# 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)

Cedric's TFSA contribution room for 2017:

2016 unused TFSA contribution room (\$20,000) + 2017 TFSA dollar limit (\$5,500) = TFSA contribution room at the beginning of 2017 (\$25,500)

## 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.

### Example

Since opening her TFSA in 2009, Jenny has contributed the maximum TFSA dollar limit in each year. By the end of 2016, she has accumulated a total of \$46,500 in her TFSA account. In 2017 Jenny makes a \$5,500 contribution, the TFSA dollar limit for 2017. Later that year, she withdraws \$3,000 for a trip. Unfortunately, her plans change and she cannot go. Since Jenny already contributed the maximum to her TFSA earlier in the year, she has no TFSA contribution room left.

If Jenny wishes to re-contribute part or all of the \$3,000 she withdrew, she will have to wait until the beginning of 2018 to do so. The \$3,000 will be added to her TFSA contribution room at the beginning of 2018.

If she re-contributes any of the withdrawn amount before 2018, she will have an excess amount in her TFSA and will be charged a tax equal to 1% of the highest excess TFSA amount for each month that the excess remains in her account.