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TFSA Rules and Contribution Limits

No matter what you’re saving for, you may be able to get there faster with an RBC Tax-Free Savings Account (TFSA), a flexible registered investment account you can use to save for any big-ticket item or goal.
Below, we’ve rounded up the rules, contribution limits and other information you should know in one handy spot.*

TFSA Basics

How it works, who can open one and the investments you can hold.

TFSAs are designed to help you save for both short-term goals like a new car or a home—and long-term goals, such as retirement.

  • As you contribute to your plan, your earnings grow on a tax free basis. You have the freedom to take money out for any reason—and you won’t have to pay taxes on the withdrawals.

Most Canadians can open a TFSA. To open a TFSA, you need to be:

  • A Canadian resident with a Social Insurance Number (SIN)
  • 18 years of age (or the age of majority in your province of residence)

Unlike a traditional savings account that only holds cash, a TFSA lets you hold a diverse number of investments2Legal. When you open a TFSA at RBC, you can invest in:

TFSAs and RRSPs differ a few ways—just keep in mind you can have both1Legal:

  • TFSA investment earnings are tax-free; RRSP investment earnings are tax-deferred.
  • You can withdraw money from your TFSA at any time (depending on what you invested in) without paying tax. Any funds you withdraw from your RRSP are added to your taxable income for the year of the withdrawal.
  • You have to be at least 18 years of age (or the age of majority in your province) to be eligible for a TFSA; there is no set minimum age for an RRSP.
  • Unlike an RRSP where contributions are not permitted after Dec 31 of the year you turn 71, you can keep contributing to a TFSA past age 71.
  • TFSAs don’t require you to have earned income to be eligible to contribute; RRSPs do.

See how they stack up.

Types of TFSAs

Plan types and your options at RBC.

In general, there are two types of TFSAs:

  • Individual TFSA: A plan opened by an individual.
  • Group TFSA (GTFSA): A collection of individual TFSAs administered by an organization for its employees, who contribute directly from their payroll using pre-tax dollars.

You have several TFSA options at RBC:

  • An TFSA with access to advice from an RBC Advisor
  • A self-directed TFSA you can trade in at RBC Direct Investing
  • An TFSA where the pros manage your investments for you at RBC InvestEase

We also offer Group TFSAs for businesses.

TFSA Contributions and Withdrawals

Contribution limit, carry-forwards and taking money out.

While the contribution limit for 2023 is $6,500, you can also make up any unused contribution room from previous years. (more on that below). This limit is set by Canada Revenue Agency (CRA) and can change from year to year.

You can add money in small amounts throughout the year or make a big contribution all at once. Try the TFSA calculator to see the benefits of regular, automatic contributions.

The best way to know how much you can contribute for the current year is to check your most recent Notice of Assessment from the CRA. Fortunately, TFSA contribution room is cumulative, which means any unused room from previous years is added to your current room—also known as your carry-forward amount. Also, if you withdraw money, those amounts are added to your contribution room the following year.

Important Information

TFSA contribution room starts adding up when you turn 18, no matter when you open your account. If you were 18 or older in 2009, your contribution room has accumulated every year since then.

Year Contribution Limit Per Year
2009 - 2012 $5,000
2013 - 2014 $5,500
2015 $10,000
2016 - 2018 $5,500
2019 - 2022 $6,000
2023 $6,500

The CRA charges a penalty tax of 1% per month on excess contributions until it’s withdrawn.

Keep in mind: if you withdraw and recontribute to a TFSA in the same year, it could result in an over-contribution status.

Here’s another great thing about TFSAs—you can withdraw your money at any time, for any reason without tax consequences. Just keep in mind that the timing of your withdrawal may depend on what you invested in—for example, non-redeemable GICs must be held until maturity.

Important Information

Any withdrawal is added back to your TFSA contribution room the following year.

TFSA Taxes, Government Benefits and More

How TFSAs are taxed, effect on income-based benefits/credits and fees.

One of the most notable features of a TFSA is its tax benefits. Here’s a quick look at how each of the following is taxed:

  • Contributions: Unlike RRSPs, TFSA contributions can’t be deducted on your tax return.
  • Investment growth: Investment income and capital gains within a TFSA are not taxed, giving your money the opportunity to grow faster.
  • Withdrawals: They’re not taxed and don’t count as taxable income.

Note: Since the earnings in your TFSA are tax-free, it also means that you can’t use any capital losses in your account against taxable gains outside your account.

You can transfer TFSAs between financial institutions as much as you want without being taxed, but there may be transfer out or other fees.

Important Information

There’s no limit on how many TFSAs you can have—but the total contribution room of all your accounts combined is the same as if you only had one.

Another great feature of a TFSA is that it won’t affect your eligibility for income-based government benefits or credits, like the Canada Child Tax Benefit, the Working Income Tax Benefit, the Guaranteed Income Supplement, Old Age Security (OAS) or the Goods and Services Tax (GST) credit.

At RBC, we don’t charge any account-related fees for TFSAs, with one exception—there’s a service fee if you transfer your TFSA outside of RBC. The fee is $50 at RBC Royal Bank, $135 at RBC InvestEase and $150 at RBC Direct Investing. The fee could change, but we’ll let you know at least 30 days before the changes go into effect.

Invest in a TFSA Today

Choose how you’d like to invest in a TFSA from the following options:

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Royal Bank of Canada and Royal Mutual Funds Inc. (RMFI) make no warranties, express or implied, as to the accuracy or completeness of the information contained herein.

Royal Bank of Canada and RMFI shall not be liable for any losses or damages arising from any errors or omissions in information contained in this calculator.

Financial planning and investment advice are provided by RMFI. RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.

RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned subsidiary of Royal Bank of Canada and is a Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. Royal Bank of Canada and certain of its issuers are related to RBC Direct Investing Inc. RBC Direct Investing Inc. does not provide investment advice or recommendations regarding the purchase or sale of any securities. Investors are responsible for their own investment decisions. RBC Direct Investing is a business name used by RBC Direct Investing Inc.

RBC InvestEase is a restricted portfolio manager providing access to model portfolios consisting of RBC iShares ETFs with each model portfolio holding up to 100% of RBC iShares ETFs. RBC iShares ETFs are comprised of RBC ETFs managed by RBC Global Asset Management Inc. (RBC GAM) and iShares ETFs managed by BlackRock Canada Limited (BlackRock Canada). RBC GAM and BlackRock Canada have entered into a strategic alliance to bring together their respective ETF products under the RBC iShares brand, and to offer a unified distribution support and service model for RBC iShares ETFs.

Other products and services may be offered by one or more separate corporate entities that are affiliated to RBC InvestEase Inc., including without limitation: Royal Bank of Canada, RBC Direct Investing Inc., RBC Dominion Securities Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company. RBC InvestEase Inc. is a wholly-owned subsidiary of Royal Bank of Canada and uses the business name RBC InvestEase.

The services provided by RBC InvestEase are only available in Canada.

Information about the TFSA is based on what is currently available from the Canadian government and can be subject to change.
Subject to meeting the eligibility requirements of both accounts.
Assets in a TFSA must be Qualified Investments under the Income Tax Act. If the TFSA holds non-Qualified Investments, it could be subject to tax.
Real-time streaming quotes are available automatically to all clients for exchange listed equities, ETFs and most over-the-counter (OTC) securities. Real-time streaming quotes for options and grey market OTC securities are available to Active Traders and Royal Circle clients upon accepting the terms and conditions of all exchange agreements on the RBC Direct Investing online investing site.