Inflation can actually be a benefit to us in some cases. Take the TFSA contribution limit for example. It is going up in 2024. The TFSA annual contribution limit is going up to $7,000 in 2024, which is up from $6,500 in 2023.
The increase is the first time that the TFSA annual contribution limit will rise in consecutive years. In the current year (2023) the amount increased from $6,000 per year in 2022.
In the coming weeks, the Canada Revenue Agency will make it official when they announce the 2023 indexation. The indexation rate also applies to tax brackets, which will be announced at the same time.
As a quick refresher, although contributions to a TFSA are not tax deductible – as they are with RRSPs – withdrawals of contributions and growth from the account are tax-free (very much unlike RRSPs).
Here are the TFSA dollar limits by year:
| 2024 | $7,000 |
| 2023 | $6,500 |
| 2019-2022 | $6,000 |
| 2016-2018 | $5,500 |
| 2015 | $10,000 |
| 2013-2014 | $5,500 |
| 2009-2012 | $5,000 |
That means the total contribution room available in 2024 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009 is set to be $95,000, up from $88,000 this year.
For someone who turned 18 after 2009, TFSA contribution room starts accumulating in the year they turned 18. For example, someone who turned 18 in 2022 and who has never contributed to a TFSA has $12,500 in TFSA contribution room this year ($6,000+$6,500). If that person doesn’t contribute to a TFSA in 2023, they will have $19,500 in TFSA contribution room in 2024 ($12,500+$7,000).
I am still surprised at how often I meet with prospective clients who have not taken advantage of unused TFSA contribution room, despite having cash sitting in a bank account or in a non-registered account.
If you would like to discuss the benefits of having your own TFSA, or anything else, please feel free to book a FREE 15-MINUTE CALL.
As always, I look forward to hearing from you.
With Gratitude,
Kevin-Barry Henry.
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