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
Print This Post
{ 66 comments }
← Previous Comments
Next Comments →
if I opened a tfsa in 2009,did’nt put anything in it can I in say 10 years put in 50,000.00 all at once?
Hi Jackie,
Yes. You are correct.
i guess tfsa is indexed and it can go up ever year.. if so what’s the amount for 2010 since it was introduced in 2009, ..
tia
I also was caught up in this situation because my bank failed to supply me with a manual (They said they came in “late” but never mentioned about over RE-contributing to the account OR about withdrawls when I made the one sole withdrawl for a new furnace). I called thr CRS and also got the form from the gov. to “rectify” the sitration.My financial advisor at the bank looked at the form and couldn’t understand it or help me with it. (The form does no good to you it’s only an account of your “bill” from CRS. There needs to be a class action law suite. How? -Peter.
So, I’m not worried about last year, I’m worried about THIS year. I only started withdrawing and re-contributing in January this year when everyone was still oblivious to the fine print. I know they are giving exemptions for last year, but there’s a slim chance they will do it again.
Anyone else in the same boat or know if there is anything we can do to correct the situation now that we know?
P.S. I transferred my TSFA in lat January. All $10,000 of it, and have been withdrawing/re contributing since. I am a student and dipped into the savings quite a bit.
can i open two accounts different bank for tfsa
Hi Lilian,
Yes. You can have more than one account.
I want to consolidate some shares of a particular company into one account. Can I withdraw stock certificates from my TFSA or must I sell them first?
Gary,
If you are moving the shares to another TFSA, you should ask the new FI to initiate and transfer. If you withdraw from your TFSA to do the switch, the room will not be added back until next year.
So if I understand you correctly I can withdraw the share certificate and combine them with those in my cash account.
And then next year I will be able to contribute 5000 + the value of these certificates Correct?
Gary
Correct.
hi, i dont understand an of this, i recieved an income tax assessment, n it says, “your unused tax-free savings account contribution room is $10,000″. ive looked online at the website provided n didnt get any help. i dont understand. if u would send an email explainng this in lamens terms that would be great.
thanks
Hi – if I overcontributed last year (moved money from one TFSA account to another and of course burst my $5000 limit), does the overcontribution carry over into this year?
Quite simply, I “contributed” $10,000 last year – $5000 x2. This year will I have $0 of room since the overcontribution has carried forward into 2010? Or do I simply pay the taxes on the overcontribution and start over at $5000?
The over contribution would be reset when your limit increased. So, if you made two contributions last year and effectively had $10,000 of contributions, the over contribution would end January 1, 2010.
So, for 2010, you would have 0. However, since this is really the same money, you may be able to appeal to the CRA and have the limit adjusted.
I found something that I do not understand on official web-site
“Under proposed changes announced on October 16, 2009, certain withdrawals made in the previous year may not be added back in the following year, after that date. The exclusion in the first bullet above also applies (after that date) to:
* withdrawals of amounts included in the definition of “advantage”,
* amounts upon which income tax was required to be paid by the TFSA trust; and
* any other income related to those amounts”
What is the definition of “advantage”? I have tax advantage saving account with cibc. Does it mean that If I withdraw my money I cannot reinvest it?
Thank you
People were using swaps between TFSAs an RRSPs and that is what these rules are limiting. Having a TFSA at the bank is OK.
If I exercise some share warrants at .10 and want to contribute the share to my TFSA, is the valuation based on the price I paid or the price of the shares at the time of exercise ?
For example, I buy 100,000 shares at .10 by exercising 100,000 warrants – I therefore paid $10,000. I have contribution room next year for $10,000 because of some withdrawals this year and next years allowable $5000. The actual share price is trading at say .25. Am I allowed to place the 100,000 shares into my TFSA based on my cost of .10/share ?.
Hi Ginger,
The fair market value of the property transferred to the TFSA is the value used. The market value of the shares contributed is the TFSA contribution: The value as expressed on the stock exchange times the number of shares.
← Previous Comments
Next Comments →
Comments on this entry are closed.