The Tax-Free Savings Account (TFSA) is one of Canada\\'s most powerful savings tools. But contributing to your TFSA isn\\'t as simple as depositing money whenever you want—there are limits, rules, and penalties you need to understand. This guide covers everything about TFSA contributions: annual limits, cumulative room, deadlines, over-contribution penalties, withdrawal rules, and how to track your room accurately.
Quick Summary:
The 2026 TFSA contribution limit is $7,000. Unused room carries forward indefinitely. Withdrawals get added back to your room on January 1st of the following year. Over-contributions are taxed at 1% per month. Always check your room on CRA My Account before contributing.
TFSA contribution limits change annually based on inflation. Here are all the annual limits since the program started in 2009:
| Year | Annual Limit | Cumulative Total |
|---|---|---|
| 2009-2012 | $5,000/year | $20,000 |
| 2013-2014 | $5,500/year | $31,000 |
| 2015 | $10,000 | $41,000 |
| 2016-2018 | $5,500/year | $57,500 |
| 2019-2022 | $6,000/year | $81,500 |
| 2023 | $6,500 | $88,000 |
| 2024 | $7,000 | $95,000 |
| 2025 | $7,000 | $102,000 |
| 2026 | $7,000 | $109,000 |
If you turned 18 in 2009 and never opened a TFSA, you would have the full $109,000 cumulative maximum available in 2026. If you turned 18 later, your cumulative room starts from that year.
Your TFSA contribution room is the total amount you\\'re allowed to put into your TFSA. It\\'s calculated based on three factors:
Every year on January 1st, you receive new contribution room equal to the annual limit (currently $7,000 for 2026). This happens automatically whether you have a TFSA or not, as long as you\\'re 18+ and a Canadian resident.
If you don\\'t use your full contribution room in a year, it doesn\\'t disappear. It carries forward indefinitely. For example, if you contribute $3,000 in 2026, the unused $4,000 rolls over to 2027 and beyond.
When you withdraw money from your TFSA, that amount gets added back to your contribution room on January 1st of the following year. This lets you re-use the same room, but you have to wait until next year.
Your Total Contribution Room =
+ Annual limit for current year ($7,000 in 2026)
+ All unused room from previous years
+ Any withdrawals made in previous years
- All contributions you\\'ve ever made
Unlike RRSPs, TFSAs don\\'t have a deadline. You can contribute at any time during the year—January, December, or anywhere in between. Unused room never expires. This flexibility makes TFSAs easier to manage than RRSPs.
To open and contribute to a TFSA, you must be 18 years old (19 in some provinces) and a resident of Canada. Non-residents can keep their TFSA but shouldn\\'t contribute while living abroad, as contributions may be subject to a 1% monthly penalty.
Any interest, dividends, or capital gains earned inside your TFSA don\\'t count against your contribution room. If you contribute $10,000 and it grows to $15,000, you still only used $10,000 of contribution room. The $5,000 growth is yours tax-free and doesn\\'t reduce your available room.
If your TFSA investments lose value, you don\\'t get that contribution room back. If you contribute $10,000 and it drops to $6,000, you\\'ve permanently used $10,000 of contribution room. This is why risky investments in a TFSA should be approached carefully.
You can open TFSAs at multiple banks, credit unions, or investment firms. However, your contribution limit applies to ALL your TFSAs combined. If you have a $20,000 limit and three TFSAs, you can split contributions however you want, but the total across all accounts can\\'t exceed $20,000.
Withdrawals from your TFSA are completely tax-free at any time, for any reason. There are no penalties, no taxes, and no restrictions. However, there are important timing rules about when you can re-contribute withdrawn money.
Critical Withdrawal Rule:
When you withdraw money, that amount gets added back to your contribution room on January 1st of the following year, not immediately. If you withdraw and re-contribute in the same year, you may over-contribute.
Scenario:
You cannot re-contribute the $5,000 in 2026 because the withdrawal room doesn\\'t get added back until January 1, 2027.
If you contribute more than your available room, the CRA charges a 1% penalty per month on the excess amount. This penalty continues every month until you either withdraw the excess or gain new contribution room.
Mistake:
If you don\\'t notice for 3 months, you\\'d owe $90 in penalties plus you\\'d need to withdraw the $3,000 excess.
Always verify your contribution room before making contributions. The CRA provides your official room, but it\\'s only updated annually and may not reflect recent transactions.
Log into your CRA My Account online and check the "TFSA" section. Updated annually by March.
Call 1-800-267-6999 to speak with a CRA agent. Have your SIN ready.
Contact your bank or investment firm. They can tell you how much you\\'ve contributed with them, but not your total room across all institutions.
Important Note:
CRA My Account only updates once per year, typically by March. If you made contributions in the past few months, they may not be reflected yet. Always track your own contributions to avoid over-contributing.
If you can afford it, contribute on January 1st to maximize the time your money can grow tax-free. A $7,000 contribution made in January gets 12 months of growth, while one made in December gets only 1 month.
Set up automatic transfers from your chequing account to your TFSA. Even $200/month adds up to $2,400 per year. Automating removes the mental effort and ensures consistent saving.
For most Canadians earning under $50,000, maxing out your TFSA before contributing to an RRSP makes sense. TFSA withdrawals are tax-free, while RRSP withdrawals are taxable. If your income is low now, you\\'re in a low tax bracket, so the RRSP deduction is worth less.
Since TFSA withdrawals are instant and tax-free, it\\'s an excellent place for your emergency fund. Keep 3-6 months of expenses in a high-interest TFSA savings account so you can access it without penalties if needed.
If you have multiple TFSAs, create a simple spreadsheet to track contributions across all accounts. Record every deposit and withdrawal to ensure you don\\'t accidentally exceed your limit.
❌ Re-contributing withdrawals in the same year
Remember: withdrawn amounts only get added back on January 1st of the next year.
❌ Not tracking contributions across multiple accounts
Your limit applies to all TFSAs combined. Having 3 TFSAs doesn\\'t triple your room.
❌ Assuming CRA My Account is up-to-date
CRA only updates annually. Recent contributions won\\'t show for months.
❌ Contributing while a non-resident
If you move abroad, stop contributing to avoid penalties.
❌ Forgetting about spousal TFSAs
Each spouse has their own contribution room. You can\\'t contribute to your spouse\\'s TFSA on their behalf.
The TFSA is one of the best financial tools available to Canadians, but only if you use it correctly. Contribution limits, withdrawal timing, and over-contribution penalties are critical to understand. Always check your contribution room before depositing money, track all your accounts, and remember that withdrawn amounts can\\'t be re-contributed until the following year.
For most people, maxing out your TFSA should be a top financial priority. The tax-free growth and flexible withdrawals make it ideal for emergency funds, short-term goals, and long-term investing.
Ready to track your TFSA and stay within your contribution limits?
Use Our Free TFSA Calculator