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Tag: FHSA

  • Your TFSA reset for the new year – MoneySense

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    New TFSA contribution room

    Every Canadian resident aged 18 or older has $7,000 of new TFSA room as of January 1, 2026. This has been the annual maximum for three consecutive years now, but it could possibly rise in 2027 to $7,500. The 2027 TFSA limit will be confirmed in late 2026. 

    Since 2016, the annual maximum has risen in $500 increments based on adjustments tied to the Consumer Price Index (CPI), which measures annual inflation. 

    Cumulative TFSA limit

    Your cumulative TFSA limit is more important than the annual maximum. If you have missed contributions in the past, your TFSA room carries forward, with the yearly maximum added to your past room.

    If you were 18 years of age or older in 2009 and a resident in Canada all of those years, your cumulative TFSA room would be $109,000 as of January 1, 2026. That is: if you were born in 1991 or earlier, have been a resident in Canada since 2009, and have never contributed to a TFSA, you could have $109,000 of TFSA contribution room in 2026.

    2025 TFSA withdrawals

    TFSA withdrawals impact your TFSA room. If you took withdrawals last year, those withdrawals will be added to your TFSA limit for 2026 along with the annual maximum. 

    For example, if you withdrew $10,000 from your TFSA in 2025, you would have the $7,000 annual maximum plus another $10,000 of TFSA room, for a total of $17,000 of new TFSA room on January 1, 2026. 

    Confirming TFSA room with CRA

    You can confirm your TFSA room with the Canada Revenue Agency (CRA) by calling them or logging into your CRA My Account online. Note, however, that the data tends to be outdated. 

    TFSA contributions and withdrawals from the previous year are reported to CRA the following year, but may not be reflected until the spring or later. As a result, CRA’s TFSA records during the first half of the year may be inaccurate. This often leads to people inadvertently over-contributing to their TFSAs. 

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    What to do if you overcontribute

    If you contribute to your TFSA beyond your limit, you may be subject to penalties and interest. The penalties are 1% of the overcontribution each month. For example, a $10,000 overcontribution would have a $100 monthly penalty, or $1,200 for a full 12-month period. Interest is also applied to the penalties, and a penalty equal to 100% of any income or gains resulting from a deliberate overcontribution.

    Non-residents of Canada cannot contribute to their TFSAs while living abroad. So, non-resident TFSA contributions will also attract penalties and interest. 

    The CRA may send you an education letter about your TFSA overcontribution and waive penalties and interest, but you should not count on it. 

    The bottom line: TFSA overcontributions can be very costly, so try to avoid and correct them as soon as possible. 

    Compare the best TFSA rates in Canada

    If you do over-contribute, you should file a TFSA Return (Form RC243) by June 30 of the next calendar year. The CRA may show leniency by waiving or canceling all or part of the penalty tax. There are three conditions they will consider:

    1. If the tax arose because of a reasonable error.
    2. The extent to which the transaction(s) that lead to the tax also lead to another tax under the Income Tax Act.
    3. The extent to which withdrawals have been made from the TFSA to correct the error.

    If you disagree with a TFSA Notice of Assessment, you have 90 days to submit a Notice of Objection – Income Tax Act (Form T400A). This is a way to formally disagree with CRA’s assessment and request a second review. 

    What to do if… you have RRSP room

    If you have a high taxable income and RRSP contribution room, you may want to consider an RRSP contribution. You can withdraw money from your TFSA and use it to make an RRSP contribution. 

    The most beneficial situation to consider this is if your income is relatively high now, and you expect it to be relatively low in retirement. Especially if you can commit the money to invest for the long-term. 

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    Jason Heath, CFP

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  • 5 money moves to make before the end of the year – MoneySense

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    1. Revisit your budget

    Budgets are a great tool to help you stay on track with your spending and savings goals, but they need regular updates to maximize their effectiveness. Hopefully, you’ve recorded any changes to your income, expenses, or money objectives throughout the year. If not, now is the time to do a deep update and analyze your progress. 

    If you find evidence of impulse spending, it’s time to make some adjustments. For example, rather than keeping all of your income in an instant-access chequing or savings account, you could tuck some away in an account like EQ Bank’s high-interest no-fee Notice Savings Account. In exchange for giving advance notice of a withdrawal (10 or 30 days), you get a higher interest rate. It’s a win-win for spur-of-the-moment shoppers who want to hold some of their money at arm’s length.

