TFSA
Your 2025 TFSA contribution room
Your TFSA gets $7,000 in fresh contribution room every January 1st. That part happens automatically — the CRA adds it whether you contribute or not, whether you have money or not, whether you remember TFSAs exist or not.
But here's what trips people up: if you withdrew money from your TFSA last year, that room doesn't come back until January 1st. Not December 31st. Not sometime in late December. January 1st.
Pull out $5,000 in March 2024? You can't put it back until January 1st, 2025. Try to recontribute in November 2024, even though it's your own money, and you've over-contributed. The CRA will notice and charge you 1% per month on the excess until you remove it.
The reset that actually matters
Most TFSA advice focuses on the annual $7,000 room increase. But for anyone who uses their TFSA as intended — money in, money out, money back in when needed — the withdrawal reset is more important.
Say you maxed out your TFSA at $102,000 (the cumulative limit for someone 18+ and a Canadian resident since 2009). You pull out $15,000 in June 2024 for a down payment. Your available room until December 31st is zero. On January 1st, 2025, you get back that $15,000 plus the new $7,000 annual room. Total available: $22,000.
The timing is firm. December 31st at 11:59 PM, you have zero room. January 1st at 12:01 AM, you have $22,000. The calendar date matters, not the business day, not when the banks update their systems.
Where people get caught
Multiple withdrawals in one year: Take out $3,000 in February, $2,000 in August, $4,000 in November. All of it — $9,000 — comes back January 1st. Not spread across the year when you took it out.
Partial recontributions: You withdrew $8,000 but only want to put back $3,000 right now. Fine. The remaining $5,000 of room stays available. TFSA room never expires.
Investment growth on withdrawals: Withdrew $10,000 that had grown from an original $8,000 contribution? You get back $10,000 in room, not $8,000. The TFSA tracks the withdrawal amount, not what you originally put in.
Between-spouse transfers: You can't transfer TFSA room between spouses like you can with RRSP contributions. Each person gets their own room and their own timeline.
At $75,000 income in Ontario, every dollar in your TFSA that would otherwise sit in a taxable account saves you roughly 30 cents in tax per dollar of growth. TaxSplit.ca shows the exact rate for your province and income.
The over-contribution trap
The penalty for over-contributing is 1% per month on the excess amount. Not 1% annual. One percent every month until you fix it.
Over-contribute by $2,000 in March? That's $20/month until you withdraw the excess. Miss it for six months and you've paid $120 in penalties, plus you still need to withdraw the $2,000.
The CRA tracks this automatically. Your bank doesn't stop you from over-contributing — that's not their job. They'll accept your money and let you figure out the tax implications later.
Most common over-contribution scenario: You withdrew money earlier in the year and forgot. December rolls around, you see room in your account, you contribute. Except that room isn't real until January 1st.
Check your CRA My Account for current TFSA room before contributing anything in November or December. The bank's numbers might not match the CRA's numbers, and the CRA's numbers are the ones that matter for penalty calculations.