Although tax-free, there is a limit to how much you can contribute to your TFSA every year. In 2023, the maximum amount that Canadians can contribute to a TFSA is $88,000. Please note that this limit may differ depending on your age and how long you’ve been living in Canada. If you’re not sure how much you can contribute, please speak with a tax professional.
If you exceed your contribution limit, there is a financial penalty. Namely, you’ll owe 1% of the amount you’ve over-contributed every month until you withdraw the excess or become eligible for more contribution room. For example, if you over-contributed $100, you would have to pay $1 per month until you corrected the situation.
You can withdraw money from a TFSA without paying taxes, however, withdrawals impact your ability to contribute to your TFSA in the future.
You can learn more about withdrawing from a TFSA here.