Personal Finance

TFSA and RRSP allowance refreshes?

  • Last Updated:
  • Feb 8th, 2021 5:00 pm
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[OP]
Newbie
Jan 27, 2021
24 posts
14 upvotes

TFSA and RRSP allowance refreshes?

If in Year 1 I have a limit of 10K on my TFSA. I can put in 10K and if that grows to 12K, i can take out 12k without tax implications?

If in Year 2 my limit is 18K and I took out 12K in the above example in Year 1 does my total allowable reset to 28K (10K + 18K). Or am i only allowed 18K?
2 replies
Deal Addict
Jan 30, 2012
1547 posts
896 upvotes
TORONTO
roosters6879 wrote: If in Year 1 I have a limit of 10K on my TFSA. I can put in 10K and if that grows to 12K, i can take out 12k without tax implications?
You can always take money out of your TFSA without tax implications.
roosters6879 wrote: If in Year 2 my limit is 18K and I took out 12K in the above example in Year 1 does my total allowable reset to 28K (10K + 18K). Or am i only allowed 18K?
In year 1, you have unused contribution room available of 10k. You contribute 10k, your investments did well, and you take out 12k. Taking out 12k means that you can contribute 12k the next year.

In year 2, you can contribute 12k (due to the withdrawal in year 1), plus you get $6k (at the moment) of new contribution room every year, so you could contribute 18k in year 2.
Deal Addict
User avatar
Aug 18, 2008
2994 posts
979 upvotes
Ottawa
At the beginning of each year, your available TFSA contribution room is equal to: [Previous Unused Room] + [Last Year's Withdrawals] + [New limit for the year aka ~$6000]

So based on your 2 scenarios (assuming contribution room for the year is $6,000, and you've previously maxed out contributions):
If in Year 1 I have a limit of 10K on my TFSA. I can put in 10K and if that grows to 12K, i can take out 12k without tax implications?
Year 2 = [0] + [12K] + [6K] = $18K new contribution room

If in Year 2 my limit is 18K and I took out 12K in the above example in Year 1 does my total allowable reset to 28K (10K + 18K). Or am i only allowed 18K?
Year 3 = [0] + [12K] + [6K] = $18K new contribution room

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