TFSA and RRSP contribution room, and how to actually track it
How room accrues, why withdrawals behave differently in each account, and the overcontribution traps that cost people real money.
August 15, 2026 · 4 min read
Contribution room is one of the few areas of personal finance where the penalty for a small mistake is immediate and mechanical. The CRA does not send a warning before it starts charging.
The two main registered accounts behave differently in almost every respect, and conflating them is the most common source of error.
TFSA: room comes back, but not immediately
TFSA room accrues every year from the later of 2009 or the year you turn 18, provided you are a Canadian resident. It accumulates whether or not you open an account, so someone who opens their first TFSA at 35 has years of accrued room waiting.
The rule that catches people is the withdrawal timing:
A TFSA withdrawal restores contribution room on January 1 of the following calendar year — not immediately.
Withdraw in March and re-contribute the same amount in June of the same year, and you have overcontributed unless you had unused room to cover it. The penalty is 1% per month on the excess, for every month it remains.
This trips up people using a TFSA as a flexible savings vehicle, moving money in and out across a year, who reason that they are "putting back what they took out."
Other TFSA specifics worth knowing: contributions are not deductible, growth and withdrawals are not taxable, and holding US dividend-paying stocks means the 15% US withholding tax is generally not recoverable, because a TFSA is not a recognised retirement account under the Canada–US tax treaty.
RRSP: room is earned, and withdrawals do not restore it
RRSP room is a function of income, not age. Each year you accrue 18% of the previous year's earned income, up to an annual maximum, reduced by any pension adjustment from an employer plan. Unused room carries forward indefinitely.
Withdrawals do not restore room. Money taken out of an RRSP is gone from the account permanently, taxed as income in the year of withdrawal, and subject to withholding at source. The two exceptions — the Home Buyers' Plan and the Lifelong Learning Plan — are repayable loans to yourself with their own schedules, and a missed repayment becomes taxable income.
The deduction is also separable from the contribution. You can contribute this year and carry the deduction forward to a year when your marginal rate is higher, which is worth considering if your income is unusually low this year.
Unlike a TFSA, US dividends inside an RRSP are generally exempt from the 15% withholding under the treaty, which is why US-listed holdings often sit there.
The overcontribution buffer that is not a buffer
RRSPs carry a $2,000 lifetime overcontribution allowance before penalties apply. This is widely described as a cushion. It is more accurately a margin for error: the amount is not deductible, and once you have used it, you have no protection left against a genuine mistake later.
TFSAs have no equivalent. The first dollar over is penalised.
Where the authoritative number lives
Your CRA My Account shows both figures. This is the number that counts, and it is the only one that does.
Two caveats that matter:
- The figure is only as current as your last assessed return. Contributions made this year, especially recent ones, may not be reflected yet.
- Transfers between institutions, corrections, and prior-year reassessments can move it after the fact.
Any figure a tool shows you — including Luum's — is an estimate built from what you have told it. It is useful for planning and for catching an obvious problem early. It is not a substitute for checking My Account before you make a large contribution.
Why tracking this is harder than it should be
If you hold registered accounts at more than one institution, no single institution can tell you your position. Each one knows what it received. The room is a property of you, not of any account.
That is the same structural problem as adjusted cost base: the authoritative view exists only when someone aggregates across every account, and by default nobody does.
The practical approach is to record contributions as you make them, with the date and the account, and reconcile against My Account once a year after your notice of assessment arrives. It takes a few minutes annually and it removes the entire category of error.
Verify your own room with the CRA before acting on any estimate.
This article is educational and general in nature. It is not investment, tax, or legal advice, and it does not take your own circumstances into account. Verify tax treatment with the CRA or a qualified tax professional.