# Is a TFSA withdrawal taxable in Canada?

> TFSA withdrawals are not taxable in Canada, and the room comes back the next January. See the limits, penalties and the business exception.

No. Money you take out of a TFSA is not taxable, and neither are the interest, dividends or gains earned inside it.

## Does the room come back?

Yes, but not right away. What you withdraw is added back to your contribution room on January 1 of the next year. If you put the money back in the same year, you may end up over-contributing.

## What is the 2026 limit?

The annual TFSA limit is $7,000 for 2026. Your own room also depends on your age, past contributions and withdrawals, and it is shown in your CRA account. Use the [TFSA calculator](https://tax-services.ca/calculators/rrsp-retirement/tfsa-calculator) to work it out.

## Are there any catches?

- Going over your room costs 1% a month on the excess.
- If the CRA decides you are running a business inside your TFSA, the income can be taxed.
- Some foreign dividends have tax withheld in the other country, and the TFSA does not remove it.

For other payments, see the table on [Is it taxable?](https://tax-services.ca/is-it-taxable) and the [income tax calculator](https://tax-services.ca/calculators/income-tax/income-tax-calculator).

## Where does this information come from?

The rules come from the [Canada Revenue Agency](https://www.canada.ca/en/revenue-agency.html) [TFSA page](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account.html). Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the [full disclaimer](https://tax-services.ca/disclaimer).

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Source: https://tax-services.ca/is-tfsa-withdrawal-taxable
Last updated: 2026-10-12
Independent information site. Not affiliated with the CRA. No services, no guarantee of accuracy. See https://tax-services.ca/disclaimer