TFSA withdrawal rules: when can you put the money back?
Short answer: when you take money out of a TFSA, the room comes back on January 1 of the next calendar year, not on the day you withdraw. This year you can only put money back up to the unused room you still have. Re-contribute more than that and the CRA taxes the extra at 1% per month. A $2,000 excess left from June to December costs $140.
How much can I put back today? Calculator
Safe re-contribution check
| Choice | Excess | Tax if left to December |
|---|
Uses the CRA rules: withdrawals are added back to your room on January 1 of the next year, and an excess is taxed at 1% of the highest excess in each month it stays in the account. Room on January 1 includes this year's $7,000 dollar limit. Estimates only; confirm your room with your CRA account and your own records.
The TFSA withdrawal rule in one line
The CRA puts it plainly: when you take money out of your TFSA, it does not immediately create new contribution room. The amount you withdraw is added back as available room on January 1 of the next calendar year. So the formula for what you can safely put in today is:
Room on January 1 − everything you contributed this year = what you can still deposit. This year's withdrawals are not part of the sum.
Taking the money out is not the problem. The CRA does not tax a TFSA withdrawal, and you can generally withdraw at any time, depending on what you hold. Your institution may have its own rules for locked-in products such as some GICs, so ask before you sell. The trouble starts when the money goes back in.
Why do so many people get caught? Because a TFSA feels like a bank account. If you take $500 out of chequing and put it back, nothing happens. A TFSA counts every deposit as a contribution, even if it is the same money that left a week ago. Your CRA account will not warn you in real time either. Issuers report each year's withdrawals by the end of February of the following year, so the room shown in your CRA account lags behind your real activity.
| Situation | Can you put it back this year? |
|---|---|
| You had unused room left after your contributions | Yes, up to that unused amount |
| You maxed out, then withdrew | No. Wait until January 1 of next year |
| You moved your TFSA by direct transfer | No room used; a direct transfer is not a contribution |
| You withdrew as a non-resident | No. Do not re-contribute until you are a resident again |
Worked example: Priya's car repair
Priya starts 2026 with $12,000 of TFSA room: $5,000 left over from earlier years plus the $7,000 limit for 2026. Here is her year.
- February: she contributes $10,000. Room left: $12,000 − $10,000 = $2,000.
- April: she withdraws $4,000 to fix her car. Her room for 2026 is still $2,000. The $4,000 does not come back until January 1, 2027.
- June: her insurance pays her back and she wants to return the full $4,000.
If she deposits all $4,000 in June, she is $4,000 − $2,000 = $2,000 over. The tax is $2,000 × 1% = $20 a month. If she does not notice until the CRA writes the following spring and the excess sits there from June to December, that is 7 months × $20 = $140 for 2026 alone. The CRA counts the month you add the excess and the month you remove it.
The safe version: she puts back $2,000 in June, which uses exactly her remaining room. On January 1, 2027, she gets the $4,000 withdrawal added back plus the 2027 dollar limit, so she can deposit the other $2,000 then and still have the rest of her new room to use.
The CRA's own example is the same story. Twyla has contributed the maximum since 2009. In 2025 she puts in $7,000, then withdraws $3,000 for a trip that falls through and re-contributes it. With no room left, the full $3,000 is an over-contribution.
Switching banks for a better TFSA rate
This is the second most common way people trip the rule. You find a better rate at another institution, withdraw the cash and deposit it at the new bank yourself. To the CRA, that deposit is a brand new contribution. If you were at your limit, the whole amount becomes an excess.
The fix is simple: ask the new institution to do a direct transfer from the old one. The CRA says a direct transfer between your TFSAs does not affect your contribution room. Some institutions charge a transfer fee, so ask both sides first. If you are comparing where to hold TFSA savings, our TFSA vs HISA explainer shows how the account and the product inside it are separate choices.
How to re-contribute safely, step by step
- Find your January 1 room in your CRA account. From April onward it reflects the previous year's reported activity.
- Add up every deposit you made this calendar year to every TFSA you own, at every institution.
- Subtract those deposits from your January 1 room. Do not add back this year's withdrawals.
- Re-contribute only what is left. If the answer is zero, wait.
- Diary January 1. Your withdrawal comes back then, along with the new year's dollar limit.
- If you already went over, withdraw the excess now and see our guide to the TFSA over-contribution penalty for the RC243 filing steps.
Keep your own running tally. The CRA itself recommends that you calculate your available room using your own records rather than relying only on the figure in your account during the year.
Your options when you need the money back in
| Option | Tax cost | When it fits |
|---|---|---|
| Put back only your unused room now | $0 | You have some room left this year. |
| Hold the cash in a regular savings account until January 1 | Interest is taxable, but no TFSA excess | You are at your limit and the amount is large. |
| Put it all back now | 1% a month on the excess | Not a good fit; the CRA taxes every excess month. |
For this year's room numbers, see the TFSA contribution limit for 2026. Weighing a TFSA against an RRSP for the money? Our RRSP vs TFSA comparison lays out both as options. Every Looni calculator is on the tools page.
Questions people ask
Can I put money back in my TFSA after I withdraw it?
Yes, but the room from a withdrawal only comes back on January 1 of the next calendar year. In the same year, you can only re-contribute up to the unused room you still have. Anything above that is an over-contribution taxed at 1% a month.
When does TFSA contribution room come back after a withdrawal?
On January 1 of the calendar year after the withdrawal. A $4,000 withdrawal in April 2026 adds $4,000 of room on January 1, 2027, on top of the 2027 dollar limit.
Is there a tax or penalty for taking money out of a TFSA?
The CRA does not tax a TFSA withdrawal. The risk is putting it back too soon. Your financial institution may have its own rules or fees for withdrawals, depending on what you hold, so check with them.
Does moving my TFSA to another bank count as a withdrawal?
Not if it is a direct transfer between institutions. The CRA says a direct transfer does not affect your room. If you withdraw the cash yourself and deposit it at the new bank, the deposit counts as a new contribution.
How do I check how much I can re-contribute this year?
Start with your room on January 1 from your CRA account, subtract every contribution you made this year, and ignore this year's withdrawals. The CRA recommends you calculate it yourself from your own records because issuers report the year's activity after it ends.
What if I already put it back too early?
Withdraw the excess right away. The CRA taxes the highest excess in each month at 1%, including the month you remove it. Then file Form RC243 and Schedule A by June 30 of the next year.
Can I re-contribute a TFSA withdrawal if I have moved abroad?
No. The CRA says not to re-contribute while you are a non-resident. The room is still added back the next January 1, but you cannot use it tax-free until you are a resident again.
Looni's coach is read-only. It keeps a running tally of what goes in and out of your TFSA through the year and shows the date your withdrawn room comes back, so a re-deposit never turns into a 1% a month surprise.
Sources
Canada Revenue Agency, Withdrawing from a TFSA (room added back January 1 of the next year, the Cedric and Twyla examples, issuer reporting by end of February, non-resident rule), Calculate your TFSA contribution room, Requesting a TFSA transfer (direct transfers do not affect room) and If you owe tax on excess TFSA amounts (1% per month on the highest excess, RC243 by June 30).