ELI5 summary
The annual limits since 2009
| Years | Annual limit |
|---|---|
| 2009 to 2012 | $5,000 |
| 2013 and 2014 | $5,500 |
| 2015 | $10,000 |
| 2016 to 2018 | $5,500 |
| 2019 to 2022 | $6,000 |
| 2023 | $6,500 |
| 2024 to 2026 | $7,000 |
The limit is indexed to inflation and rounded to the nearest $500, which is why it stays flat for several years and then jumps. Add every year from the one you turned 18 (or 2009, whichever is later) and you have your lifetime room. For someone who was 18 or older in 2009 and resident throughout, that total is $109,000 at the start of 2026.
Three rules that decide your real number
1. Age. Room accrues from January 1 of the year you turn 18, whatever your birth month. In provinces where the age of majority is 19 you cannot open the account until 19, but the room for the year you were 18 still accumulates.
2. Residency. Room accrues only for years you were a resident of Canada. Years spent abroad add nothing, and contributions made while non-resident are taxed at 1% per month for as long as they stay in the account.
3. Withdrawals. Any amount you withdraw, including growth, is added back to your room on January 1 of the following year. Withdraw $10,000 in March and re-deposit it in June of the same year and you have contributed $10,000 twice against room that was only reduced once.
Worked example
Priya turned 18 in 2016 and has always lived in Canada. Her lifetime room is the 2016 to 2026 limits added together: $5,500 × 3 + $6,000 × 4 + $6,500 + $7,000 × 3 = $68,000. She has contributed $40,000 over the years and withdrew $8,000 in 2025. Her room on January 1, 2026 is $68,000 − $40,000 + $8,000 = $36,000. The $8,000 withdrawal counts because it happened in a prior year.
Show the math
Room at the start of a year = sum of annual limits for every year you were 18 or older and resident, from 2009 onward − all contributions ever made + all withdrawals made in years before the current one. Our TFSA room calculator applies exactly that formula. The CRA figure shown in My Account is authoritative but can lag because financial institutions report transactions only once a year, so it may not include contributions or withdrawals made in the current year.
What the penalty actually costs
Over-contribute and the CRA charges 1% of the highest excess amount in each month the excess remains. A $5,000 excess that sits for six months costs $300, and the charge continues until you withdraw the excess or new room absorbs it on January 1. The tax is reported on form RC243 and must be paid by June 30 of the following year. There is no $2,000 cushion as there is with RRSPs.
Growth and losses never change room
A TFSA that has grown from $50,000 to $80,000 has not used any extra room; a TFSA that fell from $50,000 to $30,000 has not created any. Room is a function of deposits and withdrawals only. That is also why withdrawing gains and recontributing them later is allowed: the withdrawal, gains included, comes back as room next year.
Transfers between institutions
Moving a TFSA from one bank or broker to another is not a withdrawal if it is done as a direct transfer between institutions. Cashing out and re-depositing yourself is a withdrawal followed by a contribution, and the contribution needs room in the current year.
Checking your number
CRA My Account shows your room as of January 1, based on what institutions have reported. Compare it with your own records of this year’s deposits and withdrawals before contributing. If the two disagree, your records win until CRA’s data catches up.
CRA: How to calculate your TFSA contribution roomKey takeaways
- Annual limit for 2026 is $7,000; lifetime room for a full-period participant is $109,000.
- Room needs age 18 and Canadian residency for each year that counts.
- Withdrawals refill room the following January, so avoid withdraw-and-redeposit in the same year.
- Excess is taxed 1% per month, with no cushion. Direct transfers between institutions are not withdrawals.