The year, 2024 has been exciting for the Modest family as last week, on April 17th, Rich Modest won the lottery for $1 million dollars! Rich has been a saver but never thought of pushing the saving concept on his family, which he regrets. It is therefore with this lottery money, that he thought its best use would be to gift each family member money but only if they used it to contribute to their Tax-Free Savings Account (TFSA). So far, Rich is the only one with a TFSA where he has contributed the maximum each year except for this year's contribution which he still has to make. No other family member has made any TFSA contributions, and each will need to open a TFSA account (if they are eligible). Rich has asked you to help him determine the maximum amount permitted under the TFSA rules for each family member and to provide him with the family's total TFSA contribution that they could contribute for 2024. (Hint: consider carryforward balances).

Question

The year, 2024 has been exciting for the Modest family as last week, on April 17th, Rich Modest won the lottery for $1 million dollars! Rich has been a saver but never thought of pushing the saving concept on his family, which he regrets. It is therefore with this lottery money, that he thought its best use would be to gift each family member money but only if they used it to contribute to their Tax-Free Savings Account (TFSA). So far, Rich is the only one with a TFSA where he has contributed the maximum each year except for this year's contribution which he still has to make. No other family member has made any TFSA contributions, and each will need to open a TFSA account (if they are eligible). Rich has asked you to help him determine the maximum amount permitted under the TFSA rules for each family member and to provide him with the family's total TFSA contribution that they could contribute for 2024. (Hint: consider carryforward balances).

Rich Modest (father) turns 65 on December 13, 2024

Alexia (mother) turns 58 on November 10, 2024

Santo and Aitana (Rich’s parents who live with them) both are 85 with birthdays in October.

Children:

Beth turned 20 on April 1, 2024

Twins: Lena turned 18 on December 31, 2023, and Keira turned 18 on January 1, 2024

Vivianne just celebrated her 17th birthday on April 20, 2024

Answer 1

To determine the maximum contribution room for each family member for 2024, we need to consider their eligibility and any unused contribution room from previous years. As of 2024, the TFSA contribution limit is $6,000.

1. Rich Modest (father):
- Total contribution room for 2024: $75,500 ($75,500 unused contribution room from previous years)
- Maximum contribution for 2024: $6,000

2. Alexia (mother):
- Total contribution room for 2024: $0 (as she has never contributed to a TFSA before)
- Maximum contribution for 2024: $6,000

3. Santo and Aitana (Rich's parents):
- Total contribution room for 2024: $118,000 (each has $69,500 unused contribution room from previous years)
- Maximum contribution for 2024: $6,000 each

4. Beth:
- Total contribution room for 2024: $36,500 (unused contribution room from previous years)
- Maximum contribution for 2024: $6,000

5. Twins Lena and Keira:
- Total contribution room for 2024: $12,000 each (unused contribution room from previous years)
- Maximum contribution for 2024: $6,000 each

6. Vivianne:
- Total contribution room for 2024: $6,000 (as she just turned 18 and has no unused contribution room from previous years)
- Maximum contribution for 2024: $6,000

Total TFSA contribution that the family could contribute for 2024: $48,000

It is important for each family member to open a TFSA account and make use of their contribution room to maximize tax-free savings.