# Making or replacing withdrawals from a TFSA

## Making withdrawals

Depending on the type of investment held in your TFSA, you can generally 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.

## Example

From 2010 until the end of 2013 Cédric contributed the maximum TFSA dollar amount each year to his TFSA. In 2014, he is allowed to contribute \$5,500. He contributes \$2,000 for that year. He calculates his unused TFSA contribution room as follows:

2014 TFSA dollar limit (\$5,500) minus 2014 contributions (\$2,000) = unused TFSA contribution room available for future years (\$3,500)

In 2015, Cedric 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 until 2016:

2014 unused TFSA contribution room (\$3,500) + 2015 TFSA dollar limit (\$10,000) = 2015 unused TFSA contribution room available for future years (\$13,500)

Cedric's TFSA contribution room for 2016 :

2015 unused TFSA contribution room (\$13,500) + 2015 withdrawals (\$1,000) + 2016 TFSA dollar limit (\$5,500) = TFSA contribution room at the beginning of 2016 (\$20,000)

## 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 that the excess amount remains in your account.