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Glossary term

TFSA Re-Contribution Trap

Canadian over-contribution penalty

🇨🇦Canada · Tax Year 2026Reviewed Plain-English
Definition

What is TFSA Re-Contribution Trap?

If you withdraw from a TFSA and re-contribute in the same calendar year, CRA treats the re-contribution as over-contribution — penalized 1% per month on the excess. Withdrawn room is only restored on January 1 of the following year.

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