Investing in either or both of a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) have become even more attractive for the 2024 taxation year. Increases to the contribution levels for both are linked to the Canadian inflation rate, which has been rising to higher levels than has been seen in many previous years.
Canada Revenue Agency recently released the contribution limits for the RRSP and TFSA for 2024.
For RRSPs:
The RRSP maximum contribution limit for Canadian taxpayers is limited to 18% of earned income in the previous tax year or to a maximum of $31,560 for 2024, plus any unused contribution room from previous years. Your Notice of Assessment from Canada Revenue Agency can validate your contribution room. Contributions to an RRSP are deductible from earned income before tax is calculated and withdrawals from the RRSP are taxed as income in the year withdrawn.
For TFSAs:
The TFSA contribution room has been increased for 2024 to a maximum of $7,000, up from $6,500 for 2023. This marks the second consecutive year of increases to the TFSA contribution limit based on inflation in Canada and rounded to the next $500. Contribution limits also include any withdrawals made from your TFSA in previous years. Unused TFSA contribution room, like the RRSP, can be carried forward and used in any future year. Contributions cannot be deducted from income; however, contributions and income earned in the TFSA can be withdrawn tax-free. The TFSA is not tied to earned income – anyone who is a Canadian resident and age 18 years and over in a full or partial taxation year can contribute to their TFSA. The total contribution room available in 2024 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009 is $95,000.
For eligible individuals, the TFSA contribution room accumulates beginning in the year they reach age 18 or become a Canadian resident. To see the contribution room available, here are the contribution limits by year.
| 2009 – 2012 | $5,000 per year |
| 2013 – 2014 | $5,500 per year |
| 2015 only | $10,000 |
| 2016 – 2018 | $5,500 per year |
| 2019 – 2022 | $6,000 per year |
| 2023 only | $6,500 |
| 2024 | $7,000 |
To verify your TFSA contribution limit, check your Service Canada account at the Canada Revenue Agency.
For First Home Savings Accounts (FHSA):
The FHSA is a savings/investment account introduced in 2023 to assist first-time homebuyers with saving for a home. The contribution limit is $8,000 per taxation year, to a lifetime maximum of $40,000 per taxpayer. Contributions, similar to RRSP contributions, are deductible from income before tax. The FHSA contribution limit is not tied to inflation so remains at $8,000 per year, although unused contributions can be carried forward for use in future years.
The RRSP, TFSA and FHSA can all invest in the same investments. To make the most of these accounts, speak to your financial advisor.
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