Tax-free accounts
TFSA Withdrawal Rules in Canada
TFSA 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.
Are TFSA withdrawals taxable?
No. Money you take out of a TFSA, including the interest and investment growth, is not taxed and does not need to be reported as income.
There is no minimum holding period. Some products held inside a TFSA have their own limits, such as a non-redeemable GIC that cannot be cashed before maturity, or fees charged by the institution.
Put it into practiceTFSA contribution limit 2026When does withdrawn TFSA room come back?
On January 1 of the following calendar year. A withdrawal in 2026 is added back to your room on January 1, 2027, on top of the new annual limit.
For example, if you have used all of your room and withdraw $5,000 in March 2026, you have no new room for the rest of 2026. On January 1, 2027 your room becomes $5,000 plus the 2027 annual limit.
Can I put the money back in the same year?
Only if you have unused room. Re-depositing a withdrawal in the same year counts as a new contribution, and if it exceeds your room, the excess is taxed at 1% a month until you remove it.
| Recontributed without room | 1 month | 6 months | 12 months |
|---|---|---|---|
| Top$2,000 | $20 | $120 | $240 |
| $5,000 | $50 | $300 | $600 |
| $10,000 | $100 | $600 | $1,200 |
This is the most common way people overcontribute: withdrawing for an expense, then putting the money back a few months later.
How do I move my TFSA to another bank without losing room?
Ask the new institution for a direct transfer. Direct transfers between your own TFSAs are not withdrawals or contributions, so they do not affect your room.
Taking the money out yourself and depositing it at the new bank is a withdrawal followed by a contribution, with the same-year problem described above.
How do I check how much room I have?
Through CRA My Account, which shows your room as of January 1. It may not include this year’s contributions and withdrawals yet, so keep your own record. The 2026 annual limit is $7,000.
Keep reading
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 Transfer an RRSP to a TFSA in Canada?There is no tax-free transfer from an RRSP to a TFSA. You have to withdraw the money from your RRSP, pay tax on it, then contribute it to your TFSA if you have room. When that can still make sense.
Tax-free accountsHow to Close a TFSA in CanadaYou 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.- Tax-free accountsTFSA vs RRSP: Which Is Better?When a TFSA beats an RRSP and vice versa, by income level, with the 2026 limits and the rules that decide it.
Official sources and further reading
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