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Making or replacing withdrawals from a TFSA
A qualifying transfer from one TFSA to another is not considered to be a withdrawal. For more information, see Transfers.
Making withdrawals
Depending on the type of investment held in your TFSA, you can withdraw any amount from the TFSA at any time. Withdrawing funds from your TFSA does not reduce the total amount of contributions you have already made for the year.
Withdrawals, excluding qualifying transfers and specified distributions, made from your TFSA in the year will only be added back to your TFSA contribution room at the beginning of the following year. See example 2 below.
Replacing withdrawals
If you decide to replace or re-contribute all or a portion of your withdrawals into your TFSA in the same year, you can only do so if you have available TFSA contribution room. If you re-contribute but do not have contribution room, you will have over-contributed to your TFSA 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. See example 1 below.
For information on withdrawing amounts from your TFSA, contact your TFSA issuer.
Example 1
Since opening her TFSA in 2009, Sarah has contributed $5,000 for 2009, 2010 and 2011. In 2012, Sarah 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 2013 to do so. The $3,000 will be added to her TFSA contribution room at the beginning of 2013.
If she re-contributes any of the withdrawn amount before 2013, she will have an excess amount in her TFSA and will be charged a monthly tax of 1% on the highest excess TFSA amount for each month that an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 remains in the account.
In 2010, Carl is allowed to contribute $5,000. He contributes $2,000 for that year.
| 2010 TFSA dollar limit | $5,000 |
| 2010 contributions | - $2,000 |
| Unused TFSA contribution room available for future years | $3,000 |
In 2011, 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 2011. However, this withdrawal will not be added to his TFSA contribution room until 2012.
| 2010 unused TFSA contribution room | $3,000 |
| 2011 TFSA dollar limit | + $5,000 |
| 2011 unused TFSA contribution room available for future years | $8,000 |
Carl's TFSA contribution room for 2012
| 2011 unused TFSA contribution room | $8,000 |
| 2011 withdrawal | + $1,000 |
| 2012 TFSA dollar limit | + $5,000 |
|
TFSA contribution room at the beginning of 2012 |
$14,000 |
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