The federal government recently announced the TFSA contribution limits for 2023. This year the limit is $6,500. However, you will have accumulated contribution room every year beginning in 2009, so your contribution limit will be much higher if you haven’t used any or all of that reserved contribution room. The only stipulations for contributing are that you must be 18 and hold a valid Social Insurance Number (SIN).
About the TFSA Contribution Limit
Unlike other registered plans, you will not receive a tax benefit for the contributions you make. An RRSP, for example, provides a tax benefit by reducing the total amount of tax you pay. But with a TFSA you get far more flexibility in terms of contributions and withdrawals compared other types of registered accounts. You will also not pay taxes when you withdraw funds from your TFSA. These are just some of the key differences between an RRSP and TFSA.
Every year, the government announces the allowable contribution limit for the following year. These annual limits are generally indexed to inflation rounded to the nearest $500. However, in 2015, a change in the rules by the government of the time almost doubled the TFSA annual limit.
The good news for you is that these contribution limits are also cumulative, meaning if you don’t use your contribution room in one year, it is added to your total contribution limit going forward. If you have not yet accessed this contribution room, the total contribution limit can be substantial, and it can mean an excellent opportunity for you to invest for the long term.
Here are the historical contribution limits for the TFSA:
- The annual TFSA contribution limit for 2009-2012 was $5,000.
- The annual TFSA contribution limit for 2013-2014 was $5,500.
- The annual TFSA contribution limit for the year 2015 was $10,000.
- The annual TFSA contribution limit for 2016-2018 was $5,500.
- The annual TFSA contribution limit for 2019-2022 was $6,000.
- The annual TFSA contribution limit for 2023 is $6,500.
In addition to cash contributions, you can make an “in-kind” contribution to your TFSA with some limitations. If you transfer property such as stocks, for example, they are considered sold, and you must report any capital gain on your tax return. Unfortunately, if “selling” the stock to your TFSA results in a capital loss, you can’t claim that loss on your taxes.