The annual limit changes each year, and you can carry unused room forward

The amount you can put into a Tax-Free Savings Account (TFSA) each year is set by the federal government and adjusts for inflation. For 2024, the limit is $7,000 per year. For 2023, it was $6,500. The limit rounds to the nearest $500, so it does not change every single year — it only moves when inflation pushes it past the next $500 mark.

You do not lose money you did not contribute in a given year. If you contribute $4,000 when your limit is $7,000, you carry the unused $3,000 forward. That $3,000 sits in your "contribution room" and you can use it in any future year, even decades later. This is different from other savings accounts — the room does not expire.

The year you turn 18, you gain contribution room for that year and every year after. If you were born in 1995, you started gaining room in 2013. You can look up your exact lifetime room by logging into your CRA (Canada Revenue Agency) account online, or by calling them at 1-800-959-5525.

Key Takeaways

  • The annual TFSA contribution limit for 2024 is $7,000, and it increases in $500 increments when inflation pushes it higher.
  • Contribution room you do not use in one year carries forward forever — you can use it in any future year without losing it.
  • You gain contribution room starting the year you turn 18, and the CRA tracks your total available room in your online account.
  • Money you withdraw from your TFSA returns to your contribution room the following calendar year, so you can recontribute it later.
  • Exceeding your limit triggers a tax penalty of 1 percent per month on the overage, so checking your room before depositing is important.

How contribution room works when you withdraw money

When you take money out of your TFSA, that withdrawal does not permanently reduce your room. Instead, the amount you withdrew returns to your available room on January 1 of the following year. This means you can recontribute the same money later without penalty.

For example: if your limit is $7,000 and you contribute $7,000 in January, then withdraw $3,000 in June, you still cannot contribute more in 2024. But on January 1 of the next year, that $3,000 comes back into your room, and you can put it back in. This is one of the main advantages of a TFSA over other registered accounts — the flexibility to move money in and out without losing contribution room.

What happens if you contribute more than your limit

If you put more money into your TFSA than you are allowed to, the CRA charges a penalty tax of 1 percent per month on the overage. This penalty applies for each month the overage sits in the account. If you accidentally overcontribute by $1,000 and catch it after three months, you owe $30 in penalty tax (1 percent × 3 months × $1,000). The penalty keeps growing each month until you withdraw the excess.

The CRA does not automatically catch overcontribution right away — they review TFSA accounts during tax time or when they audit. If you realize you have overcontributed, withdraw the excess amount when ready and report it on your tax return. The sooner you fix it, the smaller the penalty.

Checking your contribution room before you deposit

The safest way to know exactly how much room you have is to check your CRA account online. You can log in at My Account (accessible through the CRA website) using your Social Insurance Number and password. Your TFSA contribution room appears under the "Tax returns" section.

You can also call the CRA at 1-800-959-5525 and speak to an agent who will tell you your room. Have your Social Insurance Number ready. Some banks and investment firms that hold your TFSA will also show your available room in their online banking portal, though this is not always current — the CRA's record is the official one.

How the annual limit has changed over time

The TFSA was introduced in 2009 with an initial limit of $5,000 per year. In 2013, the limit increased to $5,500. In 2018, it returned to $6,000. In 2023, it rose to $6,500. In 2024, it increased to $7,000. These changes happened because of inflation adjustments set into law.

If you have held a TFSA since 2009, your total contribution room includes room from every year since then, even the years when the limit was lower. The CRA adds up all the room you have ever earned, minus what you have already contributed, to get your current available room.

Contribution room if you have lived outside Canada

You only earn TFSA contribution room for years when you were a Canadian resident for tax purposes. If you moved to another country, you stop earning room for those years. If you move back to Canada, you start earning room again in the year you return.

For example: if you were a Canadian resident from 2013 to 2018, then moved to the United States for three years, then returned to Canada in 2021, you have room for 2013–2018 and 2021 onward, but not for the three years you were away. The CRA tracks this based on your tax residency status, which is determined by where you lived and maintained ties.

Frequently Asked Questions

Can I contribute more than the annual limit if I have unused room from previous years?

Yes. If your limit is $7,000 this year and you have $10,000 in unused room from previous years, you can contribute up to $17,000 in a single year without penalty. Your total available room is what matters, not just the current year's limit.

What if I contributed too much by accident — how do I fix it?

Withdraw the excess amount as soon as possible. The penalty is 1 percent per month on the overage, so the faster you withdraw, the smaller the penalty. Report the overcontribution on your tax return or contact the CRA to let them know you have corrected it.

Does my contribution room reset on January 1?

No. Your room accumulates year after year. What resets on January 1 is any money you withdrew in the previous calendar year — that withdrawal amount returns to your available room. Your total lifetime room only grows (with inflation adjustments) or shrinks (when you contribute).

If I am married, do my spouse and I share a contribution limit?

No. Each person has their own separate TFSA and their own separate contribution room based on when they turned 18 and their own history of contributions and withdrawals. Your spouse's room does not affect yours.

What if the CRA says I have less room than I thought?

The CRA's record is official. This can happen if you had an overcontribution in a previous year that you did not know about, or if you contributed to a TFSA before you turned 18 (which is not allowed). Contact the CRA to understand why your room is lower than expected, and ask what steps to take next.