# Archived - Backgrounder: 2013 Tax-Free Savings Account Annual Contribution Limit Increase

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Notes: Based on an additional $500 of contributions made at the beginning of each year for 20 years and assuming a 5.5 per cent annual rate of return. On unregistered savings, a combined federal-provincial average tax rate of 21.5 per cent on investment income is assumed (based on 40 per cent interest, 30 per cent dividends and 30 per cent capital gains and a middle-income saver). ## Indexation of the TFSA Annual Contribution Limit The$5,000 annual contribution limit is indexed to inflation using the Consumer Price Index (CPI) data as reported by Statistics Canada, rounded to the nearest $500. This means that, each year, an unrounded indexed amount is calculated based on increases in the CPI, but the annual contribution limit changes only when the unrounded amount reaches the rounding threshold (see the table below). For 2013, the unrounded indexed amount moved beyond the$5,250 threshold for the first time, so the annual contribution limit increases to $5,500. Calculation of TFSA Annual Contribution Limit Year 2009 2010 2011 2012 2013 Indexation increase (%) 0.6 1.4 2.8 2.0 Unrounded indexed amount ($) 5,000 5,030 5,100 5,243 5,348
TFSA dollar limit (\$) 5,000 5,000 5,000 5,000 5,500