Updated Checked by the Tax-Services.ca editorial team How we check
There is no Roth IRA in Canada. The Canadian account that works the same way is the TFSA: you put in money you’ve already paid tax on, the growth isn’t taxed, and you can take it out without tax. The dollar limit for 2026 is $7,000.
What is the Canadian version of a Roth IRA?
A Roth IRA is a US plan. The Tax-Free Savings Account is the Canadian one you probably want, and it’s simpler. Room starts to build in the year you turn 18, and only for years you’re a Canadian resident.
Three points from the CRA matter most. Investment earnings inside a TFSA aren’t taxed. Gains and losses don’t change your contribution room. And if you take money out, the room returns the following 1 January, not at once.
How much can I put in a TFSA?
Your room is the total of every annual limit since you turned 18 (or since 2009, if that came later), minus what you’ve put in, plus what you’ve taken out in earlier years. Here are the annual limits.
| Years | Annual limit |
|---|---|
| 2009 to 2012 | $5,000 |
| 2013 and 2014 | $5,500 |
| 2015 | $10,000 |
| 2016 to 2018 | $5,500 |
| 2019 to 2022 | $6,000 |
| 2023 | $6,500 |
| 2024 to 2026 | $7,000 |
Adding those up, someone who has been eligible since 2009 has $109,000 of room in 2026. That total is our own sum of the CRA table, not a printed CRA figure. Your true number is in your CRA account, though the CRA itself says to verify your room against your financial institution’s records, so keep them.
Go over your room and the tax is 1% of the excess each month until you fix it. Try the TFSA calculator to see your room for the year.
What does $7,000 a year become?
Here’s the arithmetic, with the assumptions spelled out: a 5% yearly return (an assumption, not a promise), and $7,000 deposited at the end of each year, with growth compounding yearly. Under those assumptions, $7,000 a year grows to $88,045 after 10 years, of which $18,045 is growth on $70,000 of deposits. After 20 years it’s $231,462, with $91,462 of growth on $140,000. At 25 years it reaches $334,090, and $159,090 of that is growth on $175,000. None of the growth is taxed, and that’s the whole appeal.
Deposit on 2 January instead of 31 December and every deposit earns one extra year. That lifts the 10-year figure to about $92,448, the 20-year figure to about $243,035 and the 25-year figure to about $350,794. Your real result will land in the ballpark of these, since actual returns bounce around from year to year.
You can hold a savings account, a GIC or funds inside it. The account is just the wrapper, so the return depends on what’s in it. You can test different returns with the compound interest calculator.
Which is better for me, TFSA or RRSP?
The RRSP is the reverse of a Roth: you get a deduction now and pay tax on withdrawals. Take a contribution of $10,000 with $90,000 of income in Ontario. Our RRSP calculator shows $2,965 less income tax, so the real cost is $7,035. That refund is why a higher earner often starts there.
The TFSA gives you no refund but no tax later, and you can take money out for a car, a roof or a rough year. The RRSP dollar limit for 2026 is $33,810, though your actual room is set by last year’s earnings and any pension adjustment, so check your notice of assessment.
Saving for a first home? The FHSA has deductible contributions and tax-free qualifying withdrawals. It allows $8,000 of room each year, and $40,000 is the lifetime deduction limit. Compare it on the FHSA calculator.
What if I already own a Roth IRA and live in Canada?
This is where it gets tricky. CRA guidance says a Roth IRA doesn’t have the tax deferral that Canadian registered plans get, so income inside it is generally taxable in Canada each year. There’s a treaty election that can defer that, and the CRA advises against making contributions once you’re a resident. Read the CRA’s income tax folio on Roth IRAs, and see a cross-border tax specialist before you move money in or out. We haven’t tested the details for your case.
What mistakes catch people out?
Using a TFSA as a chequing account and putting withdrawals straight back in that year is the classic one. Say Sam in Calgary pulls out $3,000 in June for a trip, then drops it back in September. If he had no other room left, that’s an over-contribution, and the 1% a month starts ticking. His room only returns in January.
Another is buying something that isn’t a qualifying investment and finding out the tax applies inside the account. Check the CRA’s list of qualifying investments before you buy.
Where this information comes from
TFSA limits and rules are from Canada Revenue Agency pages, and the RRSP and FHSA limits from CRA pages and our data files, as of September 2026. The RRSP saving figure comes from our calculator. The TFSA growth figures were recomputed for this page with a 5% return we chose for illustration. We’re an independent guide, not part of the CRA.
Frequently asked questions
Does Canada have a Roth IRA?
No. The Roth IRA is a US plan. The Canadian account that works in a similar way is the TFSA, funded with after-tax money and with tax-free growth.
What is the TFSA limit for 2026?
The dollar limit for 2026 is $7,000. Your own room also includes unused amounts from earlier years.
When do withdrawals come back as room?
On 1 January of the next year. Re-depositing it earlier can put you over your room.
What happens if I over-contribute to my TFSA?
The CRA taxes the excess at 1% for each month it remains.
Can a Canadian resident keep a Roth IRA?
The CRA says income in a Roth IRA can be taxable in Canada each year unless a treaty election is filed. Read the CRA folio and see a cross-border specialist.
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill