Canada Revenue Agency
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Making withdrawals from a TFSA
A qualifying transfer from one TFSA to another is not considered to be a withdrawal. For more information, see Transfers.
Depending on the type of investment held in your TFSA, you can generally withdraw any amount from the TFSA at any time and for any reason, with no tax consequences. However, you cannot contribute more than your TFSA contribution room in a given year, even if you make withdrawals from the account during the year. For information on withdrawing amounts from your TFSA, contact your TFSA issuer.
Any withdrawal made during the year can be re-contributed into your TFSA in the same year only if you have the available contribution room. See example 1 below.
Withdrawals, excluding qualifying transfers and specified distributions, made from your TFSA in the year will be added back to your TFSA contribution room at the beginning of the following year.
Note
If you over-contribute in the year, you will be subject to a tax equal to 1% of the highest excess TFSA amount in the month, for each month you are in an excess contribution position. For more information, see Tax payable on excess TFSA amount.
Generally you don't need to report any withdrawals you made during the year on your tax return.
Example 1
In 2009 and 2010, Sarah contributed $5,000 to her TFSA. In 2011, she makes another $5,000 contribution to her TFSA. Later that year, she withdraws $3,000 for a trip. Unfortunately, her plans changed and she cannot go. Since Sarah already contributed the maximum to her TFSA earlier in the year, she has no TFSA contribution room left.
If Sarah wishes to re-contribute part or all of the $3,000 she withdrew, she will have to wait until the beginning of 2012 to do so. The $3,000 will be added to her TFSA contribution room at the beginning of 2012.
If she re-contributes any of the withdrawn amount before 2012, she will have an excess amount in her TFSA and will be charged a monthly tax of 1% on the highest excess TFSA amount for each month that an excess exists in the account.
In 2009, Carl is allowed to contribute $5,000. He contributes $2,000 for that year.
| 2009 TFSA dollar limit | $5,000 |
| 2009 contributions | - $2,000 |
| Unused TFSA contribution room available for future years | $3,000 |
In 2010, Carl does not contribute to his TFSA, but he makes a $1,000 withdrawal from his account. This withdrawal will not affect his TFSA contribution room for 2010. However, this withdrawal will not be added to his TFSA contribution room until 2011.
| 2009 unused TFSA contribution room | $3,000 |
| 2010 TFSA dollar limit | + $5,000 |
| 2010 unused TFSA contribution room available for future years | $8,000 |
Carl's TFSA contribution room for 2011
| 2010 unused TFSA contribution room | $8,000 |
| 2010 withdrawal | + $1,000 |
| 2011 TFSA dollar limit | + $5,000 |
| TFSA contribution room at the beginning of 2011 |
$14,000 |
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