TFSA Contribution Limits & Withdrawal Rules

If you contribute more than your contribution limit, you may be subject to a penalty tax of 1% per month based on the highest excess TFSA amount in that month.

Full details on the implications of over-contributing to your TFSA can be found on the CRA website here.

No, you can’t contribute directly to your spouse’s TFSA as you can with a spousal RRSP. However, you can give your spouse money, which they can then contribute to their own TFSA. Any income your spouse earns on the money in their TFSA is theirs and will not be attributed back to you.

You can withdraw funds from your TFSA any time you want¹ and you don’t have to reach a certain age before you withdraw your money. Withdrawals made from your TFSA will be added back to your TSFA contribution room the following year.

There is no limit on how much you can withdraw from a TFSA.

If you withdraw from your TFSA, you do not permanently lose your contribution room. You can recontribute amounts you have withdrawn in the following year or years and your contribution room carries forward indefinitely.

No, you don’t have to pay income tax on the amounts you withdraw.Because TFSA withdrawals don’t count as taxable income, they don’t affect federal income-tested benefits or tax credits you may receive, including the Canada Child Benefit program, the Canada Workers Benefit, the Good and Services Tax / Harmonized Sales Tax (GST/HST) Credit, and the Age Credit.
TFSA withdrawals also won’t reduce benefits based on your income levels, such as Old Age Security, the Guaranteed Income Supplement and Employment Insurance benefits.

Anything you want. You could wait until you retire and use it to supplement retirement income you may have from pensions, RRSPs or other sources, you can also use it for short-term savings goals like a new car or a vacation, or for needs that arise suddenly like repairs to your home.