TFSA Contribution Limits

The limit to contribute to a TFSA for the year 2009 is $5000. Most everyone already knows this.

But how much will the Tax Free Savings Account Contribution limit go up to for the year 2010?

The TFSA Contribution limit goes up by the CPI, or the amount of inflation in a given year, but in $500 increments only.

In other words, unless inflation really picks up in Canada (which would likely be bad for your investments), the contribution limit will stay at $5000 per year for several years to come.

Note that you are allowed to contribute at least $5000 per year to your TFSA. So, if you've never contributed a penny to your TFSA, you can contribute $10 000 as of Jan 1st 2010. If you contributed $5000 in 2009, you can contribute another $5000 as of Jan 1st 2010. By 2011, your contribution room will be $15000 (if you qualified to contribute each year). 

Here are some estimates of when the TFSA contribution limit will next increase (to $5500):

Based on a 1% inflation rate: 9.57 years (or 2019)

Based on a 2% inflation rate: 4.81 years (or 2014)

3%: 3.22 years, or 2013

4%: 2.43 years (which rounds up to 3, or 2012)

5%: 1.95 years, or 2011

10%: 1 year, or 2010

Canada's inflation rate between October 2008 and October 2009 was 1.8%. The Bank of Canada, in general, aims for a 1-3% inflation rate. 

Don't forget to check out my article on TFSA stock/equity accounts and Canadian ETF MERs, which are helpful for planning one's TFSA investments. Please note that I'm not providing investment advice here, or on any site of mine. Get your own TFSA advice!