TFSA to remain the same in 2015 – $5,500

There have been a number of articles about the possibility of the Harper government increasing the TFSA’s contribution limit to $10,000 in 2015. Today the Canadian government announced 2015 indexation adjustment for personal income tax, benefit amounts, and the annual dollar limit for Tax-Free Savings Accounts (TFSAs). Contrary to popular beliefs, the 2015 TFSA contribution limit will remain the same as 2014 at $5,500.

I was a little bit disappointed to see that the amount will remain the same. A $10,000 TFSA contribution per person, it would completely change the landscape when it comes to determining which one is more beneficial, RRSP or TFSA. (It would be TFSA if you can maximize the contribution limit each year!). At the same time, I’m glad that the government is continuing with the TFSA program. At $5,5500 contribution limit per individual, that is still quite a bit of money to purchase high quality dividend stocks. I for one will be looking to add to our existing REITs position with our 2015 TFSA money. Mrs. T and I will be able to contribute a total of $11,000. If we were to use all the money and purchase the top 4 holding from Vanguard’s Canadian Capped REIT Index ETF (VRE):

RionCan (REI.UN) 5.22% yield
H&R REITs (HR.UN) 6.06% yield
Canadian REIT (REF.UN) 3.64% yield
Dream Office (D.UN) 8.33% yield

It would produce an annual dividend of $639.38 (ignoring trading commissions and assuming partial share purchases). If I were to take the more conservative approach and invest in a variety of Canadian dividend stocks with an estimated conservative yield of 3%, we would get $330 in annual dividend. Both are pretty good numbers if you ask me!

I haven’t decided what will be our stock purchasing strategy for the 2015 TFSA money yet. I will probably purchase some REITs and some low yield but high dividend growth stocks to further diversify our portfolio.

For now we will be saving as much money as possible so we will have $11,000 to deposit into our TFSA on Jan 1st, 2015 and make some purchases in early January.

Fellow Canadian readers, what do you plan to do with your 2015 TFSA contribution room?

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  • Reply
    Asset Grinder
    November 27, 2014 at 1:14 am

    Dissapointed it is staying the same $5500. I thought it would be 6k minimum this year everyone was saying. I have my tfsa full of reits and will continue the same with the new room transferring some over from my non registered account.

    • Reply
      November 27, 2014 at 12:51 pm

      Hi Asset Grinder,

      It would only be $6k if inflation is higher, at current sub 2% inflation rate we probably won’t see a $6k limit until 3 or 4 years down the road.

  • Reply
    November 27, 2014 at 3:58 am

    Hi Tawcan, I too am quite disappointed. A $10,000 contribution limit would be quite awesome. However, there is always the possibility of the increased contribution limit in 2016 as the federal election is coming next year. The Harper administration may include that in his platform to sway a few votes for him.

    • Reply
      November 27, 2014 at 12:52 pm

      Hi Jeff,

      A $10k contribution would be awesome. It would certainly be a challenge to maximize TFSA and RRSP in that scenario. I suspect the government will have an announcement about TFSA contribution increase before the election so they can say that they kept their promises.

  • Reply
    November 27, 2014 at 7:23 am

    Thanks for the update. I seem to have missed the announcement. A bit disappointed with the $5500 room…but I think raising it to $10K would have been a rash decision on the government’s part.


    • Reply
      November 27, 2014 at 12:54 pm

      Hi R2R,

      Raising it to $10k would probably mean some sort of tax increase to compensate loss of tax revenue. I’m just happy that they kept the TFSA program alive.

  • Reply
    November 28, 2014 at 1:16 pm

    Hi Tawcan,
    I came cross your blog via Mark’s My Own Advisor, and I was impressed and enjoy reading your many good articles regarding your dividend investing strategy and stocks BUY analysis.

    I noticed you plan to put the upcoming $11,000 TFSA into the top 4 REIT stocks, I would like to know IF the interest rate goes up in next May, which will be a big impact for REIT sector, what is your defence position?

    Thank you and you have a great weekend!

    • Reply
      November 28, 2014 at 3:43 pm

      Hi Jeanne,

      That is a hypothetical plan, I haven’t completely decided whether I will do that yet. I most likely will be purchasing a mix of REITs and other high growth dividend stocks. With oil price being so low and a lot of oil & gas stocks are hitting 52 weeks low, it might be worth it to invest in oil & gas stocks too.

      To answer your question about higher interest rate… that is definitely a concern. Interest rate will eventually go up sooner or later, that’s why you need to analyze REIT’s income statements and quarterly results to determine their debt level. Higher interest rate will have a negative impact for the REIT sector but some REITs are structured better to handle higher interest rate.

      Ultimately higher interest rate means the economy is picking up and the government is trying to control inflation rate. A booming economy will mean more need for office/retail/apartment spaces. REITs will also have more argument of raising their rents.

      It’s all about risk vs reward evaluation.


  • Reply
    Prairie Eco Thrifter
    November 30, 2014 at 9:59 am

    Within our TFSA, we invest in ETFs (with Questrade). Well, I shouldn’t say WE – my husband invests in mutual funds mainly and I in ETFs, but my portfolio is outperforming his. We haven’t maxed it out because we were focusing on our RRSPs for awhile but now we’re refocusing on our TFSAs.

  • Reply
    November 30, 2014 at 9:37 pm

    Ah shucks $10,000 would have been amazing. Oh well, that seemed to be a pie in the sky dream anyways, so not disappointed. Time to ramp up maxing out both TFSA in 2015!

  • Reply
    Dividend Digger
    December 5, 2014 at 7:13 pm

    Darn, i was really hoping for the 10K! Oh well, as you said, the TFSA in general is a real blessing anyways. Thanks for sharing, now if i can only stop with this wishful thinking haha.

  • Reply
    January 19, 2015 at 6:29 am

    Reviewing articles on the possibility of the increase of the TFSA contribution amount in appears that if it was to increase to $10,000/year it would not be announced until the spring budget speech and would not take affect to 2016 year. Does anyone have the same thoughts on the information that is being put out there?

    • Reply
      January 19, 2015 at 3:45 pm

      Hi Randy,

      If the announcement does come out we probably won’t see an increase to $10k/year until 2016. I don’t think they’ll change the contribution limit for this year.

  • Reply
    February 11, 2015 at 3:25 pm

    $10K/yr TFSA limit would be awesome. I’m maxing out my RRSP and my TFSA, but when I start winding down work I want to start drawing down my RRSP right away as long as I can stay in a lower tax bracket than I contributed it to. Having $10K/yr of space in my TFSA will let me get that RRSP money back to work tax free and free of any income impacts later when I get OAS.

    I don’t want a huge RRSP when I am 71 and get hit with a higher marginal tax rate than when I contributed the money.

    — Vik

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