Sign Up

TFSA Withdrawals

The Tax-Free Savings Account (TFSA) provides you with tremendous flexibility when making withdrawals. Unlike with most other registered plans, there are no restrictions on the amounts that can be withdrawn or the frequency of withdrawals. This benefit makes the TFSA a wonderful long-term investment vehicle.



Because your contributions are not tax-deductible at the time they are made, the contributions are not taxable when they are withdrawn. In addition, all income earned (dividends, interest, and capital gains) inside the TFSA is also free from taxation. Therefore, if you withdraw your contributions plus income earned within the TFSA, no portion is included in your income for income tax purposes.

This is a wonderful benefit for low- and modest-income Canadians that are receiving government benefits that are calculated based upon their taxable income from the previous year. This means that a person receiving Old Age Security (OAS), Guaranteed Income Supplement (GIS), Employment Insurance benefits, public long-term care subsidies, pharmaceutical or medical insurance premium assistance, etc. can withdraw monies from their TFSA and the withdrawal will not be added to their taxable income and thereby possible reducing their benefit from other government sponsored programs.

In addition, the income earned in the TFSA and withdrawals from a TFSA will not impact your ability to qualify for such government programs, such as the Canada Child Tax Benefit (CCTB), the Working Income Tax Benefits (WITB), the Goods and Services/Harmonized Tax Credits or the “Age amount” available when completing your income tax return.

This is not the case for withdrawals made from registered plans, such as Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), Life Income Funds (LIFs), etc. Withdrawals from registered accounts are added to your taxable income, in the year of the withdrawal, and the increase in your taxable income may reduce the future benefits you receive from government programs. This benefit makes the TFSA a wonderful long-term investment vehicle.

If you hold investments in your TFSA account, you are not required to sell or redeem the investment and withdraw only cash. You can make your withdrawal by withdrawing all or a portion of an investment. This is referred to as a withdrawal in kind. Your financial institution can help you with this type of withdrawal.

Note: Unlike for RRSP accounts, when you make a withdrawal from a TFSA, you do not lose the ability to re-contribute the withdrawn funds at a later date. The amount withdrawn from a TFSA is added to your unused TFSA contribution room for the following calendar year, which enables you to re-contribute the withdrawn funds in future years.

Non-resident withdrawals

If you become a non-resident of Canada, you can still make TFSA withdrawals and the withdrawals are not subject to any withholding tax deductions and the withdrawals are not taxable in Canada.

Even though a non-resident TFSA holder does not accumulate TFSA contribution room during the period of non-residency, any funds withdrawn while a non-resident will be added to the unused TFSA contribution room amount. However, before making a TFSA withdrawal, a non-resident individual should consult a tax advisor in their country of residence to determine if the TFSA withdrawal is subject to that country’s income tax.

Note: A TFSA withdrawal of deliberate over-contributions, prohibited investments, non-qualified investments, or amounts attributed to swap transactions is not added to an individual’s unused TFSA contribution room.


Back To Top

Quick Navigation

  1. How to Get Started:


  2. Videos:

    Financial Planning & Budget:

  3. Tools & Calculators:

    Other Resources: