The formula
CRA sets it out as four lines:
| This year's TFSA dollar limit | $7,000 in 2026 |
| + Unused room from previous years | yours |
| + Withdrawals you made last year | yours |
| − Contributions you've already made this year | yours |
| = Room you have left today |
Why your CRA account can mislead you
CRA says the TFSA information in your account "is only updated once per year in the spring", using your transactions from the previous year. Anything you've contributed or withdrawn since January 1 isn't in it.
CRA's own advice is to use your financial records to work out your room, not the figure in your CRA account. Treat that figure as a starting point for the year and keep your own running total.
Withdrawals come back, but later
When you take money out, you get the same amount back as new room on January 1 of the following year. Not the next day, and not the next month.
That's what catches people. They withdraw in the spring, put it back in the fall, and by then they've contributed more than they had room for.
How the tax on excess amounts works
If you go over, CRA charges 1% a month on the highest excess amount in your account for each month the excess remains. It keeps going until you withdraw the excess or new room absorbs it.
Someone with $7,000 of room contributes $9,200, so the excess is $2,200.
| Months | Excess | Tax |
|---|---|---|
| June to October (5 months) | $2,200 | $110 |
| November and December, after an $800 withdrawal | $1,400 | $28 |
| Total for the year | $138 |
If it happens to you, CRA's instruction is short: withdraw the excess as soon as possible, then file a TFSA return.
Do this before the next lesson
- Start a four-line tracker (a note on your phone works): limit this year, unused room, last year's withdrawals, this year's contributions.
- Fill in "this year's contributions" from your own statements, across every TFSA you hold.
- Before any deposit, check the bottom line first.
It's October. Your CRA account shows $20,000 of TFSA room, and you contributed $5,000 in February. How much room do you have left this year?
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