What even are these accounts: TFSAs

You have probably heard of a TFSA (or maybe some other registered accounts) before and probably got even more confused when you tried to understand what it even meant. Well, I'm here to hopefully help simplify it for you.

TFSA

This stands for Tax Free Savings Account; the main benefit of this account is that any growth on the money within this account is tax free (I know, surprising given it's name). The money you deposit into this account and it's growth can be taken out at any time and for any reason which is a nice piece of added flexibility that makes this account different than the RRSP you may have read about. If you haven't read my blog post on RRSPs please click here.

Since there is a lot of flexibility with this account people will use the money they've put into this account for any variety of things from emergencies to a home purchase, or even retirement. The government sets annual contribution limits for Canadians; please see the below tables for historical contribution limits.

You can also click here to be taken to the governments page to help you calculate your contribution limits (they have a form you can fill out). Alternatively, click here to use my favourite calculator from MoneySense to calculate your contribution limit for the year. Lastly, you can always log in to the MyCRA website here; the government tracks your contributions however they state that it is your responsibility to track your TFSA contributions and ensure you don't over-contribute. If you ever over-contribute to your TFSA you will be required to pay a monthly penalty of 1% of your excess contributions so make sure you track your contributions and if you ever over-contribute withdraw the excess ASAP.

TFSA contribution limits are also cumulative so this means if you don't use all of your contribution space in one calendar year it will be added to your contribution room in the following year. Additionally, if/when you take money out of your TFSA the amount you withdrew will get added to your contribution room in the following calendar year. For example, lets say in 2022 my contribution limit was $10,000 on January 1st, 2022 then during the year I deposited $5,000 (this decreases my contribution space so my new limit is $5,000). Then we add to that the contribution limit for the following year ($6,500) so my contribution limit for the following year will be $11,500. The calculation is as follows:

Take a look at this example of how to calculate your TFSA contribution space:

The information presented above is accurate as of February 2026; for updated rules please click here (CRA's website).