TFSA Contribution Limit

What is a TFSA?

A Tax-Free Savings Account (TFSA) is a registered account that allows your investment earnings to grow tax-free. It is designed for any savings goal – big or small. Withdrawals can be made at any time without penalty and the earnings on your investments will not be taxed.

What are the benefits of a TFSA?

• Flexibility – You can choose investment options suitable for your financial needs – You can withdraw any amount from your TFSA at any time without penalty
• Tax-free growth – Your investment earnings grow tax-free in your TFSA and you will not be charged on the earnings when it is withdrawn
• Rolling contribution limits – The amount of a withdrawal from your TFSA can be added to your contribution room the following year

How does a TFSA work?

Think of a TFSA as a basket that allows you to hold more than just GICs – you can hold stocks and mutual funds as well.

Contributions to a TFSA are made with after-tax dollars – since you paid taxes on the money going into a TFSA you will not have to pay taxes on the money withdrawn from a TFSA.

The earnings on your investments grow tax-free. The investment gains are not taxed inside a TFSA and they are not taxed when withdrawn from a TFSA.

What are the TFSA investment options?

You can hold any of the following investment options in your TFSA:

• Cash
• Stocks
• Bonds
• Mutual Funds
• GICs (Guaranteed Investment Certificates)
• ETFs (Exchange-Traded Funds)

How much can I contribute?

The TFSA contribution single year limit for 2021 is $6,000 – but you can also carry over unused contribution room from previous years.

As of 2021, your lifetime contribution room is $75,500 – provided you were at least 18 years-old in 2009, the year TFSAs were introduced by the federal government.

This means if you are at least 30 years old and have not contributed to a TSFA – you are eligible to contribute the full amount - $75,500.

If you withdraw funds from your TFSA, the amount you take out is added back to your contribution limit for the following year.

Your TFSA contribution limit can be found using one of the following Canada Revenue Agency services:

• My Account
• MyCRA mobile app
• Represent a Client if you have an authorized representative
• Tax Information Phone Service (TIPS) at 1-800-267-6999

Can I over contribute to a TFSA?

Make sure you know your contribution limit – the CRA will issue a penalty for over-contribution. If you exceed your contribution limit you will be charged 1% a month for your over-contribution amount until you withdraw it.

I have an RRSP - do I also need a TFSA?

A TFSA can complement your RRSP - the two accounts can work together to improve your financial outlook in your retirement. If you have reached your RRSP contribution limit and have more savings to invest – then a long-term investment in a TFSA can increase your retirement income.

Talk to a financial advisor

Nothing beats personalized advice. To get the most of your TFSA contributions and take advantage of the investment earnings potential - talk to a financial advisor. UCU Wealth Strategies Group partnered with Credential Securities and Credential Management Inc.,  can help you make smart investment choices. They will look at your financial situation and help you create an investment strategy that is right for you.

For more information please visit the UCU website 

*Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.