Most people don’t realize how much TFSA contribution room they actually have, says Jamie Golombek, managing director of tax and estate planning for CIBC Private Wealth Management.

Though many Canadians know the annual contribution limit of TFSAs started off as $5,000 and that it’s now $5,500, he adds, few know what happens when they withdraw funds from their accounts.

Read: Evolving the TFSA to help seniors

“If a client’s never contributed to a TFSA, the total amount they can put in for 2014 is $31,000,” says Golombek, and the amount they’ll be able to put in for 2015 will be $36,500.

Read: Clients rank TFSAs over RRSPs

However, if a client already has a growing account and withdraws from it this year, her contribution for the following calendar year will then be calculated by using the amount of money she takes out, as well as by the annual added contribution limit.

“Let’s say that you’ve maxed out your TFSA [by] putting in $31,000 over the last 6 years,” says Golombek. If it’s grown to $40,000 and you withdraw the full amount this year, “that means that at the beginning of [next] year, your TFSA contribution room will have grown to $40,000,” plus the annual limit of $5,500.

So, in 2015, that person would be able to contribute $45,500 to her TFSA.

If a client’s TFSA drops in value, and she withdraws the full amount, her contribution room falls accordingly. A formula you can share with clients to figure out their contribution room for next year is:

Unused TFSA contribution room to date + Total withdrawal made in this year + next year’s TFSA dollar limit = TFSA contribution room at the beginning of next year


Most don’t have TFSAs

Faceoff: TFSA versus RRSP

What clients find on Google: TFSAs

TFSAs reduce retirement income risk

Originally published on
Add a comment

Have your say on this topic! Comments are moderated and may be edited or removed by
site admin as per our Comment Policy. Thanks!

See all comments Recent Comments


Thanks for the clarification. This article was very helpful.

Friday, Aug 29, 2014 at 10:59 pm Reply


A hypothetical question: what if I had $31,000 contributed and it is now worth only $25,000 and I withdraw these funds in 2014. Will my contribution room be only $25,000 plus the new contribution for 2015 or will it revert back to the original $31,000 plus 2015 contribution?

Thursday, Aug 28, 2014 at 10:02 am Reply



Thanks for reading the article and for your question. We contacted Jamie Golombek and, based on your example, he says your TFSA contribution room for 2015 would then be $25,000 plus the new contribution room for the year. We’ve added more information to the article above. Have a great day!

Thursday, Aug 28, 2014 at 11:59 am