Final answer:
A holder who maxes out their TFSA and withdraws the full amount can only re-deposit the withdrawn funds in the next calendar year, not in the same year. This ensures the holder does not exceed their annual contribution limit.
Step-by-step explanation:
If a holder contributes the maximum to a TFSA (Tax-Free Savings Account) in February and then withdraws the entire amount in April of the same year for a holiday, they are indeed allowed to re-deposit the amount withdrawn into the TFSA in September of the same year. However, it is important to note that the re-contribution can only be made in the next calendar year, as re-contributions of withdrawals made in the current year are not permitted until the following calendar year. This ensures that holders do not exceed their contribution room.
The contribution room for a TFSA is calculated based on the individual's TFSA dollar limit of the year, any unused TFSA contribution room from previous years, and any withdrawals made in previous years. Remember, though, that withdrawals increase the contribution room for the following year, not the current one. So, if the individual has already maxed out their contributions for the year, they will have to wait until the next calendar year before they can put the money back in without penalty.