One of the great advantages of TFSA accounts is that you can withdraw funds at any time (may be subject to investment terms). Withdrawals are not subject to income tax, and do not impact eligibility for federal income tested benefits and credits (e.g. OAS, GIS, Age Credit, GST, EI, Canada Child Benefit, working income tax benefit).
Withdrawals from TFSA accounts will increase your contribution room in the following year, but not for the year of withdrawal
TFSA funds are transferable to another TFSA owned by:
- You, under a direct transfer.
- Your spouse/common-law partner (CLP), on your death.
- A former spouse/CLP, on relationship breakdown.
NOTE : Where a transfer from one TFSA to another TFSA for the same Holder is not direct, the transactions may result in an excess contribution situation. A transfer due to death will not affect the TFSA contribution room of the surviving spouse/CLP (see Death of a TFSA Holder for restrictions). A transfer due to relationship breakdown will not affect the TFSA contribution room of the Holder or former spouse/CLP.