Green sprouts growing from coins

A Tax-Free Savings Account is a useful tool in your savings arsenal. However, many people do not understand that there are rules to how much you can contribute to a TFSA each year. If you over contribute the CRA can and will charge you a tax. This post will cover FAQs about TFSAs. Including, what a TFSA is, how much you can contribute, and what penalties you will face if you exceed the limit.


What is a TFSA?


The government started this program in 2009, and it is available to anyone over 18 who has a valid SIN. It allows for an investment that is free of tax, this includes all money gained within investments, and tax-free withdrawals. However, this also means that unlike RRSPs you will not get a tax-deduction when you invest in a TFSA. 


No one besides yourself can contribute, withdraw money, or make decisions about investments  in your TFSA. 


 Will it affect government benefits?


Any money that is made within a TFSA or withdrawn from one, will not affect any government benefits that you have or will apply for. This is true for retirees, and people still in the workforce. 


How much can you contribute?


The CRA will publish the annual contribution limit for TFSAs for that calendar year. You can not exceed this amount if you have maxed out your previous years TFSA limit. However, if you have spare room from the previous year or you had withdrawn money in the previous year, you can add this to your contribution limit. 


If you have never opened up a TFSA, you are eligible to contribute $63,500 as of today, because your contribution limit accumulates. The breakdown of this is as follows: 


Years Contribution Limit 
2009 – 2012 $5,000
2013-2014 $5,500
2015 $10,000
2016-2018 $5,500
2019 $6,000


How can I find out my contribution limit?


If you want to find out your contribution limit, you can:


  • Phone the CRA TIPS line at 1-800-267-6999
  • Visit your CRA Individual Account


Can I have more than one TFSA?


Yes, you are allowed to have more than one TFSA, however it is your responsibility to ensure that you are not over contributing. 


What is the penalty for exceeding the contribution limit?


The CRA will charge you 1% of the highest excess amount in the TFSA for that month. They will continue doing this each month that the over contribution remains in your account. This can add up quickly! 


Where can I find more information on TFSAs?


You can check out the CRA website from the below links, or talk to your accountant or financial planner! 


TFSA Basic Information

TFSA Contributions