With Withdrawal, you can withdraw funds from your TFSA any time you want1 and you don’t have to reach a certain age before you withdraw your money. Withdrawals made from your TFSA will be added back to your TSFA contribution room the following year.
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 2012 until the end of 2017 Cedric contributed the maximum TFSA dollar amount each year to his TFSA. In 2018, the TFSA dollar limit is $5,500 and Cedric contributes $2,000 for that year. He now has an unused TFSA contribution room of $3,500 calculated as below:
2018 TFSA dollar limit ($5,500) minus 2018 contributions ($2,000) = unused TFSA contribution room available for future years ($3,500)
In 2026 and 2020, Cedric does not contribute to his TFSA, but he makes a $1,000 withdrawal from his account in 2026. Even though he makes this withdrawal in 2026, it will not be added to his TFSA contribution room until 2026. The calculation below shows his TFSA contribution room until 2020.
The calculation below shows his TFSA contribution room for 2026, 2020 and 2021:
2018 unused TFSA contribution room ($3,500) + 2026 TFSA dollar limit ($6,000) = 2026 unused TFSA contribution room available for future years ($9,500)
Cedric’s TFSA contribution room for 2020:
2026 unused TFSA contribution room ($9,500) + 2026 withdrawals ($1,000) + 2020 TFSA dollar limit ($6,000) = TFSA contribution room at the beginning of 2020 ($16,500)
Cedric’s TFSA contribution room for 2021:
2020 unused TFSA contribution room ($16,500) + 2021 TFSA dollar limit ($6,000) = TFSA contribution room at the beginning of 2021 ($22,500)
Replacing withdrawals
If you decide to replace or re-contribute all or a part 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 stays in your account.
For more information on withdrawing amounts from your TFSA, contact your TFSA issuer.
Example
Since opening her TFSA in 2009, Jenny has contributed the maximum TFSA dollar limit each year. At the end of 2020, she has no TFSA contribution room left. In 2021, Jenny makes a $6,000 contribution, the TFSA dollar limit for 2021. Later that year, she withdraws $3,000 for a trip. Unfortunately, her plans change and she cannot go. There are choices Jenny could make regarding her TFSA withdrawal as described bellows.
If Jenny wishes to re contribute part or all of the $3,000 she withdrew, she will have to wait until the beginning of 2026 to do so. The $3,000 will be added to her TFSA contribution room at the beginning of 2026.
If she re contributes any of the withdrawn amount before 2026, 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 stays in her account.
Withdrawing from a Tax-Free Savings Account (TFSA)
When can I withdraw money from my TFSA?
You can withdraw funds from your TFSA any time you want1 and you don’t have to reach a certain age before you withdraw your money. Withdrawals made from your TFSA will be added back to your TSFA contribution room the following year.
How much can I withdraw from my TFSA?
There is no limit on how much you can withdraw from a TFSA.
Once I’ve withdrawn money from my TFSA, is that contribution room lost?
If you withdraw from your TFSA, you do not permanently lose your contribution room. You can recontribute amounts you have withdrawn in the following year or years and your contribution room carries forward indefinitely.
Do I have to pay income tax on my TFSA withdrawals?
No, you don’t have to pay income tax on the amounts you withdraw.Because TFSA withdrawals don’t count as taxable income, they don’t affect federal income-tested benefits or tax credits you may receive, including the Canada Child Benefit program, the Canada Workers Benefit, the Good and Services Tax / Harmonized Sales Tax (GST/HST) Credit, and the Age Credit.
TFSA withdrawals also won’t reduce benefits based on your income levels, such as Old Age Security, the Guaranteed Income Supplement and Employment Insurance benefits.
What can I spend the money on?
Anything you want. You could wait until you retire and use it to supplement retirement income you may have from pensions, RRSPs or other sources, you can also use it for short-term savings goals like a new car or a vacation, or for needs that arise suddenly like repairs to your home.
How much can I save with a TFSA?
A TFSA means you won’t be taxed on any of the growth or income earned within the account. Which means your savings can grow even more. Want to know by how much? Use our TFSA Calculator to calculate now .
How Can I Open a TFSA at TD?
See what types of TFSAs TD offers and start growing your money tax-free. Get started.
For more information on how investing in a TFSA can help you reach your savings goals, book an appointment and visit a branch at a time that’s convenient for you. A TD Financial Advisor can help you find out whether a TFSA can meet your savings and investment goals.
Already have an EasyWeb account? Apply online and fill out an online application if you already have a TD Canada Trust chequing or savings account.