| Year | Contributed | Growth | Balance |
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How the TFSA works
A Tax-Free Savings Account is the most flexible tax shelter Canada offers. Contributions don't reduce your taxable income (unlike RRSP), but everything inside — interest, dividends, capital gains — grows tax-free, and withdrawals are tax-free at any age for any purpose.
Lifetime room accumulates every year you're 18+ and a Canadian resident. If you were 18 or older when the TFSA launched in 2009 and have never contributed, you have $102,000 of room as of 2025. Unused room carries forward indefinitely.
Annual limits: $5,000 (2009–12), $5,500 (2013–14), $10,000 (2015), $5,500 (2016–18), $6,000 (2019–22), $6,500 (2023), $7,000 (2024–25).
When you withdraw, the amount is added back to your room the following January — so the TFSA doubles as an emergency fund and long-term investment vehicle. Use it alongside the RRSP for retirement and the FHSA for your first home.
What's my TFSA contribution limit for 2025?
$7,000 for 2025 — same as 2024. If you've never contributed and were 18+ in 2009, your total lifetime room is $102,000.
Can I lose money in a TFSA?
Yes — a TFSA is just a wrapper. Losses depend on the investments inside (stocks, ETFs, GICs, HISAs). Losses don't generate tax credits the way non-registered losses do, but they also don't affect your contribution room.
What happens when I withdraw?
Withdrawals are tax-free. The amount withdrawn is added back to your contribution room on January 1 of the following year — so you can re-contribute it later without penalty.
TFSA vs RRSP — which should I prioritise?
TFSA first if your income (and marginal rate) is likely to be higher in retirement than now, or if you need flexibility. RRSP first if you're a high earner now and expect a lower rate in retirement. Most Canadians benefit from using both, plus the FHSA if buying a first home.