Be clear on contribution rules
While the TFSA has proven to be a flexible account, it is important to understand annual contribution rules. Canadian residents 18 and older are currently allowed to contribute up to the TFSA dollar limit for the year. This means if you have both a savings and an investment account, you are responsible for tracking your contributions to ensure you don't exceed the annual TFSA dollar limit.
While rules prevent you from re-contributing the amount you withdraw within the same calendar year, you are permitted to re-contribute the withdrawn amount the following year.
For example, in 2012 Timothy Smith, 36, had a TFSA investment account, in which he contributed bi-weekly through a regular investment plan that totaled his maximum contribution of $5,000 per year. Timothy contributed the maximum amount for each of the past four years (2009 - 2012), totalling $20,000. During this time, he also earned interest totalling $900. Timothy decides to withdraw the full $20,900 amount of his TFSA to renovate part of his home. While Timothy cannot re-contribute the amount he withdrew this year, he can re-contribute the full $20,900 the following year, plus the additional contribution room he is allowed for 2013.