By Amy Legate-Wolfe at The Motley Fool Canada
The Tax-Free Savings Account (TFSA) gets fresh contribution room every January, and the 2026 limit is $7,000. Unused room carries forward. Withdrawals also return as new room the following year. So investors who use the account only as a cash bucket may protect some interest from tax, but they may leave the real power untouched.
The smarter move is to use the TFSA for assets with room to grow. Shopify (TSX:SHOP) fits that idea as it remains one of Canada’s most important growth stocks. It also shows both sides of the TFSA opportunity: big upside, but real volatility.
SHOP
Shopify stock has pulled back in 2026 while the business keeps growing. That mix can catch long-term investors’ attention. The company helps merchants sell online, in stores, across social platforms, and through more automated commerce tools. In short, it gives businesses the software and payments infrastructure to run modern retail.
The latest numbers still look strong. In the first quarter of 2026, Shopify stock reported 34% revenue growth and a 15% free cash flow margin. Merchants on its platform also cleared more than US$100 billion in gross merchandise volume during the quarter. Shopify stock has therefore moved well beyond its early “online store builder” image and now sits at the centre of global commerce software.
That makes it a useful TFSA example. Say an investor puts $7,000 into Shopify inside a TFSA and the investment eventually grows to $12,000. The investor doesn’t owe tax on that gain while it stays in the account. If they later withdraw the full $12,000, that full amount gets added back to TFSA room the next calendar year, along with the new annual limit and any unused room. The gain has effectively expanded the future shelter.
This doesn’t beat the rules. It uses them properly. TFSA room grows when the account value grows, and withdrawals carry that larger value forward into future contribution room. That’s why growth stocks can work so well inside a TFSA.
Considerations
However, Shopify stock gives investors a real warning. The stock can swing hard. It fell after its latest earnings as investors worried about guidance, artificial intelligence (AI) costs, and the broader software market. It also trades at a rich valuation compared with many Canadian stocks, leaving less room for any disappointments.
The business faces competition, too. Large technology companies want a bigger role in e-commerce. AI may help Shopify stock merchants, but it could also change how shoppers find products. Shopify needs to keep proving its tools remain essential as commerce shifts again.
That’s why investors should not use a TFSA as a slot machine. A TFSA protects gains from tax, but it doesn’t protect investors from losses. If a $7,000 Shopify position drops to $4,000 and the investor sells, the missing $3,000 doesn’t come back. There’s also no capital-loss claim. Lost TFSA value can hurt more than a loss in a taxable account.
A better plan gives Shopify stock a role, not the whole account. Investors could pair it with dividend stocks, cash-flowing blue chips, or a broad exchange-traded fund (ETF). That creates balance while still leaving room for growth, and lowers the pressure on one company to carry an entire retirement plan over the long run.
Bottom line
For Canadians trying to build long-term wealth, the TFSA remains one of the best tools available. The annual limit helps, but compounding can help more. Shopify stock still grows quickly and carries enough risk to demand respect. Used carefully, it can show how a strong growth stock may turn today’s contribution room into a larger tax-free shelter later, without forcing investors to chase every hot idea alone.
The post 1 Smart Way to Use a TFSA to Increase Your Contribution appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.
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