Tax Free Savings Account (TFSA) Limit Announced for 2019
The Canada Revenue Agency (CRA) has finally announced the Tax Free Savings Account (TFSA) room for 2019 and it is $6,000.00 limit for the year and a increase of $500.00 for inflation from 2018.
So a couple of things you need to know in order to own a TFSA are as follows;
a) you have to be over 18, b) must be a resident of Canada, and c) have a valid social insurance number (SIN) .
If a person is or becomes a non-resident, they will not have any contribution room for years in which they are non-resident for the entire year.
They will still have the full annual amount of contribution room for the year in which they became a non-resident, or the year in which they returned to become a resident of Canada again,
There is no deadline for contributions to a TFSA, as the unused contribution room is carried forward into the next year.
However, a withdrawal in any year does not increase the TFSA room until the following calendar year. Thus, if you are thinking of making a withdrawal close to year end, make sure it is done by December 31st, in order to have the withdrawal amount added back to the TFSA room sooner on January 1st of the following calendar year.
If a person has contribution room, but no funds to contribute, they may contribute funds given to them by their spouse or common-law partner, with no income attribution rules applying to the spouse.
The tax payable for excess contributions to a tax-free savings account is 1% per month, for any month in which there is an excess amount at any time in the month. This means there will be a tax payable even if the excess amount is withdrawn in the same month in which it is contributed.
Contributions made to a TFSA are not tax-deductible.
If you become a non-resident of Canada, or are considered to be a non-resident for income tax purposes:
You can contribute to a TFSA up to the date that you become a non-resident of Canada. The annual TFSA dollar limit is not pro-rated in the year of emigration or immigration.
Lastly, as it's already December, I would like to wish you and your family all the best during the holiday season and have a great 2019!
Prepared by Peter Wiesner CPA, CA
on December 1, 2018