TFSA Dollar Limit - Calculation

[raffadalbo]

Edit: on the mobile app, make sure to swipe right on the table to see all 7 columns

Given the recent post and confusion on how the TFSA dollar limit is calculated, I thought I would share the calculation in the table below, because CRA doesn't. Note that the CPI Average (third column) is based on the average CPI for Oct-Sep of the year before (e.g. for 2022, it is based on the average monthly CPI for October 2020 to September 2021, rounded to the thousandths) - this is per section 117.1 of the Income Tax Act. The adjustment factor is the CPI average of a year dividend by the prior year.

Based on this, if the average monthly CPI for Sep 2021 to Oct 2022 is at least 142.013 (representing about 1.5% inflation from the same period a year earlier) then the indexed dollar limit for 2023 will be $6,255.14 which would then be rounded to $6,500.

Year
Base Amount
CPI Average
Adjustment Factor
Indexed Dollar Limit
Rounded to $500
Cumulative Room

2009
$5,000
113.558

N/A
N/A
$5,000

2010
$5,000
114.208
1.006
N/A
N/A
$10,000

2011
$5,000
115.817
1.014
N/A
N/A
$15,000

2012
$5,000
119.067
1.028
N/A
N/A
$20,000

2013
$5,500
121.392
1.020
N/A
N/A
$25,500

2014
$5,500
122.533
1.009
N/A
N/A
$31,000

2015
$10,000
124.567
1.017
N/A
N/A
$41,000

2016
$5,000 (indexed)
126.150
1.013
$5,559.31
$5,500
$46,500

2017
$5,000 (indexed)
127.933
1.014
$5,637.14
$5,500
$52,000

2018
$5,000 (indexed)
129.850
1.015
$5,721.70
$5,500
$57,500

2019
$5,000 (indexed)
132.717
1.022
$5,847.57
$6,000
$63,500

2020
$5,000 (indexed)
135.283
1.019
$5,958.68
$6,000
$69,500

2021
$5,000 (indexed)
136.692
1.010
$6,018.26
$6,000
$75,500

2022
$5,000 (indexed)
139.983
1.024
$6,162.70
$6,000
$81,500

 

[asmodea]

@raffadalbo Thanks for the explanation.

based on the average CPI for Oct-Sep of the year before (e.g. for 2022, it is based on the average monthly CPI for October 2020 to September 2021, rounded to the thousandths)

A couple of weeks I used an inflation calculator to take a stab at this. I think I used Jan 2009 to Sept 2021 and since the results were a touch over $6250 I predicted that it would go up for 2021. Good thing I didn't bet on it.

 

[raffadalbo]

@asmodea It’s not an intuitive calculation at all. I spent a bit of time to work through it.

 

[raffadalbo]

If anyone is using the mobile app and you only see a few columns, you need to swipe right to see all 7 columns. FYI.

 

[xuanang01]

@raffadalbo I use the same trick on Tinder. Nice try.

 

[raffadalbo]

@xuanang01 I just want you to love my Excel skills.

 

[xuanang01]

@raffadalbo

 

[saltandlight99]

@raffadalbo Thanks for taking the time to do this.

 

[raffadalbo]

@saltandlight99 You're welcome. I was doing it for my own benefit and figured I might as well share the work.

 

[lettyvdax]

@raffadalbo If I remember correctly it was only officially indexed to inflation starting in 2016. I would assume what happened is they began indexing starting from 2016 and starting at 5500 which would make the indexed dollar amount 6191.6091954.

 

[ylime]

@lettyvdax No. It was always supposed to be indexed for inflation. You can see this for yourself in the 2008 legislation that introduced it

“TFSA dollar limit” for a calendar year means,

(a) for 2009, $5,000; and

(b) for each year after 2009, the amount (rounded to the nearest multiple of $500, or if that amount is equidistant from two such consecutive multiples, to the higher multiple) that is equal to $5,000 adjusted for each year after 2009 in the manner set out in section 117.1.

The reference to section 117.1 refers to the Income Tax Act (the legislation I linked to amended a number of pieces of existing legislation, including the ITA.

However, as part of a pre-election campaign, the Harper conservative government increased the limit to $10,000. When they lost the election, the incoming liberal government undid that and simply restored the limit to what it was always supposed to be.

 

[raffadalbo]

@ylime This is accurate.

 

[raffadalbo]

@lettyvdax Not quite, it’s indexed effective 2016 but with a starting point of $5,000 and calculated from 2009 as per the definition of “TFSA dollar limit” in section 207.01 of the income tax act.

 

[blessing123]

@raffadalbo Your numbers for contribution limits are incorrect?

 

[ylime]

@blessing123 I don't think they are.

 

[raffadalbo]

@ylime Thanks for sticking up for me.

 

[raffadalbo]

@blessing123 Which one?

 

[blessing123]

@raffadalbo 2016-2022

2016 -5500

2017 - 5500

2018 - 5500

2019 - 6000

2020 - 6000

2021 - 6000

2022 - 6000

 

[ylime]

@blessing123 That's what's listed?

 

[raffadalbo]

@blessing123 I don’t see the problem… those are correct and even posted on the CRA website. Are you looking at the correct column in my table? (Swipe right to see all 7 columns.)