Here is the basic information regarding withdrawals from a tax-free savings account:
Withdrawals will create additional contribution room equal to the amount of the withdrawal, for deposits in future years (not in the year of the withdrawal).
Income earned in and withdrawals from a TFSA will not affect eligibility for federal income-tested benefits and credits such as
guaranteed income supplement (GIS)
old age security (OAS)
age exemption tax credit
Any fees paid related to the TFSA will not be tax-deductible.
In kind withdrawals can be made, with the investments being transferred to a non-registered account, or as a contribution to an RRSP, subject to available RRSP contribution room. When in kind withdrawals are made, the value of the transaction will be the current market value of the investment. This will be the contribution amount if the investment is transferred to an RRSP. If the investment is transferred to a non-registered account, the current market value at time of withdrawal will be the cost basis for the non-registered investment. Any subsequent capital gain or loss when the investment is sold will use this value as the cost basis.
If the maximum has been contributed to a TFSA, and then a withdrawal is made, no further amount can be contributed (without penalty) until the following year. On January 1st of the following year, the withdrawal amount from the previous year will be used to increase your regular annual contribution room.