Reader Question - If I do not open a TFSA in 2009 will the $5,000.00 contribution room carry forward, enabling me to contribute up to $10,000.00 in 2010?
If you do not use your TFSA contribution room, it will definitely carry forward. You are given $5,000 per year of contribution room. As long as you are a resident of Canada and over age 18, you will be able to carry forward and add your pays unused contribution room to new TFSA contribution room.
Who Can Contribute To A TFSA?
Anyone who is both a resident of Canada and is over the age of 18 can contribute to a TFSA.
If you do not contribute to a TFSA or don’t use all of your contribution room, the unused amount will carry forward indefinitely. There is no need to open a TFSA account to generate TFSA contribution room.
How To Calculate TFSA Contribution Room
The TFSA contribution room is calculated differently than RRSP contribution room and is more straight forward:
- Unused TFSA contribution room from last year
- Plus: TFSA withdrawals from last year
- Plus: The new TFSA dollar limit from the current year
- Less: Contributions to the TFSA in the current year.
In the comments below there is an example of how the TFSA contribution room works.
Avoid Over Contributions
There is a penalty tax of 1% per month on over contributions (also called the excess TFSA amount). The penalty tax is based on the highest value in the TFSA during the month.
Related Articles
- TFSA Questions And Answers
- TFSA Over Contributions
- The Tax Free Savings Account (TFSA)
- Questions About The TFSA
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What is TFSA? What are we suppose to do with it? How do we withdraw the amount?
This should answer your question: http://blog.taxresource.ca/the-tax-free-savings-account-tfsa/
Hi Tax Guy,
I have a question, I just opened a TFSA for $15,000 (3yr allowance), i have not invested it in anything yet, i am thinking about setting this investment as a mortgage secured by a house, which I could offer to a third party arms length borrower, the monthly payments which are being paid back may include a combination of principal and interest, or I can set it up as interest only. Would all payments i receive stay in the account,and if payments are late and their are additional penalties, if those fees remain in the TFSA account are they also considered tax free? Thank you
Your idea is illegal. http://blog.taxresource.ca/what-investments-can-i-hold-in-my-rrsp-rrif-resp/
Why is it illegal, it says you can hold mortgages in real property, if i offer $15,000 as a second or third mortgage to someone, at an interest rate compound semi annually not in advance, for 5 yrs term at prime + 5% for example what makes this illegal. Please see, http://www.cwt.ca/iris/mortgage_broker/IMBA_docs/ArmsLengthInfoPackageMarch2010IMBA.pdf
George,
Mortgage extended under the NHA are permitted. But anyone reading your question may have assumed they could have just lend money to anyone.
This thread is about TFSA contributions. Please ensure your questions are on topic.
Hi there, thanks for all the info. Question: Since investing in a particular stock last year with my TFSA trading account, I’ve earned about 25% in returns. If I sell the stock in my TFSA account today, can I reinvest the profits within this account in addition to my yearly $5000 contribution for this year, or is the profit going to be considered part of my yearly contribution? Thanks!
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