Millennials have the most unused TFSA room, says CRA

The data covers the 2021 contribution year.

The TFSA was first introduced in 2009, meaning that a person who was then of the eligible age – 18 – is now 33. If this person has never opened or contributed to a plan, they would have $95,000 in TFSA contribution room today.

Next year, when contribution room of at least $7,000 is added, the cumulative TFSA room available for a person eligible for the account since 2009 and who has never contributed will be at least $102,000.

“When you get to the point where you have your mortgage under control, have excess cash flow and are (building) retirement savings, you have another tax-sheltered option – in more to the RRSP and the new FHSA – to do it,” said Doug Carroll, tax and estate specialist at Aviso Wealth in Toronto.

Millennials tend to have the most unused room. TFSA holders aged 35 to 39 had $54,430 in unused TFSA contribution room, while TFSA holders aged 40 to 45 had $54,090 in contribution room.

Among all TFSA holders, the average unused contribution room was $43,024.

With so much space available, “many people will never know much, or need to know much, about unregistered investments because they will have sheltered investments tax as the basis of their retirement savings,” Carroll said. “They may never get to the point where they have to worry about capital gains (in a taxable account).”

TFSA holders aged 30 to 34 held assets with an average fair market value (FMV) of $15,347 in their TFSA. This figure was $17,154 for holders aged 35 to 39 and $19,338 for those aged 40 to 44.

Carroll suggested that people in their early 20s might consider keeping their savings in TFSAs during their low-income years, then withdrawing money to contribute to the new FHSA when they plan to buy a home.

FHSAs can only stay open for a maximum of 15 years, so it might make sense to prioritize TFSA savings first.

“You had the benefit of having your TFSA limit inflated because you used it to build up savings before contributing to an FHSA,” Carroll said. There, “you will be able to use the deduction (for contributions), whether that year or in anticipation of starting to take it in a few years.”

Other key TFSA statistics

• The total FMV of all property held in TFSAs as of the 2021 assessment year was $523.7 billion.
• TFSA holders contributed $103.4 billion to their TFSA that year, while withdrawing $47.7 billion.
• There were 17.2 million TFSA holders with 27.2 million accounts (individuals can open multiple TFSAs, but their total contribution room for the plan remains the same) in 2021.
• 4.6 million TFSAs were opened that year and 2.0 million were closed.