OTTAWA, Jan 18, 2026, 03:47 EST
- The CRA has set Canada’s TFSA annual contribution limit for 2026 at C$7,000.
- The agency notes that 2025 TFSA records won’t be processed until April, which means early-year room totals may fall behind.
- Investors considering new deposits favor low-cost funds and dividend payers, though over-contributing penalties can be costly
Canada’s tax authority set the 2026 Tax-Free Savings Account (TFSA) limit at C$7,000, but urged savers to confirm their own contribution room before adding funds. The Canada Revenue Agency (CRA) cautioned that its online records might not be fully up to date. According to the CRA, TFSA data from 2025 won’t be finalized until April 2026, which it considers the ideal time to check your updated contribution limits. 1
This is critical now since the new room is already active, and a lot of Canadians deposit early in the year. Misjudging your available room even slightly can escalate into a significant tax headache.
The $7,000 annual TFSA contribution limit has stayed steady for three years now. Since the TFSA’s 2009 debut, someone eligible every year could amass up to $109,000 in contribution room by Jan. 1, 2026, depending on factors like residency, age, and past activity. Certified financial planner Jason Heath noted in a MoneySense column that CRA TFSA data “tends to be outdated” early each year, as last year’s withdrawals and contributions might not yet be included. 2
TFSAs allow Canadians to shield investment gains—capital gains and dividends alike—from taxes, though contributions aren’t tax-deductible, unlike with Registered Retirement Savings Plans (RRSPs). Beyond cash, TFSAs can hold stocks, bonds, mutual funds, exchange-traded funds (ETFs)—which trade like stocks—and guaranteed investment certificates (GICs), offering fixed returns over set terms. 3
With just C$7,000 of new contribution room for many, the focus shifts to what investors should actually hold inside their TFSA. Those planning to buy and hold tend to prioritize this space for assets where the tax advantage really counts — typically higher-growth stocks or reliable dividend payers.
Fortis, a regulated utility holding company, operates nine electric and gas utilities across Canada, the U.S., and the Caribbean, serving 3.5 million customers. The company also highlights its streak of raising annual dividends for 52 straight years. 4
Fortis, listed in the U.S., offered a dividend yield near 3.41% early Sunday. Bank of Montreal’s yield stood close at 3.37%, according to SoFi data. https://www.sofi.com/invest/stock/FTS/ 5
Bank of Montreal’s push into the U.S. has been key to its growth strategy, highlighted by its acquisition of Bank of the West. BNP Paribas confirmed it finalized the sale of Bank of the West to BMO Financial Group on Feb. 1, 2023. 6
BMO ranks among Canada’s major banks, alongside Royal Bank of Canada and Toronto-Dominion Bank—names frequently spotted in dividend-focused portfolios. Their draw is straightforward: sizable balance sheets, steady dividends, and businesses rooted in everyday banking.
The TFSA label doesn’t erase the risks. Stock prices can drop, dividends may be slashed, and even sectors seen as “defensive” aren’t immune — utilities face pressure from rate changes and financing costs, while banks can suffer credit losses during a downturn.
The administrative risk is simpler to avoid but still widespread: over-contributing. Heath pointed out the penalty is 1% per month on the excess amount. The CRA notes its portal might not show prior-year transactions until spring, particularly for those with multiple TFSA providers.
