# Flow through shares in TFSA



## man-of-kanata (Nov 15, 2009)

I was wondering if the TFSA deposits can be used to purchase units in a flow-through share limited partnership and, if so, is the tax deduction still valid. Furthermore, when the units are cashed out, will the amounts received be harboured from any tax liability?


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## HaroldCrump (Jun 10, 2009)

man-of-kanata said:


> I was wondering if the TFSA deposits can be used to purchase units in a flow-through share limited partnership and, if so, is the tax deduction still valid.


Tax deduction will not be allowed. Tax deduction is only for RRSP.


> Furthermore, when the units are cashed out, will the amounts received be harboured from any tax liability?


Yes


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## man-of-kanata (Nov 15, 2009)

*Flow through investment*

My understanding is that "qualified investments" for TFSA are the same as for RRSP's. If this is correct, the deduction of amounts invested in a flow-through share partnership should be deductible from income. There seems to be no prohibition as to the source of capital (ie. TFSA or other personal sources.)


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## Oldroe (Sep 18, 2009)

I posted a tax strategy so time ago to blank stares from the stars of this site. I believe nobody here knows that much about LP and good luck finding anybody to help you threw them.


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## hylaride (Jun 11, 2009)

man-of-kanata said:


> My understanding is that "qualified investments" for TFSA are the same as for RRSP's. If this is correct, the deduction of amounts invested in a flow-through share partnership should be deductible from income. There seems to be no prohibition as to the source of capital (ie. TFSA or other personal sources.)


Yes, the qualified investments are the same as an RRSP, but the difference is you DON'T get a tax refund for contributions, but you get to withdraw without paying any capital gains tax, and there's no tax on interest/dividends inside the TFSA.

It's a different registered vehicle.


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## Cal (Jun 17, 2009)

'flow-through share limited partnership and, if so, is the tax deduction still valid'

I would contact your accountant about the deduction. Is it 15% if held outside of an RRSP account.

I am not a big fan of investing in the LP's, or anything for that matter for a tax strategy so I am not that familiar.


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## CanadianCapitalist (Mar 31, 2009)

man-of-kanata said:


> I was wondering if the TFSA deposits can be used to purchase units in a flow-through share limited partnership and, if so, is the tax deduction still valid. Furthermore, when the units are cashed out, will the amounts received be harboured from any tax liability?


I'm not clear on what your question is. Do you want to withdraw from a TFSA and invest in a flow-through LP in a taxable account? You can withdraw from a TFSA tax-free anytime. If you invest the proceeds in a Flow-through LP, you get a tax deduction equal to your investment and your ACB for the LP units is zero. When you dispose of the LP units, you pay capital gains on the entire proceeds (since your ABC is zero).

I don't understand why you'd want to invest in flow-through LP inside a RRSP or TFSA. The whole point of flow-through is the upfront tax deduction.


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