2024 TFSA Limit Increase: Comprehensive Analysis

Updated on February 23, 2024

In the latest update for TFSA limits in 2024, the contribution limit has officially been raised to CAD 7,000 from CAD 6,500 in 2023 and CAD 6,000 in 2022. Following the decision by the Canada Revenue Agency regarding the New Canada TFSA Contribution Limit 2024, individuals who have never contributed and have qualified for TFSA since its launch in 2009 will have a maximum contribution room of CAD 95,000 in 2024.

The yearly TFSA dollar limit is adjusted for inflation, rounded to the nearest CAD 500. In 2024, the CRA will apply an indexation rise of 4.7%, compared to 6.3% in 2023. This increase in 2024 marks the second-largest in TFSA contribution history, excluding the CAD 10,000 one-time increase in contribution space in 2015. Since then, the CAD 5,000 base for TFSA contribution limits has been updated to inflation and rounded to the nearest CAD 500.

2024 TFSA Limit Increase

In 2024, Canadians will see an increase in the tax-free savings account (TFSA) contribution limit, rising to CAD 7,000 according to the latest announcement from the CRA. This marks the first consecutive increase by the Canada Revenue Agency since the inception of TFSA in 2009, surpassing the CAD 6,500 limit set in 2023. The annual cap had been fixed at CAD 6,000 from 2019 to 2022.

Individuals born before 1991 will have a maximum TFSA contribution of CAD 95,000 as of 2024. Contribution limits for TFSAs vary for those born after this date, becoming available to anyone aged 18 or older, with annual increments thereafter. It’s important to note that unused contribution room carries over each year, and individuals can track their TFSA space using their CRA MyAccount.

2024 CRA TFSA Limit Details

YearTFSA Contribution Limit
2024CAD 7,000
2023CAD 6,500
2022CAD 6,000
2021CAD 6,000
2020CAD 6,000
2019CAD 6,000
2018CAD 5,500
2017CAD 5,500
2016CAD 5,500
2015CAD 10,000
2014CAD 5,500
2013CAD 5,500
2012CAD 5,000
2011CAD 5,000
2010CAD 5,000
2009CAD 5,000
TotalCAD 95,000

 

Name of BenefitTax-Free Savings Account
Name of OrganizationCanada Revenue Agency
Name of CountryCanada
CategoryFinance News
TFSA Limit Increased 2024CAD 7,000
Official Websitecanada.ca

 

Understanding Tax-Free Savings Accounts (TFSA)

Canadian residents, aged 18 and above, with a valid Social Insurance Number (SIN), can open a Tax-Free Savings Account (TFSA). Introduced in 2009, TFSAs provide instant accessibility for all adults. It functions as a savings account where contributions to various eligible assets can be made, and withdrawals can be done without incurring taxes on any income generated, including dividends, interest, capital gains, and other profits.

Qualified residents are allowed a specific annual contribution to their TFSA. The government adjusts the maximum amount based on the consumer price index, rounding up to the nearest CAD 500 as needed. Unlike an RRSP, the contribution amount is not tax-deductible.

2024 TFSA Contribution Limit Boosted

The Canadian government adjusts the Tax-Free Savings Account (TFSA) contribution limits based on the consumer price index. In 2019, the annual cap increased to CAD 6,000, with an additional CAD 500. It remained at CAD 6,000 until 2023, when it was raised to CAD 6,500. This year, the TFSA contribution limit has increased again to CAD 7,000 in 2024. Despite a higher actual inflation rate in 2022, the indexed contribution for 2023 is CAD 6,500, considering a 6.3% inflation factor. If the 2024 indexed inflation adjustment is at least 3.86%, the TFSA contribution limit will rise to CAD 7,000 in 2024.

Advantages of TFSA Usage

Owning a Tax-Free Savings Account (TFSA) is a smart move. It’s an investment account filled with stocks, bonds, ETFs, or cash savings. When you take money out, there are no restrictions or taxes on withdrawals. The profits your TFSA makes are truly tax-free, as the money you put in has already been taxed.

This presents an excellent opportunity. Compared to investing in a taxable account, contributing to a tax-sheltered account like a TFSA can significantly boost your wealth over time. The absence of taxes on gains or withdrawals is undeniably one of the key advantages of using TFSAs, enhancing the value of your money.

Evolution of TFSA Contribution Limits

In 2024, the TFSA Contribution Limit is set to increase to CAD 7,000, as announced by the federal government. This marks a CAD 500 boost from the annual TFSA limit in 2023. The news of a maximum lifetime TFSA contribution of CAD 95,000 starting January 1, 2024, is particularly exciting for Canadian investors and savers. It’s important to note that the CAD 95,000 maximum lifetime TFSA limit applies specifically to those who turned 18 by December 31, 2009. For individuals born after 1991, your lifetime TFSA contribution cap begins in the year you turn 18.

 

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