New Annual Contribution Limit for TFSAs (Canada)

Starting 2013, an additional $500 will be added to tax free savings accounts bringing the yearly limit to $5,500.

Read the announcement on the Department of Finance Canada website or visit the CRA for details.

The Ministers highlighted key features of the TFSA that make it a popular savings vehicle for Canadians:

  • A TFSA is available to all Canadians, 18 years and older;
  • Any interest, dividends and capital gains earned in a TFSA are not subject to tax;
  • A TFSA allows you to invest in a number of types of investments, be it a high-interest savings account, mutual funds, guaranteed investment certificates, listed securities, or other types of qualified investment products;
  • Unused TFSA contribution room is carried forward and accumulates for future years;
  • Funds available in your TFSA can be withdrawn tax-free at any time for any purpose. You can re-contribute withdrawn amounts in the same year only if you have unused TFSA contribution room. Otherwise, you have to wait until the following year;
  • Income earned in a TFSA and withdrawals do not affect your eligibility for federal income-tested benefits and credits; and
  • Contributions to a spouse’s or common-law partner’s TFSA are allowed.