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TFSA Contributions

Now that you have set up a Tax-Free Savings Account (TFSA), there are many rules that govern how much can you contribute, how often you can contribute, and various restrictions.



Basically, contributions into a TFSA are categorized into three categories:

  • contributions
  • re-contributions
  • over-contributions

The rules that govern these contributions are outlined in the following sections.


Beginning in 2009, every individual resident in Canada 18 years of age or older, began to automatically accumulate TFSA contribution room. Even those individuals that have not opened a TFSA account have still accumulated TFSA contribution room each year since 2009. Contribution room initially accumulated at the rate of $5,000 per calendar year (This was increased to $5,500 per year in 2013 and $10,000 in 2015, but reduced back to $5,500 for 2016).

Below is a summary of contribution basics:

  • Each Canadian resident individual 18 years of age or older can contribute to a TFSA.
  • For 2016 and subsequent taxation years, the maximum contribution limit is set at $5,500. (Note: For each of the 2009, 2010, 2011 and 2012 calendar years the maximum contribution limit was $5,000. In 2013 and 2014, the maximum contribution increased to $5,500 per year. For 2015 taxation year, you were allowed to contribute up to a maximum of $10,000.) 
  • Contributions can be in the form of cash and/or investments in kind. If you do not have sufficient cash to maximize your contribution, you can contribute an investment held in a taxable account.* The investment’s value is based upon the fair market value at the time of the contribution.
  • Any unused contribution room, in a given year, is automatically carried forward for future contributions. For example, if you were 18 or older on January 1, 2009 and open your first TFSA account in 2018, you can contribute up to $57,500 to your account. This is because you have accumulated $5,000 of unused contribution room for each of the 4 years – 2009, 2010, 2011 and 2012; plus $5,500 for each of 2013 and 2014, plus $10,000 for 2015 and $5,500 for 2016, 2017 and 2018.
  • Your TFSA contributions cannot be deducted from your taxable income, but all income earned by your contribution is earned free of taxation.
  • If you become non-resident in Canada, you can retain your TFSA account. You do not accumulate TFSA contribution room for the period that you are non-resident. Any withdrawals from a TFSA account, while you are non-resident, are not taxable in Canada. Any TFSA amounts withdrawn, while you are non-resident, will be added back to your unused TFSA contribution room. Contributions from non-resident TFSA account holders are subject to a 1.0%, per-month, tax penalty.
  • You do not have to file an income tax return nor open a TFSA account to earn contribution room.
  • The annual TFSA contribution limit of $5,500 will be indexed to the rate of inflation. 
  • Your TFSA contribution room will be reported by the Canada Revenue Agency (CRA) each year on your personal Income Tax Notice of Assessment or Reassessment.
  • Only the TFSA account holder can make contributions to their individual TFSA account.
  • The annual TFSA contribution limit is not prorated for individuals in the year
    • they turn 18 years of age
    • they die, or
    • they become a non-resident of Canada
  • In any calendar year you can contribute to more than one TFSA account, but your total contributions cannot exceed your unused contribution room.
  • Contributions to your spouse’s or common-law partner’s TFSA account are not subject to the normal income attribution rules. Normally, if you gift monies to a spouse, all income earned on the gifted monies is attributed back to you and must be included in your taxable income. However, this is not so for monies gifted and deposited to your spouse’s TFSA.
  • If you borrow to make a contribution to your TFSA, the interest expense is not tax deductible.
  • TFSA contributions and income earned can be used as collateral for a loan.

Note: When your contribution is in the form of an investment from a personal taxable account, the Canada Revenue Agency (CRA) views this a deemed sale. As a result, even though you still own the investment in your TFSA, the CRA will require you to report the contribution as a sale in your income tax return. If you have a deemed capital gain, then the taxable portion will be included in your taxable income. If you have deemed capital loss, you are not permitted to use the loss to reduce tax payable on capital gains (past, present, or future).

Calculating your unused contribution room

The CRA will calculate and report your contribution room each year on your Income Tax Notice of Assessment or Reassessment. (If you are not required to file an annual income tax return, you will not receive a Notice of Assessment. In this case, you should keep track of your unused TFSA contribution room to ensure that your contributions are not classified as over-contributions and, thus, assessed a penalty tax.)



To calculate your unused TFSA contribution room, add the following three items together:

  • your unused TFSA contribution room from previous years
  • any withdrawals from your TFSA made in the previous year, and
  • your available contribution room for the current year (max $5,500)

Example:  If you opened a TFSA account for the first time in 2013 with a contributed of $5,000.00 and a $3,000.00 contribution in 2014, and withdrew $4,000.00 in February 2015, your unused TFSA Contribution Room available for 2017 is calculated as follows:

Unused TFSA Contribution available beginning of 2013$20,000.00
Plus: New 2013 contribution room+$5,500
      Less: Contributions made in 2013-$5,000
Unused TFSA Contribution available beginning of 2014$20,500.00
Plus: New 2014 contribution room+$5,500
Less: Contributions made in 2014-$3000
Unused TFSA Contribution available beginning of 2015$23,000.00
Plus: New 2015 contribution room+$10,000
Unused TFSA Contribution available beginning of 2016$33,000.00
Plus: New 2016 contribution room+$5,500
Plus: Amount withdrawn in 2015 added back in 2016+$4,000
Unused TFSA Contribution available beginning of 2017$42,500.00
Plus: New 2017 contribution room+$5,500
Unused TFSA Contribution available in 2017$48,000.00

Note: The unused TFSA contribution room is not increased for withdrawals of deliberate over-contributions, prohibited investments, non-qualified investments, or amounts attributed to swap transactions.


When you withdraw previous contributions from your TFSA and then redeposit the withdrawn funds, this redeposit is called a re-contribution. With a TFSA account, you can withdraw a portion or all of the funds held at anytime. There are no restrictions on the amount withdrawn or the frequency of withdrawals.

The only restriction on re-contributions is that they cannot be made in the same calendar year as the withdrawal. For example, if you withdraw $5,000.00 in May, you cannot re-contribute the withdrawn $5,000.00 until the following calendar year.

All TFSA withdrawals are added to your unused TFSA contribution room for the following year. Because the withdrawn funds will not be accounted for until your TFSA assessment is calculated at the end of the year, your current year’s withdrawals are not included in your current unused TFSA contribution room and any re-contribution will result in an over-contribution.

This restriction is to permit the tracking of your total contributions so that you do not over-contribute to your TFSA account in any given year.


In general, an over-contribution occurs when you make a contribution to your TFSA account that exceeds your unused TFSA contribution room for that calendar year.

Over-contributions to a TFSA account are not permitted and the Canada Revenue Agency (CRA) assesses a penalty tax on all over-contributions.

For more information on the tax penalties assessed for over-contribution amounts, refer to the section TFSA–Taxes Payable.


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