Brayden was eager to open his TFSA, but he didn’t turn 18 until December 21, 2019. On January 4, 2020, he opened a TFSA and contributed $12,000 ($6,000 for 2019 plus $6,000 for 2020 – the maximum TFSA dollar limits for those years). On the advice of his broker, he had opened a self-directed TFSA and invested in stocks that increased in value. By the end of 2020, the value in Brayden’s TFSA had increased to $12,800. Brayden was worried that for 2021, he would only be able to contribute $5,200 (the TFSA dollar limit of $6,000 for 2021 less the $800 increase in value in his TFSA through 2020). Neither the earnings produced in the account nor the increase in its value will reduce the TFSA contribution room in the following years, so Brayden can contribute up to $6,000 in 2021 to his TFSA.

From 2014 until the end of 2019, Josh contributed the maximum TFSA dollar limit each year. As a result of his $6,000 contribution in 2019, his unused TFSA contribution room at the end of 2019 was zero.

His TFSA contribution room at the beginning of 2020 was $6,000 (the 2020 TFSA dollar limit).

On June 15, 2020, Josh made a contribution of $500. On October 26, 2020, he withdrew $4,000.

His unused TFSA contribution room at the end of 2020 was $5,500 ($6,000 – $500).

Josh calculated his TFSA contribution room for the beginning of 2021 as follows:

Step 1: Calculate Unused TFSA contribution room at the end of 2020

TFSA contribution room at the beginning of 2020 ($6,000) minus contributions made in 2020 ($500) = Unused TFSA contribution room at the end of 2020 ($5,500)

Step 2: Calculate TFSA contribution room at the beginning of 2021

Unused TFSA contribution room at the end of 2020 ($5,500) + total withdrawal made in 2020 ($4,000) + 2021 TFSA dollar limit ($6,000) = TFSA contribution room at the beginning of 2021 ($15,500).