The TFSA new contribution limit for 2021 has been officially released. That limit is $6,000, matching the amount set in 2019 and 2020.  This means the total contribution room available in 2021 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009 is $75,500.

For clients who have withdrawn from TFSAs, the gains and losses from withdrawals are factored into their TFSA room.  The formula used to calculate this is:

  • Unused TFSA contribution room to date
  • + Total withdrawal made in this year
  • + Next year’s TFSA dollar limit
  • = TFSA contribution room at the beginning of next year

The chart below shows you the dollar amounts by year:

For 2009, 2010, 2011 and 2012:

$5,000

For 2013 and 2014:

$5,500

For 2015:

$10,000

For 2016, 2017 and 2018:

$5,500

For 2019, 2020 and 2021

$6,000

Anyone 18 or older and who has a valid social insurance number is eligible to open a TFSA. Contribution room accumulates beginning in the year in which a person turns 18. TFSAs can be ideal for younger Canadians who are starting out and expect to be in higher income brackets in the years ahead. This way they can save their RRSP contribution room and tax deductions for when they need them.

While contributions to a TFSA are not tax deductible, withdrawals are tax free. Money withdrawn from a TFSA in a future year can be used to make a down payment on a home or purchase a car, for example.

Here is the TFSA lifetime contribution room for individuals who have never made a TFSA contribution, for 2020 and for 2021, based on age.

Year individual turned 18

Total unused contribution room in 2020

Total unused contribution room in 2021

2009 or earlier

$69,500

$75,500

2010

$64,500

$70,500

2011

$59,500

$65,500

2012

$54,500

$60,500

2013

$49,500

$55,500

2014

$44,000

$50,000

2015

$38,500

$44,500

2016

$28,500

$34,500

2017

$23,000

$29,000

2018

$17,500

$23,500

2019

$12,000

$18,000

2020

$6,000

$12,000

2021

0

$6,000

 

Federal tax bracket thresholds for 2021

  • The 33.0% tax rate begins at taxable income of over $216,511, up from $214,368 in 2020.
  • The 29.0% tax rate begins at taxable income of over $151,978, up from $150,473 in 2020.
  • The 26.0% tax rate begins at taxable income of over $98,040, up from $97,069 in 2020.
  • The 20.5% tax rate begins at taxable income of over $49,020, up from $48,535 in 2020.
  • Income below $49,020 is taxed at 15.0%.

The basic personal amount for 2021 is $13,808 for taxpayers with net income of $151,978 or less. At income levels above $151,978, the basic personal amount is gradually clawed back until it reaches $12,421 for net income of $216,511.

Sources:  Government of Canada.ca, Advisor’s Edge.ca