# TFSA Captial Gains Questions



## Netforce (Feb 28, 2017)

Hello, new to CMF & hope to learn much from you savvy investors. :shame:

My question is; Can I buy and sell a stock FOR A PROFIT, and then re-buy the same stock before 30 days (on a dip when it's lower) and sell again when it goes up, repeating this process as many times as I see fit without incurring any capital gains tax? (since the stock is traded from my registered TFSA account) 

I realize the 30 day wash sale rule applies to those trying to offset their capital gains with a strategic (superficial loss), but if I am selling my positions *for a profit* and repurchasing multiple times per day all from my TFSA will I have to pay capital gains or any other type tax/fee?

Thanks,


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## Ag Driver (Dec 13, 2012)

A tax free savings account is just that. Tax free. Have at 'er.


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## Mookie (Feb 29, 2012)

No tax implications to your plan, but you may find that repeatedly and frequently buying low and selling high (aka day trading) is easier said than done. Buying and holding high quality dividend payers usually works out better in the long run for most of us.


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## Netforce (Feb 28, 2017)

Mookie said:


> No tax implications to your plan, but you may find that repeatedly and frequently buying low and selling high (aka day trading) is easier said than done. Buying and holding high quality dividend payers usually works out better in the long run for most of us.


I see thanks, so how many trades would I be allowed on a monthly basis from my TFSA before I would be considered a "day trader" by the CRA and have to report any income as business income? And if this happened, would I also not be able to report any losses if CRA considers me to be running a business?


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## nobleea (Oct 11, 2013)

Netforce said:


> I see thanks, so how many trades would I be allowed on a monthly basis from my TFSA before I would be considered a "day trader" by the CRA and have to report any income as business income? And if this happened, would I also not be able to report any losses if CRA considers me to be running a business?


Most people who make a lot of trades usually lose money, so CRA doesn't really care. If you make a lot of money, whether it's a couple trades a year or a few trades a day, they will find out and could classify it as income.


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## Eclectic12 (Oct 20, 2010)

Netforce said:


> I see thanks, so how many trades would I be allowed on a monthly basis from my TFSA before I would be considered a "day trader" by the CRA and have to report any income as business income?


Not sure ... there are eight factors they look at.

For the TFSA, a rapid rise in value in the account is what seems to get their attention to trigger an audit.
http://business.financialpost.com/p...r-tfsa-being-targetted-by-cra?__lsa=d084-d678
http://business.financialpost.com/p...-the-taxman-wants-to-know-how?__lsa=d084-d678

Once they are auditing, the factors come into play.
http://www.taxtips.ca/personaltax/investing/taxtreatment/capitalorincome.htm




Netforce said:


> And if this happened, would I also not be able to report any losses if CRA considers me to be running a business?


There's no Canadian taxes in a TFSA so no capital losses or business losses would be allowed.

In a taxable account, then the business losses would be allowed.


Cheers


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## Netforce (Feb 28, 2017)

Eclectic12 said:


> Not sure ... there are eight factors they look at.
> 
> There's no Canadian taxes in a TFSA so no capital losses or business losses would be allowed.
> 
> ...


Interesting links thanks for sharing. Does anyone else find it slightly annoying you can be audited by the CRA and taxed for legitimate investment gains in your TFSA but also at the same time cannot record a capital loss for tax purposes?


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## OnlyMyOpinion (Sep 1, 2013)

Netforce said:


> ... Does anyone else find it slightly annoying you can be audited by the CRA and taxed for legitimate investment gains in your TFSA but also at the same time cannot record a capital loss for tax purposes?


No, why wouldn't we expect the CRA to have audit powers? 
You aren't taxed for legitimate investment gains in your TSFA. But I would agree that the rules constituting "business" trading gains remain opaque.


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## rsal59 (Dec 2, 2016)

It is interesting that apparently you should buy securities with closed eyes:
“ “a substantial port of the the tax player’s time is spent on studying. Markets...”


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## agent99 (Sep 11, 2013)

The main point, is that the TFSA is a tax free savings account that supplements RRSPs so people can save for their retirement. It is not intended for use by those trying to make money by carrying out frequent trading.



https://ca.finance.yahoo.com/news/canada-revenue-agency-important-tfsa-220021916.html


says:

*



Trading rules

Click to expand...

*


> If you’d like to do day trading or trade frequently, don’t do it in your TFSA. The government might consider your trading activity as a business and you will have to pay income tax.
> 
> The Canada Revenue Agency (CRA) audits taxpayers who actively trade in their TFSA.
> 
> The CRA takes a number of factors into account when determining whether or not a TFSA is subject to income tax. These include the duration of the holdings, the frequency of the trades, the nature and quantity of the securities, the time spent on the activity, and your intention to hold investments to resell them for a profit.


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## Thal81 (Sep 5, 2017)

Speaking of frequent trading in a TFSA, how would the CRA find out? How would they know to audit you? 

I'm looking at the yearly TFSA information reported by my broker on the CRA website . It includes the contribution amount and number of transactions, but not the number of trades within the account. It does include the end of year market value of the account. Thus, I assume you could only draw the CRA attention if that number gets too large relative to what's expected under typical portfolio returns. What if you bought Tesla two years ago and hit a home run? Is it an automatic ticket to audit?


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## like_to_retire (Oct 9, 2016)

Thal81 said:


> Is it an automatic ticket to audit?


I always figured they simply flagged TFSA size (a pretty good indicator) to flag an audit of the account. If they saw the single lucky trade then they would accept it as fine.

ltr


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## Eclectic12 (Oct 20, 2010)

rsal59 said:


> It is interesting that apparently you should buy securities with closed eyes:
> “ “a substantial port of the the tax player’s time is spent on studying. Markets...”


That's on option. 

For someone like myself who is employed full time, the time employed likely outweighs the time studying the markets.
I suspect many would fit this until retirement.


Cheers


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## Eclectic12 (Oct 20, 2010)

like_to_retire said:


> I always figured they simply flagged TFSA size (a pretty good indicator) to flag an audit of the account. If they saw the single lucky trade then they would accept it as fine.


That's pretty much what the articles have said. IIRC, an accounting group was pushing for a published threshold amount.



Cheers


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