Does withdrawing money from my TFSA and recontributing it in the same year cause an over-contribution?

It can, and this is one of the most common ways people accidentally over-contribute to a TFSA. Withdrawal room isn't added back to your TFSA contribution room immediately - it only becomes available starting the following calendar year. So if you withdraw money from your TFSA and then recontribute that same amount later in the same calendar year, without enough separate unused room to cover it, you can end up over-contributing without realizing it.

This trips people up because it feels intuitive that taking money out should immediately free up room to put it back in, but that's simply not how the timing works under the Income Tax Act. The room from a withdrawal doesn't exist yet in the same year you made the withdrawal - it appears on January 1 of the following year. Before recontributing any amount you've withdrawn from a TFSA in the same year, it's worth checking your actual current contribution room first, rather than assuming the withdrawal itself created room to use right away. If you've already made this mistake, catching it and withdrawing the resulting excess promptly is the best way to limit the monthly penalty tax that would otherwise keep accruing.