TFSA, RRSP and FHSA contribution room explained

This guide is general information, not tax or financial advice. Check with the CRA, Revenu Québec or a professional for your own situation.

Canada gives you three registered accounts to save with less tax: the TFSA, the RRSP and the FHSA. Each one has its own "room", the most you can put in without a penalty, and each builds that room in a different way. Mixing up the rules is one of the most common and costly mistakes people make. Here is how each one works, in plain language.

TFSA: room that grows every year from age 18

A Tax-Free Savings Account (TFSA) is open to Canadian residents who are 18 or older and have a valid social insurance number. You don't need earned income.

How room is built. Your room starts to build the year you turn 18 (or the year you become a resident, if you arrive later). Each January 1, the CRA adds that year's dollar limit. The limit was $7,000 for 2024, 2025 and 2026. The limits since TFSAs began in 2009 are on the CRA page of yearly limits. Adding them up, someone who was 18 or older and a resident every year since 2009, and who never contributed, has $109,000 of room in 2026.

Carry-forward. Room you don't use is never lost. It carries forward with no time limit.

Withdrawals. You can take money out at any time, tax-free. The amount you withdraw comes back as new room, but only on January 1 of the following year, not right away. This is the classic trap: if you have no room left, withdraw $3,000 in March and put it back in June, you have over-contributed by $3,000. The CRA uses exactly that example.

Over-contributing. Any excess is taxed at 1% per month on the highest excess in each month, for as long as it stays in the account. You must file a TFSA Return (form RC243) by June 30 of the following year. If you notice an excess, withdraw it as soon as possible: don't wait for a letter from the CRA.

RRSP: room that follows your earned income

A Registered Retirement Savings Plan (RRSP) gives you a deduction now and is taxed when you take the money out.

How room is built. Each year, your new RRSP room is 18% of your earned income from the previous year (employment income, self-employment income and some others, such as net rental income), up to a yearly dollar limit. The limit is $32,490 for 2025, $33,810 for 2026 and $35,390 for 2027. If you belong to a workplace pension plan, your pension adjustment (box 52 of your T4) lowers your room, and a few other adjustments (PAR, PSPA) can raise or lower it.

Carry-forward. Unused RRSP room carries forward indefinitely, so a year with a small contribution is never wasted.

Deadline. Contributions made in the first 60 days of a year can be deducted on the previous year's return. For the 2025 tax year, that ran until March 2, 2026. You can contribute to your own RRSP until the end of the year you turn 71.

Over-contributing. The CRA allows a cushion: you pay a tax of 1% per month only on the part of your contributions that is more than $2,000 over your deduction limit. That tax is reported on form T1-OVP.

Withdrawals. Unlike the TFSA, the CRA's formula for RRSP room has no line that adds withdrawals back. A regular withdrawal is taxable income and the room you used is gone. The Home Buyers' Plan and the Lifelong Learning Plan have their own repayment rules.

FHSA: room that only starts once you open it

The First Home Savings Account (FHSA) is for first-time home buyers. Contributions are deductible like an RRSP, and a qualifying withdrawal to buy a first home is tax-free like a TFSA.

How room is built. You get $8,000 of participation room in the year you open your first FHSA. Nothing builds before that, so opening an account early, even with a small deposit, starts the clock. Contributions and transfers from your RRSP both use this room.

Carry-forward. Unused room carries forward, but only up to $8,000. The lifetime limit is $40,000. FHSA room runs by calendar year: there is no 60-day window like the RRSP's.

How long it lasts. Your FHSA must be closed by December 31 of the year of the earliest of these: 15 years after you opened your first FHSA, the year you turn 71, or the year after your first qualifying withdrawal. Before then, you can move what's left to an RRSP or RRIF without immediate tax. Money left in the account after that date is added to your income.

Withdrawals. A qualifying withdrawal for a home does not give room back; putting the money back counts as a new contribution. A taxable withdrawal (one not used for a home) can be added back to your room, which the CRA calls "re-participation room".

Over-contributing. Like the TFSA, an excess FHSA amount is taxed at 1% per month on the highest excess in the month.

Where to find your room

TFSA: sign in to your CRA account (My Account), then Savings and pension plans. The CRA updates TFSA information only once a year, in the spring, after institutions report. Transactions made since then aren't counted, so check against your own records.
RRSP: the RRSP Deduction Limit Statement on your latest notice of assessment, your CRA account, form T1028 (mailed when your limit changed), or the CRA's automated phone service.
FHSA: once you've filed a return for the year you opened your first FHSA, your participation room appears on your notice of assessment and in your CRA account.

The CRA's own advice is to keep your own records. Banks report late, and what you see online can be months behind what you've actually deposited.

A few habits that prevent penalties

Write down every deposit, withdrawal and transfer, by account and by person. If you have several TFSAs, the room is shared across all of them.
Before you re-deposit a TFSA withdrawal, check that you have room this year.
Each spring, compare your own figures with the notice of assessment and correct them.
If you have a workplace pension, use the pension adjustment from your T4, not just 18% of your salary.

How Indivia helps

The Contribution room card on the Investments page shows each person's TFSA, RRSP and FHSA room for the year. It is calculated from the yearly CRA limits and the deposits, withdrawals and transfers recorded in each account. When this year's limit isn't in the app yet, the card says Estimated and uses last year's.

You can type the figures from your CRA account or your notice of assessment to correct it: earned income, pension adjustment (box 52 of the T4), the RRSP deduction limit from the notice of assessment, or your TFSA room on January 1. A typed figure replaces the calculation, and later years build on it. A birth year in People & companies gives the first TFSA year.

If a deposit goes over the room left, the app shows by how much. For the TFSA it reminds you that the CRA charges 1% a month on the excess; for the RRSP, that the first $2,000 over isn't penalized. The app also warns you before the RRSP deadline and in the year you turn 71. Contribution room is part of the Free plan.

Sources

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