2019 Contributions | Tax Free Savings Accounts | Discussion forum

Rick said
So I have 11K in 2019 contributions for the wife and I stashed away. Will I need 12K? The CPI, inflation and any other factors are beyond my capabilities to calculate.  

According to this article, it might reach $ 6,000 in 2019.

https://business.financialpost.com/personal-finance/the-tfsa-cap-will-stay-at-5500-for-2017-and-we-have-low-inflation-to-thank-for-it

Since TFSA is rounded of to the nearest $ 500, the inflation might edge it towards $ 6,000. Every fall CRA comes up with the inflation figures for adjusting the TFSA, so I guess the number's might be out soon.

Article Link :
https://business.financialpost.com/personal-finance/the-tfsa-cap-will-stay-at-5500-for-2017-and-we-have-low-inflation-to-thank-for-it

Loonie said
Thanks for raising the question. I had been wondering about this also.
According to the article cited, we should not expect an announcement until December.
Still, I think it very likely the contribution limit will go up to 6K. Best to plan for it, and then, if you aren't able to use it, you are ahead for the next year - or you can blow it on winter vacation or shopping spree over the holidays!  

I believe last year on Dec 6, 2017 - CRA confirmed the TFSA limit for 2018.

I was told by someone, not sure how true that is, that last year they were only short something like $ 50 in inflation adjusted dollars for raising it to $ 6,000.

And this year if the inflation is around 1.5 % it will be raised to $ 6,000.

BOC is predicting inflation at 2 % this year, so we might be on course for $ 6,000 for 2019 as TFSA limit.

But you never know what the CRA and BOC and the Government is up to.

Next year is also election year, don't forget that, and Liberals are good with coming up with goodies to buy our votes with our own money.

rfdm4g4g9 said

Next year is also election year, don't forget that, and Liberals are good with coming up with goodies to buy our votes with our own money.  

The Conservatives tried much harder, with their 10K contribution limit, but it failed.

Rick said

Thanx Norman..I saw your previous post. Still have no idea what to do with those numbers...as per my first post  

The exact TFSA contribution room added each year is prescribed by Income Tax Act subsection 207.01(1). Essentially, it is $5,000 indexed for CPI inflation after 2009 and then rounded to the nearest $500. History of the formula is in a previous post.

Bill mentioned a Financial Post article that goes through the exact calculation.

As Loonie mentioned, we need to wait for StatsCan to calculate and release the CPI inflation number for the 12 months ending September 30 to calculate the 2019 TFSA contribution room.

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In the past, the contribution room has gone up only one notch (500), in the 5th year. Next year will be the 10th year. However, we haven't had a lot of inflation since the TFSAs started until this year, so this should easily put us over the top.

If inflation goes up more than is required to get to 6K, do we get to use the extra as credit for the next year(s), so that it takes less time to get to the next threshold?

Now I'm wondering what it takes to get to $6500. It's not a huge amount, but it does add up.

With a conservative 2.5% inflation for this year, we will need 6.6% to get to $6251.

I just did the calculation using August data and the indexed value is $5860.

We now need 6.7% to reach $6251. September data excluded.

You can also feel good about future contribution increases because the time required to reach the set intervals, reduces as the contribution increases. The first increase from $5000 to $5500 was the largest percentage gap. So assuming nice even inflation, the contribution increases will come faster over time. We seem to have economic hiccups every ten years or so, so maybe not that smooth, but the interval percentages still decrease, so inflation is the key.

Okay, the first increase only had to go $251, but every increase after is $500.