From the Department of Finance Canada:

The $5,000 annual contribution limit is indexed to inflation using the Consumer Price Index (CPI) data as reported by Statistics Canada, rounded to the nearest $500. This means that, each year, an unrounded indexed amount is calculated based on increases in the CPI, but the annual contribution limit changes only when the unrounded amount reaches the rounding threshold (see the table below). For 2013, the unrounded indexed amount moved beyond the $5,250 threshold for the first time, so the annual contribution limit increases to $5,500.

The Tax-Free Savings Account (TFSA) is the most important financial tool introduced by the Canadian government since the RRSP. We recommend that everyone take advantage of it, if for nothing else than a place to keep your three-month emergency fund.