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    2. Simplify your money management

    If you think managing your own spending and saving is a challenge, try doing it with others! For some people—like couples, family members, or even roommates—budgeting can be complicated by shared expenses or joint savings goals. That’s where a joint bank account can make a huge difference. 

    When you open a joint account, all account holders (you and up to three other people) can deposit, withdraw, and save in the same account. Rather than trying to bookkeep separately, everything is in one place. Make easier money management part of your financial resolutions. Pro-tip: Consider a no-monthly-fee, high-interest bank account like EQ Bank’s Joint Account to keep your money growing. 

    3. Top-up your retirement funds and get a tax break

    Registered retirement savings plans (RRSPs) let you save for retirement in a tax-advantaged account, meaning that every dollar you put away can reduce your taxable income for the following year. Every year, you have a certain amount of contribution room for your RRSP and unused room rolls over into subsequent years. 

    Taxes on your RRSP savings are only due once you withdraw. The idea is that you will be retired at that point, so your tax rate will be lower than during your working years. 

    Although the last day to contribute to your RRSP is in March, many Canadians strive to top up earlier. Not only does this give your savings more time to accumulate interest, but it also ensures that your retirement savings don’t end up inadvertently going to holiday expenses.  

    4. If you need it, consider making a withdrawal from your tax-free savings account (TFSA) before Dec. 31

    Similar to the RRSP, a tax-free savings account (TFSA) is a tax-advantaged registered savings account with a certain amount of contribution room added annually. The difference is that when you put money into a TFSA, you don’t get a tax-break on your income tax. Instead, any gains you earn are yours, tax-free. 

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    The annual deadline for TFSA deposits is December 31, and on January 1, you get your new contribution room. What you may not know is that when you withdraw funds from your TFSA, the amount you withdraw is added back to your contribution room the following calendar year. 

    So, if you anticipate needing money soon but still want to make use of your full contribution room next year, making a withdrawal before December 31 is a good time to do it because you’ll get that room back quickly. 

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    • Eligible for CDIC coverage: Yes, for deposits

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    5. Capitalize on saving for a home

    A first home savings account (FHSA) is a tax-advantaged investment that works in a similar way to an RRSP in that the money you deposit can reduce the amount of your taxable income. And, similar to a TFSA, the money you withdraw is tax-free. Each year’s unused contribution room rolls over to the next year, so if you’ve never contributed but open one now, you could deposit up to $16,000 per person (or double that, for a couple) in 2026. 

    Unlike a TFSA or RRSP, you won’t begin accumulating contribution room until you open the FHSA. So, if you don’t have an FHSA but intend to open one, doing so before Dec. 31 can give you an extra year of contribution room in 2025. 

    On the other hand, if you have some extra cash (perhaps a year-end bonus!) to allocate to savings, contributing to your existing account by the December 31 deadline can reduce your taxable income for 2025.

    Get started on a new year’s financial plan

    Year-end is a great time to review your financial health. By choosing the right banking products and making smart investment decisions, you can build momentum toward lasting security and success.

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    About Keph Senett


    About Keph Senett

    Keph Senett writes about personal finance through a community-building lens. She seeks to make clear and actionable knowledge available to everyone.

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    Keph Senett

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  • Financial planning for the first time? A guide for women on a single income – MoneySense

    Financial planning for the first time? A guide for women on a single income – MoneySense

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    While some financial advisors recommend the 50-30-20 rule, where 50% of your pay goes to fixed expenses, 30% to discretionary and 20% to savings, putting aside just 10% of your take-home pay for savings is OK, too. “We can be as efficient with that 10% as we can possibly be… meaning we could put your savings in a diversified portfolio where the expected returns are going to be higher and over a longer period of time.”

    Ayana Forward, a financial advisor and founder of Retirement in View in Ottawa, acknowledges how hard it can be for single women—and all women—to create a plan to invest, particularly early in their careers. “You have all kinds of competing priorities,” she says, including possible childcare expenses, a mortgage, car payments and school debts. However, Forward encourages women to begin saving anything they can as soon as possible to build habits and benefit from compound interest, which is when your money’s interest starts earning interest of its own. 

