If contribution space is an issue in your tax free savings account (TFSA), you might want to consider making a withdrawal before Dec. 31.
Under federal government rules, contribution space from TFSA withdrawals is not renewed until the following calendar year. That means the dollar amount of withdrawals made in 2023 will be added to your available contribution space on Jan. 1, 2024.
If you make a withdrawal after Dec. 31, the additional contribution space will not be available until 2025.
It’s obvious why millions of Canadian take advantage of the “tax-free” status for gains on investments made inside a TFSA. With the exception of foreign dividends, capital gains on equities or income from dividends, bonds, guaranteed investment certificates (GICs) or even high-interest savings accounts are never taxed.
In comparison, income on investments outside registered accounts like TFSAs are fully taxed and half of gains on equities are subject to taxation.
That could add up to a big chunk of money over the years that goes to the government instead of being reinvested for further gains.
You should never make an investment decision based solely on tax consequences, but the current late-year rally could present an opportunity to take some profits in your TFSA to open up space in the new year. 
You can also create space by withdrawing any cash in your TFSA. Cash in a TFSA is wasted space.
If you make a withdrawal before the end of the year, that amount will be added to whatever Ottawa permits in the new year. Last year, an additional $6,500 was added to the total contribution room, but it could be raised to $7,000 this year to account for inflation.
It should be noted that Ottawa is under no obligation to expand the available TFSA limit at all.
As it stands, the current limit for those who were 18 years or older when the TFSA was launched in 2009 is $88,000, but it can vary among individuals depending on withdrawals made over the years.
Over-contributing to your TFSA could result in a penalty from the Canada Revenue Agency (CRA). Many Canadians contribute to their TFSAs through more than one institution and it is the account holder’s responsibility to ensure they don’t exceed their limits. 
Tax-loss selling is a popular strategy for investors who want to lower their tax bills by deducting capital losses from the sale of losing stocks against capital gains generated from winning stocks.
That only applies to non-registered accounts. Since capital gains are never taxed in a registered TFSA, there’s nothing to offset capital losses against. 
TFSAs are often confused with registered retirement savings plans (RRSP), which allow contributions to be deducted from the plan holder’s income to generate a tax refund.
While TFSA contributions don’t deliver an immediate tax break, withdrawals are never taxed. In comparison, RRSP contributions and all the gains they generate over time are fully taxed when they are withdrawn.
TFSAs, however, can be an effective retirement savings tool to work in conjunction with an RRSP. If investment in an RRSP grow too much, retirees could be forced to make withdrawals in a higher tax bracket and even face Old Age Security (OAS) claw backs.
Splitting retirement savings between an RRSP and TFSA allows you to limit RRSP withdrawals to the lowest tax bracket and top up required funds with non-taxable TFSA withdrawals. 
It’s another great way to keep more of your retirement dollars in your pocket.