Withdrawals will create additional contribution
room equal to the amount of the withdrawal, for
deposits in future years (not in the year of the withdrawal).
Income earned in and withdrawals from a TFSA will not affect
eligibility for federal income-tested benefits and credits such as
guaranteed income supplement (GIS)
old age security (OAS)
age exemption tax credit
Any fees paid related to the TFSA will not be
tax-deductible.
In kind
withdrawals can be made, with the investments being transferred to a
non-registered account, or as a contribution to an RRSP, subject to
available RRSP contribution room. When in kind withdrawals are
made, the value of the transaction will be the current market value of
the investment. This will be the contribution amount if the
investment is transferred to an RRSP. If the investment is
transferred to a non-registered account, the current market value at
time of withdrawal will be the cost basis for the non-registered
investment. Any subsequent capital
gain or loss when the investment is sold will use this value as
the cost basis.
If the maximum has been contributed to a TFSA, and then a withdrawal is made, no further amount can be
contributed (without penalty) until the following
year. On January 1st of the following year, the withdrawal amount from the previous year will be
used to increase your regular annual contribution room.
Amendments to the
Income Tax Act in Bill C-47, which became law in December 2010, included rules to ensure that any withdrawals of
amounts regarding deliberate overcontributions, prohibited investments,
non-qualified investments, asset transfer transactions and income related
to those amounts do not constitute withdrawals for TFSA purposes, and do
not create additional TFSA contribution room.
The information on this site is not intended to be a
substitute for professional advice. Each person's situation differs, and
a professional advisor can assist you in using the information on this web
site to your best advantage.
See our Business
Directory for tax, accounting and finance-related firms in your
area.
Please see our legal
disclaimer regarding the use of information on our site, and our Privacy
Policy regarding information that may be collected from visitors to our
site.
