Shi immigrated to Canada when she was 16 years old. Shi worked very hard since arriving, and pretty much raised her little brother on her own. To this day she has little in savings but lives a comfortable life. She just celebrated her 60th birthday and her younger brother, who is a very wealthy entrepreneur, gave her money for her birthday to maximize her Tax-Free Savings Account (TFSA). What is the maximum Shi can contribute in 2024? Shi would like to consider any carry-forward room that she may have.

Question

Shi immigrated to Canada when she was 16 years old. Shi worked very hard since arriving, and pretty much raised her little brother on her own. To this day she has little in savings but lives a comfortable life. She just celebrated her 60th birthday and her younger brother, who is a very wealthy entrepreneur, gave her money for her birthday to maximize her Tax-Free Savings Account (TFSA). What is the maximum Shi can contribute in 2024? Shi would like to consider any carry-forward room that she may have.

• We are April 24, 2024

• Shi retired in 2023

• Shi opened a TFSA account in 2009 where she contributed $5,000 at that time (the only contribution that she has made to date)

• Shi withdrew $8,000 from her TFSA in May 2023 when her account had a market value of $8,248

TFSA dollar limits and cumulative totals

Question 60Select one:

a.
$90,000

b.
Nothing can be contributed to her TFSA as Shi is retired and therefore can no longer contribute under the TFSA rules

c.
$87,000

d.
$98,000

e.
$82,000

Answer 1

c. $87,000

To calculate the maximum contribution for Shi in 2024, we need to consider the TFSA dollar limits and cumulative totals.

The TFSA contribution room for 2024 is $6,000.

Shi opened her TFSA in 2009 and contributed $5,000 at that time.

She withdrew $8,000 in May 2023. This means her TFSA contribution room for 2023 should have been $8,000 + $6,000 (contribution limit for 2023) + any unused room from previous years.

Unused contribution room from previous years:

2020: $6,000
2021: $6,000
2022: $6,000

Total unused contribution room: $6,000 + $6,000 + $6,000 = $18,000

So, Shi's contribution room for 2023 should have been $8,000 + $6,000 + $18,000 = $32,000

Since she withdrew $8,000, her remaining contribution room for 2023 is $24,000.

For 2024, Shi's contribution room would be $6,000 (2024 limit) + $24,000 (carryover from 2023) = $30,000

Adding her initial contribution of $5,000, the maximum contribution Shi can make in 2024 is $30,000 + $5,000 = $35,000

However, the maximum contribution room for TFSA for someone who was eligible throughout the period is $87,000 by 2024. So Shi can contribute up to $87,000 in 2024.