TFSA Contribution Limit for 2022
What is a Tax-Free Savings Account (TFSA)?
The Tax Free Savings Account (TFSA) is an investment program for individuals to set aside tax-free money over their lifetime. Individuals must be 18 years of age or older and have a valid Social Insurance Number (SIN).
TFSA contributions are not income tax deductible. Money contributed along with any income earned in the TFSA account is generally tax-free, even when it is withdrawn. Qualified investments include cash, guaranteed investment certificates (GIC), government and corporate bonds, mutual funds, and securities listed on a designated stock exchange. Qualifying investments for a TFSA are similar to those that qualify for an registered retirement savings plan (RRSP).
Fees in a TFSA (administrative or other) and any interest on borrowed money for a contribution to a TFSA are not tax-deductible as the money you invest has already been taxed. You do not need to have earned income to contribute to a TFSA.
Table of Contents
When Is the TFSA Contribution Deadline for the Year 2022?
There are no deadlines. If you don’t contribute, the contribution room will be carried to future years.
How is the Limit Determined?
A specific maximum amount can be put into a TFSA account each year. The maximum amount that you can contribute to your TFSA is limited by your TFSA contribution room. Changes in the value of your TFSA and investment income earned will not affect your TFSA contribution room for current or future years.
If you were 18 or older in 2009, your TFSA contribution room grows each year even if you do not file an income tax and benefit return or open a TFSA. If you turned 18 after 2009, your TFSA contribution room starts in the year you turned 18 and your TFSA contribution room accumulates every year after that year.
Annual TFSA Dollar Limit
The annual TFSA dollar limit for each of the years from 2009 to 2023 are:
| 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 |
What is my TFSA Lifetime Limit
The maximum overall money you can deposit in your TFSA is cumulative. If you are contributing in 2023 for the first time, to catch up, you are eligible to deposit $88,000 in total contributions, provided you were over 18 years of age since 2009 and have a valid SIN (social insurance number). Unused TFSA contribution room rolls over from one year into the following year.
What if You Contribute More Than Your TFSA Room?
Generally, you have to pay a tax of 1 percent per month on your contributions that exceed your TFSA deduction limit by more than $2,000. Your excess contributions must be reported to the Canada Revenue Agency (CRA) within 90 days after the last day of the tax year when you over-contributed. Reports filed after that deadline may be subject to an additional penalty equal to 5 percent of the taxes you owe plus an extra 1 percent for every month, to a maximum of 12 months.
Common Issue – Withdrawing from TFSA account
You can withdraw funds from TFSA any time you want, but one thing that you need to be mindful of is when you “redeposit the funds”. You cannot redeposit it back in the same year, as CRA wants to discourage individuals to use TFSA like a chequing account. Once you withdraw the funds, the “contribution room” will not be available until NEXT year. For example, in March 2022, Jenny used up her TFSA contribution room available. If she withdraws $5,000 in July 2022, she cannot deposit the funds back in October 2022. She needs to wait until January 1 2023. Otherwise, there will be penalties and interest on the overcontribution.
YOU MAY ALSO ENJOY THESE ARTICLES
Tax Deadline 2024: All Tax Filing Due Dates
When Do I Need to File My Taxes? A Complete Guide to 2024 Tax Deadlines The tax due dates always seem to be just around the corner, but don’t let them sneak up and catch you off guard. Keeping track of these deadlines allows for a smooth filing process and helps you avoid costly penalties
The Importance of Bookkeeping and the Danger of Not Doing It
Why Do You Need A Bookkeeper? Whether you’re an established business or just starting up, you most likely have an endless to-do list. As a result, bookkeeping is probably the last thing on your mind. It’s common for small business owners to neglect their bookkeeping function until tax time rolls around, but is this really
What Do Bookkeepers Do
Why Do You Need A Bookkeeper? If you’re a first-time entrepreneur, there are probably a few questions that keep you up at night: “Do investors expect me to wear a tie to meetings?”, “Are standing desks really worth it?”, and “Will anyone mind if I take a client call in this Chipotle?”. While knowing whether