Withdrawing from a TFSA

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How withdrawals affect contribution room

When you take money out of your TFSA, it does not immediately create new available contribution room. The amount you withdraw will only be added back as available contribution room on January 1 of the next calendar year.

If you withdraw funds, do not re-contribute them in the same calendar year unless you are sure you have available room. Any over-contribution you make to your TFSA, even in error, is taxable.

Example: How a withdrawal can change contribution room

From 2013 to the end of 2021, Cedric contributes the maximum TFSA dollar amount each year to his TFSA.

2022

In 2022, the TFSA dollar limit is $6,000 and Cedric contributes $2,000. As a result, he has $4,000 unused contribution room still available.

Unused room after contribution:

 
$6,000
 
2022 dollar limit
$2,000
 
Contribution
=
$4,000
 
Unused contribution room (still available)

2023

In 2023 Cedric withdraws $500 from his account. Even though he makes this withdrawal in 2023, it will not be added back to his contribution room until 2024.

Available contribution room in year of withdrawal:

 
$4,000
 
2022 unused contribution room
+
$6,500
 
2023 dollar limit
 
$500
 
Withdrawal (no effect on current year's contribution room)
=
$10,500
 
Available contribution room

2024

Available contribution room in year after withdrawal:

 
$10,500
 
2023 unused contribution room
+
$500
 
Withdrawal (added back as available contribution room)
+
$7,000
 
2024 dollar limit
=
$18,000
 
Available contribution room at the beginning of 2024

2025

Available contribution room:

 
$18,000
 
2024 unused contribution room
+
$7,000
 
2025 dollar limit
=
$25,000
 
Available contribution room at the beginning of 2025

For more information: What is contribution room

How to make a withdrawal

To withdraw funds from your TFSA, you must go through the financial institution that issued it. Contact your issuer or consult their website to find out what options are available. Depending on the type of investments you hold, you can generally make a withdrawal any time during the year.

Your TFSA issuer must report all the withdrawals you make during the year to the CRA by the end of February of the next year. This allows us to adjust your available contribution room for the new calendar year.

Replacing a withdrawal

You may replace a TFSA withdrawal by re-contributing some or all of the amount you took out if you have available contribution room.

The amount you withdraw will be added back to your account as available contribution room the next calendar year. So unless you have unused room that is still available, do not re-contribute funds in the same year you take them out.

Always check that you have enough contribution room before you contribute. We recommend that you calculate your available room yourself using your own records.

Example: How re-contributing in the same year can lead to over-contribution

Since opening her TFSA in 2009, Twyla has contributed the maximum TFSA dollar limit each year. At the end of 2023, she has no available contribution room left.

In 2024, Twyla makes a $7,000 contribution (the TFSA dollar limit for 2024).

 
$7,000
 
Available contribution room (2024 dollar limit)
$7,000
 
Contribution
=
$0
 
Unused contribution room after contribution

Later that year, she withdraws $3,000 for a trip. Unfortunately, her plans change and she cannot go. She decides to re-contribute the $3,000 she withdrew. However, Twyla does not realize that, by replacing the amount when she doesn't have available contribution room, she will be over-contributing to her TFSA.

 
$0
 
Unused contribution room
$3,000
 
Contribution
=
($3,000)
 
Over-contribution

With no contribution room left in 2024, any contribution will result in a taxable excess amount.

For more information: Calculate your room before you contribute

Excess amounts are taxable

If you replace a withdrawal and do not have the available room, it is considered an over-contribution. The excess amount in your TFSA is taxable at a rate of 1% per month for as long as the excess amount remains in your account.

For more information: If you over-contribute to a TFSA

Withdrawing as a non-resident

You may withdraw money from your TFSA tax-free if you become a non-resident. However, do not re-contribute any amounts when you are a non-resident. Any re-contribution is considered a taxable non-resident contribution.

After you make a withdrawal, new contribution room will be added back to your TFSA the next calendar year, but you cannot make tax-free contributions until you become a resident again.

For more information: How non-residency affects your TFSA

Related information:

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2025-10-10