Key Takeaways
- Your TFSA room is the current year's dollar limit ($7,000 for 2026), plus every year of unused room since you turned 18, plus last year's withdrawals — someone eligible since 2009
- A withdrawal is only added back to your room on January 1 of the following year — putting it back in the same year is the most common way Canadians over-contribute.
- Over-contributing costs 1% per month on the highest excess amount, and the room figure in CRA My Account can be months out of date — CRA itself tells you to trust your own records.
Your TFSA room is a running total, not a yearly allowance
Ask ten Canadians how much they can put in a TFSA and most will quote one number — this year's dollar limit. That number is real, but it is only one of three parts. Your actual contribution room is a running total that has been building, in most cases, since you turned 18.
Here is the formula the CRA uses, in plain language:
Your room = this year's dollar limit + all your unused room from previous years + the withdrawals you made last year − what you have already contributed this year.
Room starts accumulating in the year you turn 18, as long as you are a resident of Canada with a valid social insurance number — whether or not you have ever opened a TFSA. The account itself launched in 2009, so nobody has room from before then.
The dollar limit, year by year
The annual amount the federal government adds has changed over time:
- 2009–2012: $5,000 a year
- 2013–2014: $5,500
- 2015: $10,000 (a one-year spike)
- 2016–2018: $5,500
- 2019–2022: $6,000
- 2023: $6,500
- 2024: $7,000
- 2025: $7,000
- 2026: $7,000
That history produces a number worth knowing. If you were 18 or older and living in Canada in 2009, and you have never contributed a dollar, your accumulated room reached $102,000 on January 1, 2025 — and $109,000 on January 1, 2026. Turned 18 later? Your total is smaller: add up only the limits for the years from the year you turned 18 onward.
The withdrawal trap — the one rule that catches everyone
Withdrawals are the part people get wrong. Money you take out of a TFSA does come back as contribution room — but not until January 1 of the following year. The CRA's own guidance is blunt: do not replace a withdrawal in the same year.
A concrete example: you have used all your room, then withdraw $10,000 in March 2026 for a car. Your room for the rest of 2026 is still zero. That $10,000 only reappears on January 1, 2027. If you re-deposit it in June 2026 because "the room came back," you have just over-contributed — even though the money was yours and the account balance looks identical.
Two quieter rules sit beside it. Investment gains inside the TFSA never add room, and investment losses never subtract it — if your $7,000 grows to $9,000 and you withdraw it all, you get the full $9,000 back as room next year; if it falls to $5,000, only $5,000 comes back. And contributions reduce your room the moment they land; nothing about the calendar resets them.
What over-contributing actually costs
Put in more than your room and the CRA taxes the excess at 1% per month, calculated on the highest excess amount in your account for each month it remains there. A $5,000 excess left for six months is a $300 tax — before the CRA's letter arrives.
The fix is to withdraw the excess as soon as you discover it, and to file Form RC243 (with Schedule A) by June 30 of the following year. The CRA can waive the tax where the excess came from a reasonable error and you withdrew it without delay — but the waiver is a request, not a right. We walk through the penalty math and the waiver in our companion piece on the TFSA over-contribution penalty.
Why the number in CRA My Account can mislead you
Here is the part the CRA itself warns about: do not treat the contribution room shown in your CRA account as current. Financial institutions only report TFSA transactions to the CRA once a year, by the end of February of the following year, and the CRA updates its figures in the spring. The CRA's own worked example shows a taxpayer creating a $4,000 excess by trusting the room displayed in her account.
Its advice, in its own words, is to use your own financial records — not the information in your CRA account. Add up every contribution you have ever made, subtract nothing for withdrawals until January 1 of the year after each one, and compare against the total room you have accumulated since age 18. If you are deciding between accounts, our RRSP vs TFSA comparison shows where the tax surprise usually hides.
Two final traps. Giving money to your spouse to contribute to their TFSA is fine — attribution does not apply — but it uses their room, never yours, and a TFSA can only ever have one holder. And running what amounts to a business inside a TFSA — aggressive day trading is the classic case — can make the account taxable on that business income. There is no published "safe" number of trades.
The Twikup Take
A TFSA is not complicated; its room is just bookkeeping with a one-year delay built into withdrawals. Keep your own ledger — date, amount, which year each withdrawal returns — and the account does exactly what it promises. Trust the number on a website that updates once a year, and the 1%-a-month lesson tends to teach itself.
Image: Illustrative image.