2023 TFSA Contribution Limit: Invest Up To $88,000

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Dividend Earner

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The TFSA account is relatively new and often referred to as a younger sibling to the RRSP.

The choice of investing in your TFSA or RRSP first is still a debated question but what isn’t up for debate is your contribution amount per year and how much you accumulate in contribution room.

The TFSA contribution limits starts accumulating once you turn 18 unlike RRSP where you need to have income declared to accumulate contribution room. It’s the perfect vehicle to create a passive income machine with dividend investing.

How much you can contribute is based on your accumulated limit, and how much you have contributed. Your TFSA contribution room is pretty easy to calculate – check out the amazing calculator below with mind-blowing math.

Make note of this; the TFSA account is the best way to start investing. Students should start here, and build a six figure portfolio faster than they can imagine with a simple ETF model portfolio.

2023 TFSA Contribution Limit

The TFSA contribution room for 2023 is $6,500 for a total contribution of $88,000 since inception.

Here are the TFSA limits by year since the introduction of the account in 2009 with a total TFSA room since inception at $88,000.

wdt_ID Year Yearly Limit Cumulative Comment
1 2009 5,000 5,000
2 2010 5,000 10,000
3 2011 5,000 15,000
4 2012 5,000 20,000
5 2013 5,500 25,500
6 2014 5,500 31,000
7 2015 10,000 41,000
8 2016 5,500 46,500
9 2017 5,500 52,000
10 2018 5,500 57,500
11 2019 6,000 63,500
12 2020 6,000 69,500
13 2021 6,000 75,500
14 2022 6,000 81,500
15 2023 6,500 88,000
16 2024 6,500 94,500 Estimate
17 2025 6,500 101,000 Estimate
18 2026 6,500 107,500 Estimate
19 2027 7,000 114,500 Estimate
20 2028 7,000 121,500 Estimate
21 2029 7,000 128,500 Estimate
22 2030 7,500 136,000 Estimate

All of the profits made within a TFSA is completely tax free including the withdrawals. This is a game changer for retirement. Imagine never paying taxes in retirement, wouldn’t it be amazing? … and yet it’s possible with a diligent investment.

Future contribution limits are indexed to inflation rounded to the nearest $500. You can always review the detail over at the Canada Revenue Agency (CRA), but to see how profitable a TFSA can be, continue reading.


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TFSA Contribution Calculator

It’s pretty simple to calculate your contribution with the table above. The formula is the total for the current year minus your contribution to date minus the total for the year before you turn 18.

For example, if you turned 18 after 2011, the formula would have the following parameters:

  • Total for 2023 is $88,000
  • Contribution to date, say $10,000
  • Total before turning 18 is $10,000

We are left with the following math: $88,000 – $10,000 – $10,000 = $68,000

Now that you can easily calculate your potential, and actual TFSA contribution room. My suggestion is that you try and maximize your TFSA contribution each year if you can.

A dividend growth investing approach will easily beat inflation and provide solid returns towards a tax-free retirement.

Accessing Your Contribution Details

As soon as you file a tax return, you should have an account with the Canada Revenue Agency, and you can always check the status of your contribution room under your account. Financial institutions are required to report the contributions, but they do it leisurely.

You simply need to create an account. It’s pretty useful to have the account and you can manage your direct deposit for your tax return.

TFSA Withdrawal Rules

You can withdraw tax-free at any time but you cannot contribute that money until the new year. If you were to contribute the maximum over the first few months of the year and then withdraw it in August, you can only add it back come January 1st of the following year.

TFSA Over-Contribution Penalty

If you happen to over contribute, the extra contribution will be subject to a 1% penalty per month. I recently handled an RRSP over-contribution and it’s more paperwork than you want.

If you realize you have over-contributed, quickly withdraw the amount and start filling the forms. Get ahead of it to avoid surprises.

TFSA Growth Opportunity

Having the account is step one in building wealth, the next step is putting your money at work. When you do and you start early, time can do wonders when partnered with compound growth.

Below is a graph and table showing the potential growth. Choosing between investing in your RRSP or TFSA first is a good problem to have and the perfect solution is based on your situation. Investing in a RRSP requires diligence in how you handle the tax refund to truly reap the benefits.

The better you do in your TFSA the less it will impact your OAS clawbacks and the more you can retain from your CPP payments in retirement.

How you decide to grow this tax-free account can have a major impact later in life, and that’s why it’s an investing account and not an emergency account. Investing is important if not critical.

Before you think the 10% growth in the table below is not possible, my TFSA market value is outlined below in the table, and keeping up with the 10% and doing better.

Check out my stock portfolio to see what I hold. Dividend investing is true passive income.

It’s true what they say: “The first million is the hardest!”.

wdt_ID Year Yearly Limit Cumulative 5% Growth 10% Growth Dividend Earner Spousal
1 2009 5,000 5,000 5,250 5,500 Not Tracked Not Started
2 2010 5,000 10,000 10,762 11,550 Not Tracked Not Started
3 2011 5,000 15,000 16,550 18,205 Not Tracked Not Started
4 2012 5,000 20,000 22,628 25,525 Not Tracked Not Started
5 2013 5,500 25,500 29,534 34,128 $41,742 Not Started
6 2014 5,500 31,000 36,786 43,590 $52,820 Not Started
7 2015 10,000 41,000 49,125 58,949 $56,307 Not Started
8 2016 5,500 46,500 57,356 70,984 $70,200 Not Started
9 2017 5,500 52,000 65,999 84,034 $78,900 $13,308
10 2018 5,500 57,500 75,074 98,487 $96,937 $58,818
11 2019 6,000 63,500 85,128 114,986 $129,467 $82,596
12 2020 6,000 69,500 95,684 133,030 $153,993 $95,906
13 2021 6,000 75,500 106,769 152,933 $181,601 $113,194
14 2022 6,000 81,500 118,407 174,827 $183,031 YTD $144,633 YTD
15 2023 6,500 88,000 131,152 199,459
16 2024 6,500 94,500 144,536 226,555
17 2025 6,500 101,000 158,587 256,361
18 2026 6,500 107,500 173,342 289,147
19 2027 7,000 114,500 189,359 325,762
20 2028 7,000 121,500 206,177 366,038
21 2029 7,000 128,500 223,836 410,342
22 2030 7,500 136,000 242,902 459,626
23 2031 7,500 143,500 262,923 513,838
24 2032 7,500 151,000 283,944 573,472
25 2033 7,500 158,500 306,016 639,069
26 2034 7,500 166,000 329,192 711,226
27 2035 7,500 173,500 353,526 790,599
28 2036 7,500 181,000 379,078 877,909
29 2037 7,500 188,500 405,906 973,950
30 2038 7,500 196,000 434,077 1,079,595

TFSA Investing Strategy

Before you delay investing by learning about all various strategies, start with the simplest one, and buy the S&P500 index. The index covers the top 500 companies in the US – all international conglomerates.

VFV is an ETF purchased in Canadian dollars tracking the S&P500 index. It’s my go to benchmark.

VFV vs XDV vs XIU ETFs

When trying to build wealth or outperform an index, you need the right tools to find your winning investment. As a DIY investor, my winning tool is Stock Rover. It allows me to build the most powerful dividend stock screeners. Stock Rover is powerful! It's like having  a supercar in your hands, take the time to learn the tool.

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.