    Here’s how that can look: Let’s say you take $100 a week from your miscellaneous allotment and invest it at an interest rate of 5% and watch it grow. After 30 years, if you had put that $100 in a savings account with no or a low interest rate, you’d only have $156,100—but because you invested it, you’d have $345,914. (Calculate your savings with our compound interest calculator.) 

    Prioritize what you love

    What are your absolute must-haves in life? Your non-negotiables? You don’t have to give those up—you may just have to find an alternative way to make them work while meeting your savings goals. “My client, who is a college instructor, loves to travel, and her trips are usually tax deductible,” says Hughes. But to be able to afford her trips while continuing to save, she picked up a part-time job. “It gave her some extra income since she was determined to meet her goal, which was to own a place of her own,” says Hughes. 

    Whether you pick up a side hustle or not, chances are there will still be a few sacrifices you’ll need to make. It comes down to looking at your budget and deciding what you want to prioritize in the immediate time period, says Cornelissen, and deciding what you can let go of for a while. 

    Or it can relieve you from doing the opposite, over-saving for fear of not having enough money. Knowing how much money is going in and going out of your account is key to making a plan for your money.

    Revisit your employee contract

    If you’re employed full-time, find out if your company offers a pension or an employer-sponsored plan, such as RRSP matching (where an employer contributes the same amount as an employee to a registered retirement savings plan). This will help you determine how much you need to save for retirement. “If you don’t have a pension, you’ll need to save more than someone who has a pension,” says Forward. 

    Also, when planning for your retirement explore government income sources that may be available, like the Canada Pension Plan (CPP) and Old Age Security (OAS). “You can go into your My Service Canada account to get those benefit statements so you know what you’ll be receiving from those programs,” says Forward. (You can log into your My Service Canada account using a unique password or use your bank account log in.)

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    Renée Reardin

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  • How long it takes to get your tax refund in Canada—and how to spend your refund – MoneySense

    How long it takes to get your tax refund in Canada—and how to spend your refund – MoneySense

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    10 ways to use your tax refund

    How you choose to spend your tax refund will often boil down to your tax bracket and debt profile, Forward explains, and working with a certified financial planner (CFP) can help you cut through the noise and allocate it wisely. Here are 10 savvy ways to spend your tax refund. 

    1. Pay down credit card debt

    “If you’re carrying credit card balances, you might want to go in that direction to get rid of any of those balances so that you’re not paying interest that you don’t need to pay,” says Forward. Eliminating or significantly reducing credit card debt with your tax refund can save you money in the long run and improve your overall financial health and creditworthiness.

    2. Start an emergency fund

    Building an emergency fund with your tax refund can provide a financial safety net for unexpected expenses and prevent you from going into debt during emergencies. Consider a high-interest savings account (HISA) for your emergency fund to earn interest on your savings and interest on the interest, which is called compound interest. (Check out MoneySense’s compound interest calculator).

    3. Start a first home savings account (FHSA)

    If home ownership is a future goal for you, setting up a first home savings account (FHSA) with your tax refund can kickstart your journey to becoming a homeowner. You’re limited to $8,000 a year and a maximum of $40,000, but it’s a solid first step to owning your first property that only first-timers can take advantage of. 

    4. Open a TFSA

    If you haven’t created any financial goals yet but still want to be intentional with your tax refund, opening a tax-free savings account (TFSA) with your tax refund can help you grow your savings tax-free and provide flexibility for future financial goals.

    5. Make an RRSP contribution

    Contributing to an RRSP with your tax refund can help you save for retirement and reduce your taxable income. Still, Forward explains that this option may be less important if you need the money sooner or already have a pension. “A younger person might not be thinking about RRSPs because they’ve just started their career,” says Forward. “RRSPs make more sense when you’re in your highest tax bracket, and you can get the most bang for your buck.”

    6. Make a prepayment on your mortgage

    If you have a mortgage with a prepayment privilege, you may use your CRA tax refund to make a prepayment on your mortgage. It goes directly toward your principal owing, so you can reduce the overall interest you pay and shorten your mortgage term. Most lenders limit how many times you can pre-pay each year, but maxing out allowable prepayments can save you a lot of interest in the long run.

    7. Pay down your student loan

    If you’ve got any lingering student debt, using your tax refund to pay down student loans can help you reduce your debt burden and save on interest payments over time. For more tips, check out “Student Money: “How to pay for school and have a life—a guide for students and parents.”

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    Alicia Tyler

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