MR
  • Insurance
  • Mortgages
  • Debt Management
  • Personal Finance
  • Credit Cards
  • Retirement Planning
  • News
No Result
View All Result
Contact Us
MR
  • Insurance
  • Mortgages
  • Debt Management
  • Personal Finance
  • Credit Cards
  • Retirement Planning
  • News
No Result
View All Result
MR
No Result
View All Result
Home Personal Finance

TFSA Contribution Limit & Withdrawal Rules for Canadians (2023)

Adeola Adegoke by Adeola Adegoke
February 23, 2023
A A
tfsa contribution limit
592
SHARES
3.3k
VIEWS
Share on FacebookShare on Twitter

A Tax-Free Savings Account (TFSA) is a popular savings and investment option which allows Canadians to earn tax-free returns on their contributions. The contribution limit for TFSA is set by the government every year and can vary due to inflation and other factors. 

Staying informed about the TFSA contribution limit is essential to maximise the benefits of the TFSA and avoid penalties for over-contributing. 

Fortunately, the TFSA contribution limit accumulates over time, so even if you don’t max out your contributions in a given year, you can carry over unused contribution room to future years.

Stick with me as I discuss the current TFSA contribution limit and explore all you need to know to take full advantage of your TFSA contribution room, including contribution tracking, TFSA withdrawal rules, and many more.

What is the Annual TFSA Contribution Limit?

The 2023 TFSA contribution limit is $6,500. 

The government of Canada limits the amount of money that can be contributed to every TFSA yearly. The annual contribution limit (TFSA dollar limit) is usually indexed to inflation and rounded to the nearest $500. 

Below is a recap of each year’s annual TFSA dollar limit since the program began in 2009.

Year

TFSA annual limit

2023

$6,500

2019-2021

$6,000

2016-2018

$5,500

2015

$10,000

2013-2014

$5,500

2009-2012

$5,000

The yearly amounts reflect in your accumulated TFSA contribution room. So if you were 18 and above in 2009 and have not contributed to your TFSA, you currently have $88,000 of contribution room in 2023.

How Can I Track My TFSA Contribution Room?

The Canada Revenue Agency (CRA) has stopped adding the TFSA contribution room to your Notice of Assessment (NOA). 

However, you can quickly check your TFSA contribution room by:

  • Registering for “CRA My Account”
  • Downloading the “MyCRA” mobile app
  • Calling the Tax Information Phone Service at 1-800-267-6999.

Keep in mind that any contributions made or withdrawn from a TFSA in the year before will not be reflected in your contribution room in the present year till February comes to a close.

Using this CRA worksheet, you can also calculate your contribution room for the current year. However, endeavour to keep good records because there are penalties for contributing too much. 

Penalties For Over-Contribution To Your TFSA

All contributions to your TFSA during the year will count against your contribution room. So if you contribute more than your available TFSA contribution room at any time in the year, you will be subject to penalties.

For each month that the excess amount remains in your TFSa account, you must pay a tax equal to 1% of the highest excess amount in the month.

So, for example, if you exceeded your available TFSA contribution room by $6,000, you would be charged a penalty of $60 monthly and $720 after one year.

TFSA Withdrawal Rules

You can withdraw money from your TFSA whenever you want, as long as the underlying investment isn’t subject to lock-in rules. There are no withdrawal limits for your TFSA.

Your withdrawals do not count as income and are 100% free of any tax, so it doesn’t affect income-based benefits like the Canada Child Benefit, the Canada Workers Benefit, the GST/HST Credit, the Age Credit, Old Age Security, or the Guaranteed Income Supplement and employment insurance benefits.

The next year after withdrawing from your TFSA, the amount you withdrew is reversed back to your allowed TFSA contribution room. So, if you withdraw $10,000 from your TFSA in 2021, as of January 1, 2022, you will have an additional $10,000 of contribution room left.

How to Authorize a Representative

You can authorise a representative (such as your spouse or common-law partner, tax preparer, or accountant) to get information about your tax affairs and give the government information on your behalf. 

The government accepts information from and provides information to your representative only after they are satisfied that you have authorised them to do so through your CRA My Account.

Your authorisation will stay in effect until any one of the following situations applies:

  • It is cancelled by you or your representative
  • It reaches the expiry date you choose
  • They receive notification of your death

You or your representative can cancel your consent by telephone or in writing.

How To Find Your TFSA Mail Online

Some TFSA letters are available for online mail. When you register for online mail, the CRA sends an email notification whenever there is new mail to view in your secure online account.

 Correspondence available through online mail will no longer be printed and mailed to you through Canada Post.

How Will TFSA Receive Your Information?

By the last day of February of the following year, all issuers must electronically submit a TFSA record for each individual with a TFSA.

If you disagree with any of the information on your TFSA Room Statement or TFSA Transaction Summary, including dates and amounts of contributions, and withdrawals, that your TFSA issuer has provided, contact your TFSA issuer. 

If any information initially provided by the issuer regarding your account is incorrect, the issuer must send the government an amended record so that records can be updated.

