No matter what you are saving for, a Tax Free Savings Account (TFSA) is a great way to save, be it a long-term goal such as retirement or a short-term goal such as a renovation or a vacation!
If you have never opened a TFSA and have been eligible for the TFSA since it’s inception in 2009, you can contribute $81,500 today. TFSAs are a unique way for Canadians to save money and pay less tax. Anyone 18 or older and who has a valid social insurance number can open a TFSA.
Here are the dollar amounts by year:
|For 2009, 2010, 2011 and 2012||$5,000|
|For 2013 and 2014||$5,500|
|For 2016, 2017 and 2018||$5,500|
|For 2019, 2020, 2021, 2022||$6,000|
The CRA just released the new TFSA limits for 2023, which will be $6,500 and will take the total contribution limit to $88,000.
Did you know?
- You can hold many types of investments in your TFSA including but not limited to mutual funds, ETFs, GICs, bonds, and securities.
- You can withdraw money any time and investment income is not taxed.
- Contributions are not deductible from your taxable income.
- Unused contribution limits can be carried forward indefinitely to future years. If you didn’t contribute the maximum amount in a given year, you are allowed to “catch up” in the future as long as you stay within the overall contribution room limits.
- Any withdrawals from your TFSA are added to your contribution room in the following year, so you can recontribute it in a different year.
- You can have more than one TFSA but keep a watchful eye so that you don’t go over the contribution limits
- If you contribute more than the total allowed, the over-contribution amount will be subject to a tax penalty
- You can check your TFSA limits by going to the CRA website and logging in to My CRA Account