Letter: A TFSA Error to Avoid

Olev Edur’s answer to a reader’s question about Tax-Free Savings Accounts (TFSAs) in the November issue [page 46] was very good, clearly explaining that you can take out any amount and recontribute the same amount the following year. Nevertheless, many readers will still miss that very important phrase, “the following year.” If you return any or all of the money in the same year you withdrew it, you are assessed a tax of 3% on that amount. Believe me: I got stuck for a huge fee four years ago, and it isn’t fun trying to get any relief. Even my bank manager didn’t understand the rules at that time!

Ronald C. Lowe

Shedden, ON

Back to blog