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Daily Banking

How does TFSA contribution room work?

February 9, 2024
min read

In 2024, the TFSA contribution limit increased for the second year in a row. Here’s how to make the most out of the new dollar limit!

Man looks at finance statements and laptop

Your tax-free savings account (TFSA) offers a flexible way to save up for short and long-term financial goals, from a down payment on your first home to your retirement.

How you choose to use your TFSA is entirely up to you. But to make the most of this tax-efficient savings tool, it helps to know a bit more about how it works.

If you need a quick refresher, here’s what a TFSA offers:

  • It’s flexible. You can use the money in your TFSA to cover any expense or purchase you’d like, from a car to a down payment.
  • You don’t pay taxes on withdrawals. Whenever you take money out of your TFSA, you won’t pay any taxes on it. That’s because you only put after-tax dollars into it!
  • Investments grow tax-free. If you hold investments in your TFSA that grow in value, those gains will not be treated as taxable income.
  • Your contribution room isn’t tied to your income. It’s the same for everyone!
  • No tax break for contributions. Unlike an RRSP, you don’t get a tax credit for putting money in a TFSA.

But how do TFSA contribution limits work exactly? To answer that, let’s dive into how you can use your TFSA to your advantage in 2024:

The new TFSA contribution limit

There’s a limit to how much money you can keep in your TFSA. But how can you determine what that limit is? It depends on a few factors:

In 2024, the TFSA contribution limit increased to $7,000.  

You start accruing TFSA contribution room the year you turn 18 – even if you haven’t opened your account yet!

However, if you were 18 or older in 2009, you started accumulating room that year.

Each year following your 18th birthday, the total amount you can contribute to your TFSA increases. View the full table of TFSA dollar limits since the account was launched in 2009.

Example: If you turned 18 in 2016, you’d have $54,000 of TFSA contribution room in 2024 (assuming you hadn’t made any contributions yet).

When does TFSA contribution room reset?

When you make a TFSA withdrawal, your contribution room is re-instated the following year.

In the new calendar year, you’ll be able to contribute using the room you’d previously used up.

You make a withdrawal of $5,000 from your TFSA on July 20, 2023.

On January 1, 2024, you’d get back the $5,000 of contribution room from the previous year, along with the new dollar limit of $7,000 for 2024.

Now, you can add another $12,000 to your TFSA (in addition to any unused contribution room from previous years).

You can open multiple TFSAs at different financial institutions - just keep in mind that your cumulative dollar limit stays the same. You’ll need to keep track of it to ensure you don’t over-contribute.

Does unused TFSA contribution room carry forward?

Yes! Your total contribution room will include any unused amounts from previous years.


Exceeding the dollar limit of your TFSA has a costly penalty. The CRA will charge 1% per month on the excess amount.

Wondering how to find out your TFSA contribution room? You can:

  • Contact the CRA directly by visiting their website or calling 1-800-959-8281, and finding out your current TFSA room
  • Contact the financial institution you opened your TFSA with
  • Check your annual tax return

We can help you start saving with your TFSA today!

Still have questions about TFSAs? You can book a meeting with a Cambrian Advisor to talk about your options. We’ll help you understand the different investments you can hold in your TFSA, so you can reach your financial goals!

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