FILE 210 / DOSSIER C · SAVINGS
/ 5 MIN READ
How TFSA room adds up, and what an over-contribution costs
Someone who has been eligible since 2009 has $109,000 of cumulative TFSA room in 2026. Withdrawals come back, but not until January, and putting money back too early costs 1% of the excess for every month it stays.
The most common way people break the TFSA rules is not by contributing too much new money. It is by taking money out in spring and putting it back in autumn, in the belief that room they already used is still there. It is, eventually. Just not until January.
The Tax-Free Savings Account is simple to use and easy to misread. Here is how the room is built, how much it adds up to in 2026, and what the CRA charges when contributions get ahead of it.
The withdrawal that came back too early
Money in a TFSA grows without tax, and withdrawals are not taxed. Because withdrawals give back contribution room, people sometimes treat a TFSA like a bank account: out when needed, back in when convenient. The rule that trips them up is timing. Room from a withdrawal is restored on January 1 of the following year, not on the day of the withdrawal.
How room is calculated
The CRA describes your available contribution room as the sum of:
Anyone who has a valid Social Insurance Number and is 18 or older can open a TFSA. Room starts in the year you turn 18, or in 2009 for people who were already adults then, and accumulates for each year you are a resident of Canada, whether or not you open an account.
The yearly limits since 2009
The CRA has set these annual dollar limits. The 2026 limit is $7,000.
| Years | Limit each year | Subtotal |
|---|---|---|
| 2009 to 2012 | $5,000 | $20,000 |
| 2013 and 2014 | $5,500 | $11,000 |
| 2015 | $10,000 | $10,000 |
| 2016 to 2018 | $5,500 | $16,500 |
| 2019 to 2022 | $6,000 | $24,000 |
| 2023 | $6,500 | $6,500 |
| 2024 to 2026 | $7,000 | $21,000 |
| Total, eligible every year since 2009 | $109,000 |
A person who turned 18 in 2009 or earlier, has lived in Canada throughout and has never contributed has $109,000 of room in 2026. Someone who turned 18 in 2020 has the limits from 2020 onwards: $6,000 × 3 + $6,500 + $7,000 × 3 = $45,500.
The limit for future years is not fixed in advance. The CRA’s TFSA guide explains that the annual limit is indexed to inflation and rounded to the nearest $500, which is why it moves in uneven steps: it stayed at $7,000 from 2024 to 2026 and will only rise when indexation adds up to the next $500.
Withdrawals return on January 1
The CRA’s wording is direct: if you withdraw, you will regain the same amount as new contribution room on January 1 of the following year. A withdrawal in March 2026 does not create room until January 1, 2027. If you have no unused room, putting the money back before then is an over-contribution, even though the account balance is no higher than it was.
Transfers directly between your own TFSAs at different institutions are different: done as a direct transfer, they are not treated as a withdrawal and a new contribution. Withdrawing and re-depositing yourself is.
What an over-contribution costs
Any excess TFSA amount is taxed at 1% per month for as long as it stays in the account. According to the CRA’s TFSA guide, the tax is 1% of the highest excess amount in each month, so removing it partway through a month does not avoid that month’s charge. Anyone who owes the tax must file a TFSA Return, Form RC243, by June 30 of the following year.
Two over-contributions, worked through
| What happened | Excess | Months it stays | Tax at 1% a month |
|---|---|---|---|
| $10,000 withdrawn in March, put back in August; room returns January 1, 2027 | $10,000 | 5 (Aug–Dec) | $500.00 |
| $2,000 contributed in February by mistake, noticed only at year-end | $2,000 | 11 (Feb–Dec) | $220.00 |
In the first case, the person did nothing more than move their own money out and back. Had they waited until January 2027, there would have been no tax at all.
Fixing it, and asking for relief
The first step is to withdraw the excess as soon as you find it; the monthly charge continues until you do, or until new room arrives on January 1. The CRA can waive or cancel all or part of the tax if it decides it is fair to do so, considering factors such as whether the tax arose because of a reasonable error and the extent to which payments were made from the TFSA. The request is a letter explaining what happened, which can be sent through My Account.
Why the CRA figure can lag
The CRA calculates room from information that issuers send after year-end, so the room shown in My Account early in the year may not include recent transactions. The CRA itself advises checking your own records against your financial institutions’ to avoid over-contributing. If you have accounts at several institutions, only you see the whole picture.
What to check
- Add up this year’s contributions across every TFSA you hold.
- Note any withdrawals this year; they only count as room from next January 1.
- Compare with the room shown in My Account, allowing for recent transactions.
- If you hold an FHSA as well, remember its limits are separate, as our FHSA file explains.
TFSA income does not appear on the return, which is also why it does not affect income-tested amounts such as the grocery and essentials benefit.
- Canada Revenue Agency — Calculate your TFSA contribution room — the room formula, the $7,000 limit for 2026 and withdrawals restored on January 1.
- Canada Revenue Agency — If you contribute more than your room — the 1% per month tax and the TFSA Return.
- Canada Revenue Agency — TFSA Guide for Individuals (RC4466) — annual limits since 2009, the highest-excess rule, RC243 due date and waiver requests.
No Planet Be Summit is private sponsored information published by FinanceAdvice OÜ. It is not the Canada Revenue Agency or the Government of Canada, and it is not affiliated with, endorsed by or acting for the CRA, the Department of Finance Canada or any provincial or territorial government. This file is general information, not financial, tax or legal advice, and every figure in it is either quoted from the official source named or a clearly labelled illustration; none is a promise, assessment or entitlement for any reader. Rules and amounts change and depend on personal circumstances. This site processes no applications and charges no fees. Never give your Social Insurance Number, banking details or CRA My Account credentials to a website in response to an article. For your own tax return, benefits or account, use the CRA’s My Account or contact the Canada Revenue Agency.
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