TFSA Contribution Limit for 2023

Savvy Canadian investors are counting up their contributions and trying to figure out how much they can add to their Tax-Free Savings Account in 2023. In this post, I’ll share what you need to know about the TFSA contribution limit for 2023.

What is the TFSA limit for 2023?

The TFSA contribution limit for 2023 is $6,500. Canadians 18 or older when the TFSA was established in 2009 can contribute a maximum of $88,000 to their TFSA.

The Canada Revenue Agency announces the new contribution limit for the TFSA near the end of the year. Last year, the CRA announced that Canadians could again contribute $6,000 to their TFSA.

The TFSA contribution limit for 2023 is calculated by multiplying the annual inflation rate by the $5,000 limit established in 2009. This value is then rounded to the nearest $500 for simplicity.

Because we’ve recently had higher than usual inflation, the TFSA contribution limit for 2023 will be $6,500 for the first time.

TFSA Contribution Limit by Year

The TFSA was created in 2009 with a $5,000 contribution limit. Since then, the TFSA contribution limit has remained around $5,000, with occasional adjustments based on inflation.

TFSA Contribution Limit by Year
TFSA Contribution Limit by Year

In 2015 the TFSA contribution limit was temporarily increased by Steven Harper to $10,000 but was reduced back to $5,500 when Justin Trudeau was elected.

TFSA Contribution Limit FAQ

Here’s a quick rundown of all of the most common TFSA contribution limit questions.

What happens to unused TFSA room?

Fear not! If you haven’t been able to contribute to your TFSA know that unused contribution room carries forward indefinitely.

Can I withdrawfrom my TFSA?

Yes, you can withdraw from your TFSA at any time without penalty. If you’d like to recontribute the amount you’ve withdrawn, you must wait until the end of the year for your contribution room to reset.

How much can I put in my TFSA if I have never contributed?

You start accumulating TFSA room at 18. If you were 18 before the TFSA started in 2009, you will be able to contribute the maximum amount of $88,000 in 2023.

If you only turned 18 recently, you must review the TFSA contribution limits since your 18th birthday to determine how much contribution room you have in your TFSA.

What is the lifetime limit for TFSA?

The lifetime limit for the TFSA in 2022 is $81,500, while in 2023 it’s $88,000.

Should I max out my TFSA?

The answer is an emphatic yes! No matter your income level, the TFSA is an amazing account to use for investing. If you’re able to, work on contributing the maximum amount to your TFSA as soon as you can.

What investments can I hold in my TFSA?

The CRA allows GICs, bonds, stocks, mutual funds, ETFs and cash to be held in your TFSA. You are also allowed to buy options and sell covered calls in your TFSA.

Can you day trade in TFSA?

No. The CRA considers any income earned from day trading as regular income, so all of your investment gains may be subject to tax.

What happens if you lose money in your TFSA?

Permanent losses in your TFSA cause you to lose contribution room. So invest carefully, and avoid trading in risky assets that could incur a permanent loss.

What happens if I contribute too much to my TFSA?

The CRA takes TFSA overcontributions very seriously. If you contribute more than the TFSA contribution limit, you will be levied a 1% tax per month on your overcontribution.

It’s best to avoid overcontributing by keeping track of your contributions and checking them against your TFSA contribution room. If you do overcontribute, act fast and immediately withdraw the excess amount from your TFSA stop being charged 1% per month.

Can I have 2 TFSA accounts?

Yes, you can have multiple Tax-Free Savings Accounts. But be careful! Having more than one TFSA does not mean that you can contribute any more than you would have been able to with a single account. You must still abide by the annual and total contribution limit for that year as measured across all of your Tax-Free Savings Accounts.

Can I contribute to my spouse’s TFSA?

No, you cannot contribute directly to your spouse or common-law partner’s TFSA. However, you can give your spouse or common-law partner money for them to contribute to their own TFSA. These contributions would be subject to your spouse or partner’s TFSA contribution limit.

Do I get taxed on TFSA withdrawals?

Withdrawals from your TFSA are entirely untaxed. That’s because, unlike RRSP contributions, TFSA contributions are made with after-tax money.

Thanks for Reading!

If you’d like to learn more about the TFSA, consider reading my post comparing the TFSA vs RRSP. In it, I explain how you can determine which of the two retirement accounts you should contribute to.

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  1. Your chart (above) does not include an extra contribution ($6,000.00) you say “the government announced near the end of last year” – did I read it incorrectly?

    1. Hi Diane, Thank you so much for your comment. I mean to say that the contribution limit is again $6,000. Not $12,000. Hopefully that’s clear now! Cheers, AL.

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