Your TFSA is generally meant to be used for investment purposes, and not to carry on a business. Depending on the circumstances, frequent trading activity may be considered a business—even if it is taking place within your TFSA. According to the Income Tax Act, a TFSA that is found to be operating as a business will be subject to income tax on the income earned from that business.
In recent years, the Canada Revenue Agency (CRA) has increased their scrutiny of registered plans such as TFSAs which are engaged in frequent trading and/or speculative transactions.
Several factors are considered when determining whether a TFSA is considered to be carrying on a business. These include transaction frequency, term of investments, intention to buy securities with short-term profit goal, types and number of securities, investment expertise, and hours spent on trading activities.