Examples – TFSA contribution room

Example 1

Brayden was eager to open his TFSA, but he didn’t turn 18 until December 21, 2013. On January 4, 2014, he opened a TFSA and contributed $11,000 ($5,500 for 2013 plus $5,500 for 2014 – the maximum TFSA dollar limits for those years). On the advice of his broker, he had opened a self-directed TFSA and invested in stocks that outperformed the market. By the end of 2014, the value in Brayden’s TFSA had increased to $11,800. Brayden was worried that for 2015, he would only be able to contribute $9,200 (the TFSA dollar limit of $10,000 for 2015 less the $800 increase in value in his TFSA through 2014). Neither the earnings generated in the account nor the increase in its value will reduce the TFSA contribution room in the following year, so Brayden can contribute up to another $10,000 in 2015 to his TFSA.

Example 2

From 2009 until the end of 2013, Josh contributed the maximum TFSA dollar limit each year. He did not make any other contributions and he did not withdraw any funds. As a result of his $5,500 contribution in 2013, his unused TFSA contribution room at the end of 2013 was zero.

His TFSA contribution room at the beginning of 2014 was $5,500 (the 2014 TFSA dollar limit).

On June 15, 2014, Josh made a contribution of $500. On October 26, 2014, he withdrew $4,000.

His unused TFSA contribution room at the end of 2014 was $5,000 ($5,500 - $500).

Josh makes the following calculation to determine his TFSA contribution room at the beginning of 2015:

Step 1: Calculate Unused TFSA contribution room at the end of 2014

TFSA contribution room at the beginning of 2014 ($5,500) minus contributions made in 2014 ($500) = Unused TFSA contribution room at the end of 2014 ($5,000)

Step 2: Calculate TFSA contribution room at the beginning of 2015

Unused TFSA contribution room at the end of 2014 ($5,000) + Total withdrawal made in 2014 ($4,000) + 2015 TFSA dollar limit ($10,000) = TFSA contribution room at the beginning of 2015 ($19,000).

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