Final Thoughts on TFSA Contribution Limit

It’s no surprise that TFSAs are popular choices among Canadians who want to preserve their wealth and reduce the taxes they have to pay, but you have to be careful and follow the rules of using this investment tool.

If you know your TFSA contribution limit and contribution room and follow the rules governing all TFSA-related activities, then you are on the right track.

Remember that any excessive contribution attracts a potentially steep penalty of 1% of the highest amount you contributed in the month and for every month you have over-contributed. So, tread carefully as you indulge in TFSAs.

FAQs on TFSA Contribution Limit

Are Capital Losses Deductible?

TFSA withdrawals are tax-free, which is awesome. But it’s important to remember that capital losses within your TFSA will not be deductible because they’re tax-free.

Can You Have Multiple TFSAs?

You can open additional TFSAs at different financial institutions. Each account will contribute towards your overall TFSA contribution limit, so ensure you don’t go over.

Previous Post

2023 Canada Child Benefit (CCB) Payment Dates and Amounts

Next Post

14 Legit Ways To Make Free Money From The Canadian Government

Related Stories

spring financial review
Business

Spring Financial Review 2023: Best Online Loan Platform

by Adeola Adegoke
September 17, 2023
0

Have you ever wished for a personal finance overhaul that doesn't involve complicated paperwork or credit checks? Then you should check out this spring financial review. Spring Financial is a...

Read more

RBC Void Cheque: How To Read and Get One Fast (2023)

25 Cheapest Places to Live in Canada in 2023

What Is The Minimum Wage in Ontario in 2023 ?

The 10 Best Crypto Wallets in Canada For 2023

Next Post
Free Money from the Canadian government

14 Legit Ways To Make Free Money From The Canadian Government

Bill of Sale Alberta

What is a Bill of Sale in Alberta? How to Write & Template

Shakepay Review

Shakepay Review 2023: Is it Safe and Legit? Is it Worth It?

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

Recommended

Best Canadian Dividend Stocks

20 Best Canadian Dividend Stocks To Buy in 2023

June 14, 2023
How to Start a Cleaning Business

How to Start a Cleaning Business in 10 Easy Steps

June 28, 2023
free roadside assistance

4 Ways To Get Free Roadside Assistance in Canada (2023)

May 26, 2023
Work at Home Jobs for Canadians

20 Flexible Work at Home Jobs for Canadians

November 26, 2022

Popular Story

  • Websites Where Men Give You Money

    12 Legitimate Websites Where Men Give You Money in 2023

    11928 shares
    Share 4771 Tweet 2982
  • Best Mutual Funds in Canada: 15 Top-Performing Mutual Funds

    5600 shares
    Share 2240 Tweet 1400
  • 12 Safe Investments with High Returns in Canada (2023)

    4391 shares
    Share 1756 Tweet 1098
  • 10 Best RESP Providers in Canada (2023)

    3697 shares
    Share 1479 Tweet 924
  • Is World Financial Group Scam? An Unbiased Review in 2023

    3279 shares
    Share 1312 Tweet 820
  • Canada PRO Deposit 2023: Dates, Eligibility, and Amounts

    2833 shares
    Share 1133 Tweet 708
  • 10 Best E-Transfer Payday Loans Canada 24/7 (2023)

    2432 shares
    Share 973 Tweet 608
  • GST Payment Dates 2023: GST/HST Tax Credit Explained

    2381 shares
    Share 952 Tweet 595
  • How Much Does it Cost to Have a Baby in Canada? (2023)

    2144 shares
    Share 858 Tweet 536
  • 8 Best Investments in Canada for 2023

    2132 shares
    Share 853 Tweet 533
Facebook Twitter Instagram

Money Reverie

Adeola Adegoke

Owner/Founder

Money Reverie is a top personal finance and finance blog in Canada. We share finance tips & self-help to live a rewarding life.

🎯 https://casinochan-onlinecasino.com/ online casino in Canada 2023: your destination for thrilling games and massive wins. Spin, win, and smile today! 😁🎰


🎉 Start your winning journey at National casino online in Canada 2023! Claim your https://nationalcasino-online.com and spin for the win! 🎰💰


https://scatters-casino.com

Categories

  • Benefits
  • Business
  • Credit Cards
  • Cryptocurrency
  • Debt Management
  • Insurance
  • Investing
  • Mortgages
  • News
  • Personal Finance
  • Product Reviews
  • Retirement & Estate Planning
  • Reviews
  • Tax
  • Uncategorized

© 2021 Money Reverie

No Result
View All Result
  • Contacts
  • Contributors
  • Disclaimer
  • Newsletter
  • Personal Finance & Debt Management Blog in Canada – Money Reverie
  • Privacy Policy
  • Super Visa Insurance Quote
  • Terms and Conditions

© 2021 Money Reverie

Need Help With Anything Finance?

Enter your email address to get valuable personal finance & small business tips from top experts delivered to your inbox weekly.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.