Contributions

• You can only contribute to your own TFSA

• Contribution limit is not tied to income

Don’t overdo it. Take care not to invest beyond your own contribution limit. For each month that an over-contribution remains in your TFSA, Canada Revenue Agency (CRA) will charge a penalty tax of 1% per month on the excess amount. Just be sure that you don’t contribute more than your yearly limit allows.

Unused Contribution Room

• If you don’t maximize your contribution in a given year, the remaining ‘contribution room’ accumulates and can be used in future years

• CRA will confirm your contribution room on your Notice of Assessment

• Unused contribution room is carried forward, so you can ‘catch-up’ in future years

• You can take money out of your TFSA. The withdrawal will increase your contribution room for the following year

Example: This year, Sarah invests $5,000 in a TFSA. Later that year, she withdraws $3,000 for a vacation, but her plans change and she is not able to go. Since Sarah has no unused TFSA contribution room left, she will have to wait until the next year to deposit the $3,000 back into her TFSA.