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Investing in a Tax-Free Savings Account (TFSA) is a part of any healthy financial routine. Like paying down consumer debt, and checking your credit score for free. However, it’s important that you understand the TFSA contribution limit in 2024 to make sure you don’t over-contribute.

If you’ve been withdrawing and investing in your TFSA without tracking your limit, you could be penalized if there are excess contributions. 

So, what is the TFSA contribution limit for 2024? Let’s dive in to find out more about this year’s cap on TFSA contributions to help you make the most of your account and avoid possible penalties.

What Is The TFSA Contribution Limit For 2024?

There’s a limit to how much you can contribute to your TFSA every year. This is known as your ‘contribution room’. The Canada Revenue Agency (CRA) establishes the TFSA contribution limit each year, and for 2024, the limit is $7,000. That’s $500 more than it was last year when the yearly TFSA dollar limit was $6,500.

If you’ve maxed out on your contributions each year up until now, $7,000 is the most you can contribute for 2024. But if you’ve never contributed to your TFSA before and were 18 and older in 2009, you can contribute a cumulative amount of up to $95,000.

When Can You Start Contributing To A TFSA?

Your TFSA contribution room starts the year you turn 18 and increases every year, even if you do not file your income taxes. Any investment earnings from your TFSA investments won’t impact your TFSA contribution room for this year or future years. If you don’t contribute to your TFSA this year, the unused contribution room will roll over into the next year.

If you contribute more than what’s available in your TFSA contribution room, you’ll be taxed accordingly.

How Do You Know What Your TFSA Contribution Limit For 2024 Is?

The CRA keeps tabs on your TFSA contribution room. You can find out what your TFSA balance is for the current year in one of two ways:

Find Out Your TFSA Contribution Limit For 2024 Online

Login to “My Account” on the CRA website, then visit the Overview page. Scroll down to ‘Savings and pension plans’ and find the “2024 TFSA contribution room as of January 1, 2024,” which represents the most up-to-date calculation of your contribution room since the beginning of the year.

Find Out Your TFSA Contribution Limit For 2023 Online By Telephone

Call CRA’s Tax Information Phone Service line at 1-800-267-6999. 

It’s best to wait until February to check your TFSA contribution room to give your bank time to report all your TFSA transactions from last year and previous years.

How To Calculate Your TFSA Contribution Limit If You’ve Never Contributed Before

As mentioned, your TFSA contribution room starts accumulating when you turn 18. To calculate your TFSA contribution limit for 2024, you’ll first need to know what the contribution limits were for each year since 2009 (when the program first started):

YearTFSA Contribution Limit
2024$7,000
2023$6,500
2022$6,000
2021$6,000
2020$6,000
2019$6,000
2018$5,500
2017$5,500
2016$5,500
2015$10,000
2014$5,500
2013$5,500
2012$5,000
2011$5,000
2010$5,000
2009$5,000

Based on this chart, add the maximum contributions from the year you turned 18 to today. For instance, if you turned 18 years old in 2019, you would add up all the maximum contributions from 2019 to 2024, as follows:

$7,000 (2024) + $6,500 (2023) + $6,000 (2022) + $6,000 (2021) + $6,000 (2020) + $6,000 (2019)= $37,500

Then, add up all previous years’ contributions you made and subtract that sum from $37,500. For instance, if you contributed $10,000 over these years, you would subtract $10,000 from $37,500 to arrive at $27,500. This is your current maximum TFSA contribution for 2024.

If you’ve never contributed before, your contribution limit is $95,000.

You’ll also need to factor in any withdrawals from your TFSA over the years. In this case, you would need to include that amount in your calculations.

How Do Withdrawals Affect Your TFSA Contribution Limit For 2024?

Generally speaking, you can withdraw any amount from your Tax-Free Savings Account anytime you want. This won’t affect your contribution limit for this year. 

Whatever amount you withdraw from your TFSA will be added to your contribution limit on January 1st of the following year.

TFSA Contribution Limit Example

In 2023, when the TFSA contribution limit was $6,500, you contributed $3,500, but you also withdrew $2,000. That means you have an unused TFSA contribution room of $5,000 ($6,500 – $3,500 + $2,000), as illustrated below:

  • 2023 TFSA dollar limit = $6,500
  • 2023 contributions = $3,500
  • 2023 withdrawals = $2,000
  • Unused TFSA contribution room = $5,000

Withdrawals will give you more contribution room in the following year, not the current year. For instance, if you contributed the maximum amount to your TFSA every year and withdrew $2,000 in 2023, this would open up extra contribution room in 2024. 

