Tax-free accounts
How to Close a TFSA in Canada
You can close a TFSA at any time by withdrawing everything and asking your institution to close the account. No tax applies, and the room comes back next year. When a transfer is the better choice.
How do I close a TFSA?
Sell or redeem the investments, withdraw the cash, and ask your bank or broker to close the account. Some institutions charge a closing or transfer fee, and locked-in GICs may not be redeemable before they mature.
Is there tax when I close a TFSA?
No. TFSA withdrawals are tax-free and are not added to your income. Your institution reports the withdrawal to the CRA.
Do I lose my contribution room?
No. The amount you withdraw is added back to your contribution room on January 1 of the next calendar year, on top of the new annual limit.
If you re-contribute in the same year without enough room, the excess is taxed at 1% per month. The 2026 limit is $7,000.
Should I transfer instead of closing?
If you want the money in a different TFSA, yes. A direct transfer between institutions does not affect your contribution room. Withdrawing and re-depositing elsewhere counts as a new contribution and can cause an over-contribution.
Is there a reason to keep an empty TFSA open?
You don’t need an open account to keep your room; it builds up every year from 18 whether or not you have a TFSA. Keeping one open simply makes it easier to start contributing again.
Keep reading
Tax-free accountsTFSA Withdrawal Rules in CanadaTFSA withdrawals are tax-free and can be made at any time, but the room only comes back on January 1 of the next year. How to withdraw without creating an overcontribution.- Tax-free accountsHow to Transfer a TFSA to Another Bank in CanadaTo move a TFSA without affecting your contribution room, ask the new institution for a direct transfer. Why you should never withdraw and re-deposit it yourself, plus fees and timing.
Tax-free accountsTFSA Contribution Limit 2026The 2026 TFSA limit is $7,000. Total room for someone eligible since 2009 is $109,000. Every year’s limit, how room works, and where to hold your TFSA.
Tax-free accountsCan You Have More Than One TFSA in Canada?Yes. You can hold TFSAs at several banks and brokers, but your contribution room is shared across all of them: the 2026 limit is $7,000 in total, not per account. How to move money between them without overcontributing.
Official sources and further reading
Terms vary by product. Confirm the provider’s current terms before acting. This guide does not predict approval, realized value or credit-score changes. How WalletReturn calculates value