Contributions to a Tax-Free Savings Account

There is no requirement for you to have earned income in order to make contributions to a TFSA. The maximum amount you can contribute to your TFSA is determined by your TFSA contribution room.

All contributions made to a TFSA throughout the year, including the replacement or re-contribution of previously withdrawn funds, will be counted against your contribution room.

If, at any point during the year, you contribute more than your available TFSA contribution room, you will be subject to a tax equal to 1% of the highest excess TFSA amount for each month that the excess amount remains in your account. More information on this can be found in the TFSA excess amount correspondence explanation.

As the account holder, you have exclusive control over certain actions related to your TFSA. These actions include making contributions, making withdrawals, and determining how your funds are invested.

You have the option to give money to your spouse or common-law partner so that they can contribute to their own TFSA. The amount given or any earned income from that amount will not be attributed back to you. However, it is important to note that the total contributions made by both you and your partner cannot exceed your individual TFSA contribution room.

Fees paid by the TFSA holder for managing a TFSA trust are not considered contributions to the TFSA. Additionally, the payment of investment counsel, transfer, or other fees by a TFSA trust will not result in a distribution or withdrawal from the TFSA trust.

TFSA contribution room refers to the maximum amount you are allowed to contribute to your TFSA. This amount is based on various factors including your age and the number of years you have been eligible to contribute.

Only valid Social Insurance Numbers (SIN) are accepted for TFSA contributions.

If you were 18 years or older in 2009, your TFSA contribution room increases each year, regardless of whether you file an income tax and benefit return or open a TFSA.

For those who turned 18 after 2009, your TFSA contribution room starts in the year you turned 18 and accumulates annually thereafter.

Any investment income or changes in the value of your TFSA investments will not impact your TFSA contribution room for the current or future years.

The annual TFSA dollar limit for the year 2023 is ,500. For the years 2019 to 2022, the annual TFSA dollar limit was ,000. From 2016 to 2018, the annual TFSA dollar limit was $5,500. In 2015, the annual TFSA dollar limit was $10,000. In 2013 and 2014, the annual TFSA dollar limit was $5,500. From 2009 to 2012, the annual TFSA dollar limit was $5,000.

The TFSA annual room limit will be adjusted for inflation and rounded to the nearest $500.

It is important to note that you will continue to accumulate TFSA contribution room for each year, even if you do not file an income tax and benefit return or open a TFSA.

Here's an example to illustrate this information:

Brayden was excited to open his TFSA, but he didn't turn 18 until December 21, 2021. On January 4, 2022, he opened a TFSA and contributed a total of $12,000 (,000 for 2021 and ,000 for 2022, which were the maximum TFSA dollar limits for those years). Following the advice of his broker, he opted for a self-directed TFSA and invested in stocks that experienced an increase in value. By the end of 2022, the value of Brayden's TFSA had risen to $12,800. Brayden was concerned that his contribution room for 2023 would only be $5,700 (the TFSA dollar limit of ,500 for 2023 minus the 0 increase in his TFSA's value through 2022). However, the earnings and increase in value of his TFSA will not impact his contribution room for subsequent years. Therefore, Brayden can contribute up to ,500 to his TFSA in 2023.

Discovering your TFSA contribution allowance

Determining your TFSA contribution allowance involves considering the following factors:

• The current year's TFSA dollar limit
• Any unused contribution room from previous years
• Withdrawals from your TFSA in the previous year

Keep in mind

Calculating your contribution room excludes "Qualifying transfers," "exempt contributions," and "specified distributions."

Case Example 2

From 2014 until the conclusion of 2021, Josh maximized his TFSA contribution each year. By contributing ,000 in 2021, his remaining contribution room at the end of that year became zero.

Beginning in 2022, his contribution room amounted to ,000, which reflected the 2022 TFSA dollar limit. On June 15, 2022, Josh contributed $500, but later, on October 26, 2022, he withdrew $4,000.

Consequently, his unused contribution room by the end of 2022 equaled $5,500, which is derived from subtracting $500 from the original ,000.

