Planning on maxing TFSA contribution in 2023.Is it safe to withdraw the interest earned Jan 1 this year from TFSA

CanadianConsumerYEG wrote: ↑ 2023 contribution room = 6500 + past unused contribution room + withdrawals in 2022

That's it that's all. Rest of your post is confusing.

RigorMortis wrote: ↑ I moved all of the funds out of my TFSA accounts in the last week of decemeber to make things a bit simpler in terms of how much contribution room I would be starting with this year.

In other words, as of January 1st, the only $ in the TFSA was the couple hundred interest that tangerine deposited for the interest earned for keeping the funds there in december

Do I need to be concerned about withdrawing the couple hundred from my TFSA if I want to max out my allowable ($88,000) in TFSA later this year?

RigorMortis wrote: ↑ I moved all of the funds out of my TFSA accounts in the last week of decemeber to make things a bit simpler in terms of how much contribution room I would be starting with this year.

In other words, as of January 1st, the only $ in the TFSA was the couple hundred interest that tangerine deposited for the interest earned for keeping the funds there in december

Do I need to be concerned about withdrawing the couple hundred from my TFSA if I want to max out my allowable ($88,000) in TFSA later this year?

CanadianConsumerYEG wrote: ↑ 1. The new year allowance (2023 is $6500)
2. Withdrawals in 2022
3. Unused past contribution room

Super_Chicken wrote: ↑ Edit for simplification.

This is all you need to understand to figure out your limit.


If you pulled everything in 2022:
1. The new year allowance: 2023 is $6500
2. Withdrawals in 2022: everything you pulled in Dec 2022
3. Unused past contribution room: had you previously maxed your TFSA or no? It sounds like you don't know what this amount is?


A simple example:
If your TFSA limit is $100 and you deposit your $100. Your TFSA is now maxed.
In the same year if you grow that amount to $200 and withdraw it, the next year you get the full $200 back as contribution room (number 2) (in addition to the next year's growth, number 1).


Complicated part:
If you don't know number 3, you will need to calculate it.

You need to calculate how many TFSA years you are eligible for (if you're younger and weren't old enough at the time it was created). If you were old enough, it was $88,000

Then calculate all the money you deposited and withdrew from the account. NOT how much money you earned inside the amount. This is where withdrawing everything in Dec 2022 didn't matter for you. If you deposited $80,000 to your TFSA over your lifetime. Your remaining contribution room is $8000. Simple!

If you deposited $80,000 to your TFSA over your lifetime, grew it to $100,000, and you withdrew that in Dec 2022; your remaining contribution room is still $8000.
The $100,000 you withdrew in Dec 2022, unlocks as contribution room again Jan 1, 2023.

It also works negatively.
If you deposited $80,000 to your TFSA over your lifetime, shrunk it to $50,000, and you withdrew that in Dec 2022; your remaining contribution room is still $8000.
The $50,000 you withdrew in Dec 2022, unlocks as contribution room again Jan 1, 2023. The $30,000 is lost as contribution room. You would need to grow it back within the TFSA.


That will give you what your actual limit is.

CanadianConsumerYEG wrote: ↑ Don't even calculate. Ask the tax man aka CRA, find it online in your CRA account.

CanadianConsumerYEG wrote: ↑ Don't even calculate. Ask the tax man aka CRA, find it online in your CRA account.

Any contributions that are made or withdrawn from a TFSA in the prior year may not be reflected in your available current year contribution room until after the end of February. All issuers have until the last day of February to electronically submit a TFSA record to the CRA for each individual who has a TFSA. Any transactions made in the current year will not be included.

callernamet wrote: ↑ Nope. CRA records are not updated till March 1st week may be. So you keep all the records. It is simple. I mean really.


https://www.canada.ca/en/revenue-agency ... tions.html

CanadianConsumerYEG wrote: ↑ If you're OP that doesn't even know how TFSA works, you can't expect him to go back to 2009 and calculate all his contributions and withdrawals to find out his exact room, with records that probably are long gone.

Thus, wait until March 1 and the CRA will tell you exactly how much 2023 contribution room you have down to the penny.

No matter what you choose to do with your TFSA funds, keep in mind that one of the biggest benefits of the TFSA, beyond the tax-free income and growth, is the flexibility to recontribute any withdrawn funds back to your TFSA, beginning the following calendar year. You’re also able to transfer funds from one TFSA to another, but it must be done via a direct transfer, rather than a withdrawal and recontribution.
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Taxpayers who don’t appreciate the nuances of the TFSA recontribution or transfer rules, however, could find themselves in trouble with the taxman for overcontributing. That’s exactly what happened in a case decided in late 2022.

The taxpayer’s troubles began in early 2020, when, needing to move closer to his young daughter after separating from his wife, the taxpayer withdrew $50,000 from his TFSA with the intention of making an offer on a new home. He said he did this before actually finding a home because “in a hot housing market in which there were often bidding wars for the same home, a competitive bid necessitated that funds be in hand for an offer to be accepted within a very short period of time.”

The taxpayer quickly realized the housing market was simply “too hot for his financial wherewithal,” so he did what he assumed was “the reasonable thing to do” and deposited the same funds back into his TFSA on Feb. 6, 2020. Unfortunately, the taxpayer’s TFSA contribution room for the 2020 taxation year was only $10,000, such that the redeposit of $50,000 triggered an overcontribution for the month of February of about $40,000.

But things became even more complicated later that month when the taxpayer, in an attempt to consolidate two TFSAs into one account, transferred that same $50,000 from the TFSA into his regular savings account and then into a second TFSA on the same day.

The taxpayer wrote to the CRA to request it cancel the assessment, arguing that “he was not aware that redepositing the same funds that were withdrawn during the same taxation year would constitute additional contributions.”