A TFSA is a Canadian account where investments grow tax-free and withdrawals are never taxed, though contributions aren't tax-deductible.
The 2026 dollar limit is C$7,000. Room builds each year from the year you turn 18 as a Canadian resident, and unused room carries forward with no time limit. Someone eligible since TFSAs began in 2009 who has never contributed has C$109,000 of room in 2026, the sum of every year's published limit.
Anything you withdraw is added back to your room on January 1 of the next year. Putting it back in the same year can create an overcontribution, taxed at 1% a month on the highest excess, with none of the C$2,000 cushion RRSPs allow.
TFSA income and withdrawals don't count toward federal income-tested benefits such as Old Age Security and the Guaranteed Income Supplement. That makes a TFSA a useful source of retirement cash for anyone near the OAS clawback threshold.
How to check
The CRA shows your TFSA room in My Account, but it's updated only once a year from the previous year's records. Check your own statements for this year's contributions and withdrawals before adding money.
Sources
- Canada Revenue Agency, Calculate your TFSA contribution room (page modified February 20, 2026)
- Canada Revenue Agency, MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE (page modified October 28, 2026)
- Canada Revenue Agency, If you owe tax on excess TFSA amounts
- Canada Revenue Agency, What is a TFSA
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