The maximum amount someone is currently permitted to contribute to a registered account (like a TFSA or RRSP) without incurring a penalty, which accumulates over time based on government-set annual limits and, for RRSPs, a percentage of earned income.
Registered accounts aren't unlimited — the government caps how much tax-sheltered room you get each year, and unused room usually carries forward if you don't use it right away. Contribute more than your available room, and the excess amount gets penalized, typically at 1% per month until it's withdrawn or absorbed by new room.
TFSA room is the same flat dollar amount for every eligible adult, tracked from the year you turned 18, regardless of income. RRSP room is different for everyone — based on a percentage of the prior year's earned income, up to an annual maximum. Mixing up the two systems is one of the most common registered-account mistakes.
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