Know your TFSA contribution limit + MORE Nov 2nd

Ask MoneySense
Five years after buying out my former spouse’s share of the matrimonial home, I decided to sell two years ago and watch the market for just the right downsize, anticipating that my eldest would be attending university out of province. 

Then came COVID, and plans changed. Now I have an 18-year-old and a 14-year-old living and working in what was supposed to be a temporary rental home. It appears I’ve missed the window for purchasing during the pandemic and am watching my dollars lose value on the real estate market day by day. 

Long story short, I’ve decided to take a prolonged break from house hunting and want to put the equity from my sale in a safe place that will also earn enough to at least keep up with inflation. What are my options?

–Liz

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Find out your current tax-free savings account (TFSA) contribution limit by using this calculator.

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Tax-free savings account is a bit of a misnomer. While you can use it for straightforward savings, think of it more accurately as an investment holding account to store things like exchange-traded funds (ETFs), guaranteed investment certificates (GICs), bonds, stocks and, yes, plain old cash. While you do have to abide by the set amount of contribution room each year, any growth you earn on those investments will not affect your contribution room for the current year or years to come. Plus, the income earned is tax-free (more on that below). Any resident of Canada who is 18 or older and has a valid social insurance number can open a TFSA.

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Is a TFSA really tax-free?

TFSA contributions won’t reduce your taxable income and generate a tax refund, unlike registered retirement savings plan (RRSP) contributions…

Tax-free savings accounts (TFSAs) are more than a simple tax-sheltered savings account. TFSAs allow Canadians to hold cash, guaranteed investment certificates (GICs), stocks, bonds, exchange-traded funds (ETFs) or mutual funds within a structure backed by the government. Any interest made during your investment is yours to keep, tax-free.

Featured TFSA accounts

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Best TFSA savings account

Earn a guaranteed interest rate of 3.00% tax free.

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Best online brokerage

Open a TFSA investment account and trade ETFs and stocks with $0 commission on all transactions.

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Best robo advisor

Get pre-built portfolio based on your investment needs, and earn up to $2,000 cash back for new and existing clients…

For Canadian investors and savers, it’s always some of the best news to come each year: new TFSA room that becomes available each January 1. For 2024, the TFSA contribution limit is $7,000, and for 2023, it is $6,500.

The actual TFSA yearly limit was set at $5,000 back in 2009 when the investment account was first created, but it’s indexed to inflation each year and rounded to the nearest $500 to simplify things for investors. The exception was 2015, when the TFSA limit was hiked up to $10,000 for a single year before being decreased to $5,500.

Someone who has never contributed to a TFSA and was born in 1991 or earlier could have cumulative contribution room of $95,000 as of Jan. 1, 2024.

TFSA contribution limit—2009 to 2024

Year
TFSA Annual Limit
TFSA Cumulative Limit

2009
$5,000
$5,000

2010
$5,000
$10,000

2011
$5,000
$15,000

2012
$5,000
$20,000

2013
$5,500
$25,500

2014
$5,500
$31,000

2015
$10,000
$41,000

2016
$5,500
$46,500

2017
$5,500
$52,000

2018
$5,500
$57,500

2019
$6,000
$63,500

2020
$6,000
$69,500

2021
$6,000
$75,500

2022
$6,000
$81,500

2023
$6,500
$88,000

2024
$7,000
$95,000

Investing ideas for your TFSA

TFSAs are not just for savings…