The Tax Free Savings Account (TFSA) contribution limit for 2022 has been set at $6,000, the Canada Revenue Agency says.
The news was contained in the annual update of inflation-based indexation to such things as tax brackets, tax credits, refundable medical expenses and old age security repayments.
Based on the measures of inflation used by the CRA, Canadians can expect a $500 increase in the limit to $6,500 in 2023.
TFSAs were introduced in 2009 with an annual limit of $5,000. The cumulative contribution room in 2022 for someone who has not made a contribution is $81,500.
CRA Inflation Rates
|2022 ||2.4 %|
Money inside a TFSA grows tax free and amounts withdrawn in any year can be removed without any tax payable. The amount withdrawn can be added back, but only in the next calendar year.
The difference between a TFSA and a Registered Retirement Savings Plan (RRSP) is that contributions to an RRSP are tax deductible, with the tax paid when you later withdraw it.
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