What is charterers contribution clause?

Tax Free Savings Account Contribution Limit in Canada?

• I'm 19 years old and opened my first TSFA in Toronto this year. I deposited the $5000 contribution limit and nothing more to ensure the government wouldn't tax my earnings. However, I'm aware that there are some sort of rules that if you didn't fill your contribution limit in previous years, that gets transferred over. This leads me to believe that all my unused contribution limit since I was 18 (so one year) should be transferred over to this year and that I should be able to deposit $10000 this year without getting taxed. I don't want to take the risk of depositing it and getting charged who knows how much without someone explaining the me what the exact rules are! My parents did my taxes last year and can't find my tax returns, so they're not able to check if it says on there what my contribution limit is. Also, what are the penalties imposed if you do go over your TFSA contribution limit? How much are you charged for each dollar you deposit or each dollar in interest you earn? Thanks in advance! Any clarification would help! Oh, also... if I do in fact have $10000 contribution limit this year ($5000 this year and $5000 from last year transferred over) and I don't use the $5000 from last year... will it get transferred over to next year again or do I have to deposit the $5000 into my TSFA by the end of the year to ensure I don't lose that contribution limit?

• Answer:

  Your contribution room carries over every year, so you never lose it. Your limit is $5,000 per year starting from age 18 plus any withdrawals made in previous years. So if you take out any money, that amount is added back to your limit for the next year. The $5,000 amount is supposed to be increased in step with inflation, but I don't think it has been yet. From the website linked at the end: "If, at any time in a calendar month, there is an excess TFSA amount in your account, you are liable to a 1% tax on your highest excess TFSA amount in that month. Note If an excess TFSA amount exists in the account as of the date of death of a TFSA holder and there is a successor holder, see Excess TFSA amount at the time of death. The 1% per-month tax will continue to apply for each month that the excess amount remains in the TFSA. It will continue to apply, on a pro-rata basis, until the earlier of: * when the entire excess amount is withdrawn; or * when the entire excess amount is absorbed by the addition of your unused TFSA contribution room for a later year. This tax is similar to the 1% per-month tax on excess RRSP contributions except that in the case of a TFSA, there is no $2,000 “grace” amount. The 1% tax on an excess TFSA amount is applicable from the first $1 of excess contributions. This 1% per-month tax is applicable on the highest excess TFSA amount in your account for each month in which an excess exists. Since it is based on the highest excess TFSA amount, this means that the 1% tax would be applicable for a particular month even if an excess amount was contributed and later withdrawn during the same month."