Over the years, many Canadians have opened a Tax-Free Savings Account or “TFSA” to take advantage of the significant tax benefit of those plans. TFSA’s started in 2009 and allowed Canadians who were 18 years of age or older to contribute funds to the TFSA. Any investment income earned on the funds in the TFSA does not attract any tax and the funds can be removed by the investor at any time. The advantageous tax position of these accounts can be very significant to the Canadian investor. The contribution limit was $5,000 per year with the annual contribution being increased to $5,500 in 2013 and then to $10,000 in 2015 resulting in a cumulative contribution level of $41,000 in 2015. With the election of our new government, the Liberal party has recently followed through with another campaign promise to reduce the contribution limit from $10,000 to $5,500 which will be effective January 1, 2016. Investors will need to be aware of the lower contribution limit to avoid over-contributing to their plans in 2016 since the penalty can be quite severe at a rate of 1% of the excess contribution amount per month. As a result, any investors with pre-authorized contribution plans should contact their financial institutions or advisors to adjust their contribution amounts accordingly. For those who have not started a TFSA, missed contributions are carried forward thereby allowing a new plan contributor to put as much as $46,500 into the TFSA after January 1, 2016. Although the lower contribution amounts may be a disappointment to some investors, the tax benefit of these plans remain intact and should be a part of your investment portfolio.