Question of the Week: Does TFSA growth affect my contribution room?

Submitted by nsscadmin on Wed, 08/11/2021 - 09:00

This is another question that we have seen on investing message boards and Facebook pages lately. The question often goes like this: I have total contribution room on my TFSA of $75,500. Thanks to some sizable gains from some strong investments lately the value of my TFSA is now over $100,000. Have these gains taken me over my contribution room?

The short answer is that only deposits to your TFSA affect your contribution room. If your contribution room is $75,500 you can deposit up to that amount to purchase investments. You can also leave it as cash if you wish. Any gains made by the investments you purchase do not affect your contribution room. If your investment gains take you over the total of your allowable contribution room this is alright.

If you do deposit too much, and go over your contribution limit please see our previous blog post for guidance. One other thing that all TFSA investors should remember: If you withdraw funds from your TFSA you do not regain that contribution room until January 1^st of the following year. So, if you make a $5,000 withdrawal from your TFSA on October 1, 2021^,you do not regain that $5,000 of contribution room until January 1, 2022.

If you have questions about your contribution room, you should consult with a tax professional.

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