How contribution room builds
Room is made up of the annual dollar limit for the year, which is $7,000 for 2026 and is added on January 1, plus unused room from earlier years and last year’s withdrawals, minus contributions already made this year. The total applies across all of your TFSAs together, not to each account separately. You do not need earned income to contribute.
Contributions reduce your room immediately. That is why the figure in your CRA account can mislead you: it is updated once a year in the spring, after financial institutions report the prior year’s transactions.
Withdrawals restore room next year
Taking money out does not give you the room back straight away. The amount withdrawn is added back on January 1 of the following calendar year, alongside the new annual limit. Putting the money back in the same year is only safe if you still have unused room that year.
As an illustration, imagine you begin 2026 with $10,000 of room, contribute $4,000 in March and withdraw $3,000 in September. Your room stays at $6,000 for the rest of 2026. On January 1, 2027 the $3,000 returns, and the 2027 annual limit is added on top. The numbers are illustrative.
Over-contributions
If you contribute more than your available room, the excess is taxed at 1% per month for as long as it stays in the account. Remove it as soon as you find it. Withdrawing it does not end your reporting duty: you are still required to file a TFSA Return for the excess amount. A deliberate over-contribution can bring further tax consequences.
Because issuers send a summary of each year’s transactions only by the end of February of the next year, an excess can sit in an account for months before the CRA contacts you.
Keep your own records
The CRA recommends calculating room from your own records, using its worksheet or calculator, and checking them against statements from every institution where you hold a TFSA. If you disagree with the CRA’s figures, the issuer must send an amended report.
Raise TFSAs with your accountant when you move money between institutions, return after time outside Canada, or are choosing between a TFSA, an RRSP and an FHSA for the same savings.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- RRSP, TFSA and pension limitsCanada Revenue Agency
- Calculate your TFSA contribution roomCanada Revenue Agency
- Withdrawing from a TFSACanada Revenue Agency
- If you over-contribute to a TFSACanada Revenue Agency
- Opening a TFSACanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.