Tax Free Savings Account (TFSA) were introduced in 2009 to as a way Canadians 18 years of age or older could save and invest money tax-free during their lifetime – either for retirement or for any other purpose. TFSA contributions are made with after tax dollars, but income earned by the amounts contributed as well as any gains inside it are tax-free, even when withdrawn.
The contribution limit is set each year and increases based on inflation. The maximum amount for 2022 has been set at $6,000, matching the amount set from 2019 to 2021. Unused TFSA contribution room can be carried forward and any amounts withdrawn in the current year can only be put back in the following year.
- The 2022 contribution of $6,000 is unchanged from 2021
- The total contribution room available in 2022 for someone who has never contributed and has been eligible for the TFSA since its introduction is $81,500.
- The annual limit is indexed to inflation and rounded to the nearest $500. The Canada Revenue Agency’s indexation increase for 2020 is 2.4%.
- Anyone 18 or older is eligible to open a TFSA and contribution room accumulates beginning in the year they turn 18.
TFSA contribution limits dollar amounts by year:
For 2009 -2012: $5,000
For 2013 and 2014: $5,500
For 2015: $10,000
For 2016, 2017, and 2018: $5,500
For 2019, 2020, 2021, 2022: $6,000
Federal tax bracket thresholds for 2022
The 33.0% tax rate begins at taxable income of over $221,708, up from $216,511 in 2021
The 29.0% tax rate begins at taxable income of over $155,625, up from $151,978 in 2021
The 26.0% tax rate begins at taxable income of over $100,392, up from $98,040 in 2021
The 20.5% tax rate begins at taxable income of over $50,197 up from $49,020 in 2021
Income below $50,197 is taxed at 15%
The basic personal amount (BPA) for 2022 is $14,398, for taxpayers with net income of $155,625 or less. Income levels above $155,625, the BPA is clawed back until it reaches $12,719 for net income of $221,708 (taxable income above which the 33% bracket begins).