Your tax-free savings account (TFSA) contribution room is the maximum amount that you can contribute to your TFSA. Your contribution room accumulates every year even if you do not file an income tax return or open a TFSA.
Investment income earned by and changes in the value of your TFSA investments will not affect your TFSA contribution room for the current or future years.
Example:
Mary didn’t turn 18 until September 9, 2010. She opened a TFSA on February 15, 2011. At the time she opened her TFSA, her contribution room was $1,000 ($5,000 for 2010 and $5,000 from 2011). She opened a self-directed TFSA and invested $8,000 in stocks market. She planned to contribute another $2,000 when she had money. Mary received her tax refund in May and had $2,000 available for TFSA contribution. But she was worried whether the room had been reduced because the value in her TFSA had increased to $11,000.
Neither the earnings generated in TFSA nor the increase in its value will reduce the TFSA contribution room in the current or future year, so Mary can tribute up to another $2,000 in 2011. And she will have another $5,000 contribution room in 2012.