The federal government in Ottawa is raising the 2023 tax-free savings account (TFSA) contribution limit by an additional $500.
The total amount Canadians aged 18 and older can contribute to their TFSA will be lifted to $6,500 a year beginning on January 1, 2023. The previous contribution limit was $6,000.
The new $6,500 limit only applies to people who have contributed the maximum amount to their TFSA in previous years. Unused contribution space accumulates and can be carried forward from one year to another.
According to the Canada Revenue Agency (CRA), only 10% of Canadian TFSA holders contribute the maximum amount each year.
Introduced in 2008 in the wake of the global financial crisis, the TFSA is the main tax-free savings and investment instrument in Canada.
Gains on investments held in a TFSA are not taxed, other than U.S. dividends.
