By now, you should know that you allow to contribute $5,000 to your TFSA and income generated from that TFSA is tax free. Indeed, you can withdraw and re-contribute the amount again. However, this not as simple as it sounds.
Any withdrawal made in current year will be added to your TFSA contribution room for NEXT YEAR. For example, you contributed $5,000 in February 2011 but you withdrew $3,000 in October 2011. Your TFSA contribution room for 2012 will be $8,000 ($5,000 for 2012 plus $3,000 you withdrew in 2011).
There are many cases which Taxpayer A puts $5,000 in Bank XXX but soon realizes that Bank YYY offers a better interest rate. So, Taxpayer A wants to "transfer" the TFSA account by withdrawing $5,000 from Bank XXX and depositing them to Bank YYY. Guess what, you have just over-contributed your TFSA.
If you want to transfer TFSA from one bank to another, you can actually contact the banks and so they can arrange with to directly transfer TFSA to another bank without physically withdrawing the money.
If you want to know more, you can visit:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html
Any withdrawal made in current year will be added to your TFSA contribution room for NEXT YEAR. For example, you contributed $5,000 in February 2011 but you withdrew $3,000 in October 2011. Your TFSA contribution room for 2012 will be $8,000 ($5,000 for 2012 plus $3,000 you withdrew in 2011).
There are many cases which Taxpayer A puts $5,000 in Bank XXX but soon realizes that Bank YYY offers a better interest rate. So, Taxpayer A wants to "transfer" the TFSA account by withdrawing $5,000 from Bank XXX and depositing them to Bank YYY. Guess what, you have just over-contributed your TFSA.
If you want to transfer TFSA from one bank to another, you can actually contact the banks and so they can arrange with to directly transfer TFSA to another bank without physically withdrawing the money.
If you want to know more, you can visit:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html