How Re-Contributing Withdrawn Funds Affects Your Contribution Room

If you choose to re-contribute your withdrawals back to your TFSA in the same year, you’ll only be able to do so if there is any TFSA contribution room available. If you don’t have any room, you’ll be considered to have over-contributed to your TFSA that year. In this case, you’ll be taxed 1% of the highest excess amount in the month, for every month the excess amount remains in your account. 

For instance, let’s say you opened a TFSA account the first year the program started in 2009. Since then, you’ve contributed the maximum amount every year, leaving you with no contribution room left. At some point in 2024, you make a $7,000 contribution, which is the limit for 2024. Then, you withdraw $4,000.

If you want to re-contribute the $4,000 that you withdrew, you’ll need to wait until 2025, or else you’ll have over-contributed and will be taxed accordingly.

Can I Switch My RRSP Contributions To My TFSA Without Affecting My TFSA Contribution Limit?

There’s no direct way to transfer money or securities in-kind from an RRSP to a TFSA. Instead, you would need to withdraw the funds from your RRSP, and then contribute them to your TFSA. 

Before you do, ensure you have enough contribution room in your TFSA. Keep in mind that you’ll have to pay applicable withholding tax when you withdraw from your RRSP. You’ll also need to include your RRSP withdrawal in your income for that year when you file your taxes. However, you may be able to withdraw funds from your RRSP and re-contribute them to your TFSA without having to pay taxes if your taxable income is low. 

You can claim the taxes charged on line 43700 of your income tax return. If no tax is owed, any taxes withheld will be refunded when you file your income tax return.

What Happens If You Go Over The TFSA Contribution Limit In 2024?

Keeping track of your TFSA contributions will not only help you maximize your tax savings, but it will also help you avoid over-contributing. Once you go over your contribution limit, you’ll face tax consequences. 

The CRA will charge 1% per month on the over-contribution amount until it’s withdrawn. For instance, let’s say you over-contributed $1,500. In this case, you’ll be charged $15 a month until the excess amount is removed. 

Generally, before charging the 1% penalty, the CRA typically sends out notifications for when you first over-contribute. If you take the excess amount out of your TFSA immediately after, you may not be penalized. But if you leave the money in your account, the 1% charge per month will take effect. 

What Happens If You Can’t Afford To Pay Your TFSA Over-Contribution Penalty? 

Depending on how long and how much you over-contributed to your TFSA, the penalty can be hefty. In some cases, the CRA may be able to arrange a payment plan for you to repay them. however, you may not qualify for this if you’re unable to show you require financial assistance. 

In such circumstances, a personal loan may be a better option. With it, you can take out a small loan to help cover the costs over a few months to years. 

Final Thoughts

Contributing to a TFSA is a great way to shield your earnings from taxation. Whatever you earn in the account is yours to keep, whether dividends, interest, or capital gains. Plus, there are no penalties when you withdraw. But before you make annual contributions, you should understand what the TFSA contribution limit for 2024 is to avoid getting penalized for over-contributing.

TFSA Contribution Limits 2024 FAQs

What is the maximum TFSA contribution limit in 2024?

The maximum amount you can contribute to your TFSA for 2023 is $7,000. However, you may be able to contribute much more if you haven’t maxed out on contributions in the years prior. And if you’ve never contributed before, you may be able to contribute up to $95,000.

Does interest affect my contribution room?

Any changes to the value of your TFSA investment from income earned in interest will have no effect on your contribution room for 2024 or future years.

Can I make contributions to my spouse’s TFSA?

No, you cannot make contributions to your spouse’s TFSA. Instead, you can give your spouse money so they can make contributions to their TFSA on their own.

Is any contribution room lost by withdrawing money from my TFSA?

No, you won’t lose your contribution room if you withdraw money from your TFSA. Since your contribution room is carried forward, you can re-contribute money taken out of your TFSA the next year or in future years.

When can I withdraw funds from my TFSA?

You can withdraw money from your TFSA whenever you want without penalty. Any withdrawals you make will be added back to your contribution room the next year.
Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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