out of Canada, you stop earning new room. If you move back, you start earning room again from the year you return.
If you are a non-resident and hold a TFSA, you can keep the account open and the money inside grows tax-free. However, you cannot make new contributions while you are non-resident, and if you do, the CRA will charge the 1% monthly overcontribution penalty. You can withdraw at any time without penalty, and withdrawals do not restore room while you are non-resident.
Once you return to Canada and re-establish residency, your contribution room resumes. The CRA will calculate your available room based on the limits for each year you were resident, minus any contributions you made in those years.
Frequently Asked Questions
Can I contribute more than the annual limit if I have unused room from previous years?
Yes. Your total available room is the sum of all annual limits since 2009 (or since you turned 18, if later) minus all contributions you have made. You can contribute up to your total available room in any single year. If your total room is $50,000 and you have only contributed $10,000 so far, you can contribute up to $40,000 more whenever you want.
What if I do not know my exact contribution room?
Check CRA My Account online or call the CRA at 1-800-959-5525. Your Notice of Assessment also shows your room as of the date you filed your tax return. The CRA will give you the exact number, including any adjustments for contributions or withdrawals from the previous year.
Do I have to contribute the full annual limit every year?
No. You can contribute any amount up to your available room, including zero. Unused room carries forward indefinitely, so you can skip years and catch up later. There is no penalty for not contributing.
If I withdraw money, can I put it back the same year?
No. Withdrawals restore your room on January 1 of the following year only. If you withdraw in any month and try to re-contribute before January 1, the CRA treats the re-contribution as an overcontribution and charges a 1% monthly penalty.
What is the penalty for overcontribution, and how do I fix it?
The penalty is 1% per month on the excess amount. To stop the penalty, withdraw the excess when ready. The penalty for months it already sat there remains due. If the overcontribution was a reasonable error, you can request penalty relief from the CRA in writing, but you must still withdraw the excess.