TFSAs are an excellent way to deflect tax. The annual maximum contribution to a TFSA was $5,000 from 2009 – 2012 and increased to $10,000 for 2015; $5,500 for 2016 to 2018. The total contribution room by 2018 was therefore $57,500 per person (over age 18). The TFSA contribution limit for 2020 is $6,000, remaining the same as 2019. If you have never contributed to a TFSA and have been eligible since its introduction in 2009, your cumulative contribution room will be $69,500 in 2020. There is no maximum age restriction and no “use it or lose it” consideration.
Money can be withdrawn at any time – and as it is “Tax Free” there are no tax considerations. The money can be “re-deposited” at a future time, though attention must be given to timing as it must be in a later calendar year. For example, $8,000 withdrawn in January 2015 can be replaced (without changing contribution room), but you must wait until 2016 to make the repayment. TFSAs, therefore, can function as an Emergency Fund – an important asset in your financial planning tool box.