Earlier this week, the 2015 Federal Budget announced that the Tax Free Savings Account annual contribution limit will be increased from $5,500 to $10,000 per year. The government has said that this change will be effective immediately (and be retroactive to January 1st).
What This Means for You
If you have not already made a 2015 deposit into your TFSA, you can do so now up to the new maximum of $10,000 (if you have not maximized previous years contributions you may actually have more room). If you have already made a contribution of $5,500 this year, you can add the additional $4,500 that you are now eligible for.
With this change, the government has announced that the TFSA limit will no longer be indexed for inflation moving forward.
Are TFSAs better than RRSPs?
Unfortunately there is no easy answer to this question. TFSAs are a great alternative to or addition to RRSPs. It really does depend on your individual financial circumstances so do consult with us to find out which should be your personal priority. Click here to read more on this topic.
Will I only make a tiny bit of interest in a TFSA?
Tax Free Savings Account investment options are not limited to low yielding savings vehicles. You can own almost any kind of liquid investment such as stocks, bonds, GICs and mutual funds inside your TFSA. Don’t brush them off as just a savings account—we can offer much better alternatives for good long-term growth.
As a reminder, all Canadian’s eligible for a TFSA now have a maximum contribution limit of $41,000 total:
2009 — $5,000
2010 — $5,000
2011 — $5,000
2012 — $5,000
2013 — $5,500
2014 — $5,500
2015 — $10,000
Please note that your exact individual TFSA limit can be found on the My Account section of the Canada Revenue Agency website.