8.3 Million Canadians Are Using Their TFSA Wrong

Every year, the CRA quietly publishes a bunch of TFSA stats that I always go through. In this blog post, I’ll show you the five numbers from the 2024 file that reveal how most Canadians are using their TFSA wrong, starting with…

TFSA Stat #1 — $38,566 Average Balance

Thirty-eight thousand, five hundred and sixty-six dollars.

That’s the average TFSA balance in Canada. Every holder, every age, every situation, lumped together. Before we go any further, ask yourself where you sit against that number. Above it? Below it?

Look at the shape of that curve. It climbs through every decade of life and never catches up to the room available. The eighty-plus crowd — the people who’ve held this account the longest — top out at $76,305 on average. That’s the ceiling, and it’s well below the max contribution limit of $109,000. 

And here’s the part that might surprise you. Women are ahead of men. The average female holder sits at $40,481. The average male holder, $36,567. Almost four grand higher for women, in every single age band. Women contribute slightly less per year on average, but they withdraw less aggressively, and the balances compound from there.

TFSA Stat #2 — $166.2 Million in Penalties

One hundred and sixty-six point two million dollars.

That’s how much the CRA assessed in TFSA over-contribution tax in 2024. Roughly 133,000 Canadians got caught. Average penalty: $1,252 per person. And that number has quadrupled in the last decade.

Here’s why this one hits close to home. About fifteen years ago, I checked my contribution room on the CRA’s My Account page, did exactly what it said I could, and ended up $5,000 over for almost full year. First I knew about it was the letter. I had to pay about $500 in fines, which was really annoying.

And the CRA still tells you to this day, in writing, not to trust the number on their own page. It updates once a year, in the spring. Earlier this year they blocked the display entirely for over a month because their own data was off. Track your own room.    

The other trap is withdrawals. Pull money out of your TFSA, figure you’ll put it back in a few months. You can’t. Not in the same calendar year. The room doesn’t come back until January 1st of the following year. Re-contribute before then and you’re over. 1% per month until you fix it.

And if you’re moving banks? Don’t withdraw and re-deposit. Do a direct institution-to-institution transfer. Different paperwork, same money, no penalty.

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TFSA Stat #3 — 8.3 Million Canadians

Eight point three million.

That’s how many Canadians have a TFSA and didn’t put a single dollar into it last year. Out of roughly 19 million holders, that’s nearly half.

And the first thing you’d assume is, fine, that’s the broke twenty-somethings, the people who can’t afford to invest yet. Open the table.

It’s not.

The non-contributing group skews older. The biggest concentrations are in the 60-plus age bands. People in or near retirement. Folks with pensions, RRSPs, savings, capital. The capacity is there. The account is there. The dollars never moved.

Some of these holders are already maxed. Some are retired and drawing the account down the way it was designed. Those are fine. The problem is the rest. People with room, with capital sitting in non-registered accounts paying tax every year, who just haven’t gotten around to using the TFSA.

That’s $7,000 of new room every Canadian got last year, sitting untouched. Over the life of the account? Often well over $80,000 of unused space.

And the fix is easy. Two ways to never miss a year again. One, set up automatic contributions from each paycheque, so the money moves before you see it. Or two, what I do personally, lump sum on January 1st. New year, new room, done. Either way, you take the decision off your plate.

TFSA Stat #4 — Even The Rich Aren’t Filling It

Seventy-three thousand, six hundred and forty-six dollars.

That’s the average TFSA balance for Canadians earning over $250,000 a year, straight from the CRA’s own data. The top 1% of earners in this country.

They’re still over $35,000 short of the contribution limit.

Think about that. The annual cap is $7,000. For someone clearing $250K, that’s a rounding error. They could max it out of a single paycheque and never notice the money was gone. If anything, you’d expect this group to be over the lifetime cap on growth alone, because the TFSA can grow tax-free beyond the contribution limit. Sixteen years of compounding in a maxed-out TFSA invested in a broad equity index should put a balance well into the low six figures by now.

Instead, the top earners average $73,646.

What the data is really telling you is that even at the top, most of these accounts aren’t getting contributed to consistently, or the money inside isn’t being invested in anything that actually grows. Probably both.

So when you look at your own balance and think “I’ll catch up when I make more,” the data says something different. People who already make more, aren’t catching up. The account’s not getting filled by income. It’s getting filled by intention.

And here’s the other thing high earners run into. They’re also the group most likely to leave Canada at some point. The moment you become a non-resident, the TFSA rules change fast. No new room. Most countries don’t even recognize the tax-free status and will tax the growth every single year. That’s exactly what I am building Blueprint Abroad for. A full leaving Canada course on residency, treaties, departure tax, and what to do with your registered accounts like TFSAs before you go. Sign up for the waitlist at blueprintfinancial.ca/abroad.

TFSA Stat #5 — 8.9% Maxed out

Eight point nine percent.

That’s the share of Canadian TFSA holders who’ve actually maxed out their contribution room. Out of 19 million people with a TFSA, only 1.7 million are fully using it.

For every eleven Canadians with a TFSA, one is filling it up. The empty accounts, the cash sitting where equities should be, the penalties. All symptoms of this one number.

And look at the bigger picture. The Canadian household savings rate sat at just 5% in 2024. Groceries up, mortgages up, rent up. People aren’t avoiding the TFSA because they don’t believe in it. They’re trying to get through the month. Maxing $7,000 a year is genuinely hard right now.

But here’s what I see in practice. The people who hit the cap aren’t earning twice what everyone else earns. They’ve built a system. Pay yourself first. The transfer to the TFSA goes out the same day the paycheque hits, before rent, before groceries. Even $270 every two weeks gets you maxed. Set it once, automate it, forget about it.

For myself, I max it out every year, and I set a reminder every January 1st to contribute the max to it. I know not everyone has that luxury or cash on hand, but try to set it as a annual goal to max out your TFSA. 

If you’re watching this, you’re probably closer than most. The gap between “almost there” and “actually maxed” is usually two or three decisions away.

Conclusion

Five numbers, one quiet CRA file, and over a trillion dollars of tax-free room sitting idle. The TFSA is one of the most powerful accounts in the Canadian tax system—but only if you use it the way it was designed to be used.

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