To establish his TFSA contribution room for the start of 2023, Josh employed the subsequent calculation:

Step 1: Determining the Unused TFSA contribution room at the end of 2022

Starting TFSA contribution room in 2022 (,000) minus contributions in 2022 ($500) equals the Unused TFSA contribution room at the end of 2022 ($5,500).

Step 2: Establishing the TFSA contribution room at the beginning of 2023

Unused TFSA contribution room at the end of 2022 ($5,500), total withdrawals made in 2022 ($4,000), and the 2023 TFSA dollar limit (,500) result in the TFSA contribution room at the beginning of 2023, which amounts to $16,000.

Accumulation of TFSA contribution room is not possible during any year when the individual is a non-resident of Canada throughout the entire year.

The TFSA dollar limit is not proportionate in the year when an individual experiences any of the following conditions:

• Reaching 18 years of age
• Deceasing
• Becoming a resident or non-resident of Canada

Locating your TFSA contribution room information

You can access your TFSA contribution room information through the following services:

Note

Please be aware that any contributions or withdrawals from your TFSA in the preceding year might not be immediately accounted for in your available contribution room for the current year. The end of February marks the deadline for all issuers to electronically submit TFSA records to the CRA for each TFSA holder. Consequently, transactions made in the current year will not be factored in.

Furthermore, if you wish to receive a TFSA Room Statement, contact us. You can also request a TFSA Transaction Summary, which provides information from your TFSA issuer(s) regarding your contributions and withdrawals.

If we do not have complete information about your transactions in your Tax-Free Savings Account (TFSA), or if you have made contributions to your TFSA this year, you can use a tool called "Form RC343, Worksheet - TFSA contribution room" to calculate your TFSA contribution room for the current year. However, if we have already determined a specific amount for your unused TFSA contribution room, do not use this form. Instead, please contact us for more information.

To ensure that you do not exceed your TFSA contribution room, it is important for you to keep records of your TFSA transactions. Additionally, we will also keep track of each individual's contribution room based on the information provided by TFSA issuers on an annual basis.

Authorizing a Representative

If you wish to authorize someone, such as your spouse, tax preparer, or accountant, to access and provide information on your behalf for tax-related matters, you can do so through the "My Account for Individuals" service or by following the steps outlined in the "Authorizing a representative - Overview" guide. Once authorized, we will only accept information from and provide information to your representative after verifying the authorization.

Your authorization will remain in effect until one of the following situations occurs:

- You or your representative cancels it.

- It reaches the expiry date you have chosen.

- We receive notification of your death.

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

For individuals who are the legal representatives of deceased persons, please refer to the "Guide T4011, Preparing Returns for Deceased Persons" to understand the necessary documentation.

To learn more about authorizing representatives, please refer to the "Authorizing a representative - Overview" guide.

Accessing Your Online Mail

Certain correspondence related to your Tax-Free Savings Account is available through online mail. Once you are registered for online mail, we will notify you via email whenever you have new mail to view in your secure online account. This means that the correspondence will no longer be printed and mailed through Canada Post. For more information, please visit the "Email notifications from the CRA - Individuals" page.

How We Receive Your TFSA Information

By the end of February of the year following, all TFSA issuers are required to electronically submit TFSA records to us for each individual who holds a TFSA.

If you disagree with any information provided by your TFSA issuer, such as dates or amounts of contributions or withdrawals on your TFSA Room Statement or TFSA Transaction Summary, please contact your issuer directly. If the initial information provided by the issuer is found to be incorrect, they must send us an amended record to update our records accordingly.

You can view your TFSA Transaction Summary online through the "My Account for Individuals" service. This will allow you to see all the contributions and withdrawals made to your TFSA.

Forms and Publications

Here is a list of relevant forms and publications for your reference:

- "Form RC343, Worksheet - TFSA contribution room" (link: [Form RC343](https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/rc343.html))

- "Guide T4011, Preparing Returns for Deceased Persons" (link: [Guide T4011](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4011.html))

Additional resources

• Transfers
• Making or replacing withdrawals from a Tax-Free Savings Account (TFSA)
• Tax obligations related to TFSA

We appreciate your valuable input.

Last updated: July 28, 2023