# Transferring Stocks To TFSA



## Bighairybeast (Feb 24, 2011)

When the TFSA first started I was able to maxout the first couple of years and a partial contribution the third year through TD Waterhouse . This had done very well for me as I'm up about 134%. But since that point I haven't contributed due to various factors.

I have a good job making just into six figures and I have a company share plan that allows me to by up to 6% and they match 1 for every 3. These shares are held by Solium. My question is if there is a reasonable way to either transfer these shares to fill up my TFSA contribution room or sell the shares and buy back from within my TFSA. 
What would the tax implications be considering my present income? I plan on holding these shares for quite a while either way but would like to get them away from the taxman. The company is TCK.b and I probably should have thought of this a few months ago when they were near there year low. Thanks for any ideas.


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## Eclectic12 (Oct 20, 2010)

Yes, transferring the shares to your TFSA when they were lower would have been better.

Transferring shares into the TFSA is simple - what is going to complicate things are the rules around the company share plan, including both the tax implications as well as any restrictions. For example, some friends have to hold their shares for three years before they can sell while others in a company share plan, have to keep working for the company for six months but can sell the shares at six months and 1 day.

To keep things simple - let's look at what happens with a transfer of shares that you've bought on your own (i.e. not company plan shares) in a taxable account first.

In that case (which I've done) - I first made sure I had the TFSA contribution room to transfer the shares into the TFSA. The transfer in is considered by CRA the same as selling the shares and contributing the money. This means one has to report a capital gain (CG) on their tax return for whatever the CG is. Note there *must* be a CG as a capital loss is not allowed.

Once I had an idea of how many shares and my target price - I checked the trading range at say 2pm every day. When the day's range hit a spot I liked that minimises the capital gain, I then called in to transfer the shares. I told the rep "I want 100 shares of stock ABC transfered to my TFSA". The rep later asked what transfer price to use, where I could choose from the current range. At the time I transferred my stock, the range was from a high of $8.50 to a low of $7.50 - since $7.55 meant was I had a CG of $0.01 per share, I picked $7.55 as the transfer price.

I then kept checking online, three days later the stock disappeared from my brokerage account, appeared in the TFSA and was marked as $7.55, even though on the transfer day a late rally meant the closing prices was $8.90 per share.

On the next tax return, I reported my $0.01 / share CG, which other capital losses from other stock wiped out.

That's it.


In your case, it will be more complicated as there are additional factors. 

Are there any restictions that require you hold the stock (your and the matching stock) with Solium for a set period before a tansfer or sale can happen?

Since there are matching shares from the company, I would think there would be extra taxes to pay. You might want to post a separate question in the CFM Taxation section to get an idea of what tax implications the share plan with matching company shares has. 

Then too - are the shares in a registered account or taxable account at Solium. (A registered account likely means fees from Solium are the only cost to worry about as a TFSA to TFSA transfer has no tax implications.)

Once any holding period has expired - are there any fees or timelines that Solium imposes? Some plans have an annual priviledge that allows a transfer out.

Without knowing more details (i.e. is it a taxable account) or what the tax implications of the stock plan & company matching shares - it is hard to assess if selling for cash and contributing the cash to your TFSA makes sense.


Cheers


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## Bighairybeast (Feb 24, 2011)

Thanks for the detailed response. Solium does have a holding period, but I have more than enough shares that have cleared. Currently I have a 12.95/share gain based on my average cost per share. I haven't looked up my available TFSA room exactly but it should be right around $13000. So if I transferred 345 shares to come in just under my limit I would pay capital gains on 345 X 12.95= 4467.75 I believe the capital gains are taxed at 50%??? so I would have $2233.88 added to my income for the year? I will have to look into tax on the matching shares but as it shows on each cheque I believe it is already taxed. Thanks again.


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## Eclectic12 (Oct 20, 2010)

For a transfer from taxable to TFSA, this CG calculation looks correct to me.

The CG is calculated on the income tax return on schedule 3, totaled with any capital losses (CL) plus other items on line 197 and multiplied by 50% on line 199. The final amount is transferred to the T1 form on line 127.

As a side note, if you have other shares that are in a CL which you don't think will recover, it would be good to sell them in the same tax year to reduce the total.


As for the matching shares, it is good to find out. Here are some links that might be a starting point:
http://www.canadiancapitalist.com/tax-treatment-of-espp-benefits/
http://www.advisor.ca/tax/tax-news/up-to-speed-–-2010-tax-changes-10390
http://www.slideshare.net/fmclaw/converting-employees-to-owners-employee-share-purchase-plans

If the taxes are already being taken off for the shares (matching & yours), then it may just boil down to the CG (or CL if you have enough balancing losses).


Cheers


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## Bighairybeast (Feb 24, 2011)

Well, the share price dropped again so I have been attempting to get this process going. From talking to both my bank and Solium I was not able to find a way to pick the share price; I can't even control what days price they use. It also blows my mind that this process will take minimum of 5-6 business days and up to a month if share certificates have to be sent. Finally sent in form requesting the max amount of shares that I can transfer (according to my total on CRA page which seems high to me but my record keeping is bad and I haven't done anything this year so it should be up to date?). Almost a week later I got a call from Solium and was informed that my form was for a registered TFSA account so tranfer could not proceed. Now I have to open a non-registered Waterhouse account to do this.

Am I missing something here or is it this complicated? Should I just sell the shares then transfer money to my TFSA to buy them back?

Thanks for any info

ps recently my forums has had every individual post shrunken onto scrollable screen. Is there a way to go back to where I can see entire posts?


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## Eclectic12 (Oct 20, 2010)

Bighairybeast said:


> Well, the share price dropped again so I have been attempting to get this process going....
> Almost a week later I got a call from Solium and was informed that my form was for a registered TFSA account so tranfer could not proceed.
> 
> Now I have to open a non-registered Waterhouse account to do this...


I haven't heard of this before ... did they explain why a non-registered account was required?
It also seems odd to me that Solium is able to transfer shares to a non-registered TDW account but can't to a registered account.




Bighairybeast said:


> Am I missing something here or is it this complicated? Should I just sell the shares then transfer money to my TFSA to buy them back?


It is a bit more complicated as the non-registered TDW account has to be setup first. The good news is that when the setup is complete - there is really nothing further required. It's a bit of overhead in that you will then have an extra account to keep track of (i.e. Solium account plus two TDW accounts).

There is also the advantage that if the Solium transfer non-registered to a TDW non-registered account, there will be no tax implication. At that point, the transfer to the TFSA (i.e. TDW account to account) will allow you to pick the day as well as the price the shares are transferred at.

Then too - if you decide to DIY invest in a non-registered account, there will be one already setup and ready to go.

The main other issue I can think of at the moment is what trades will cost but it sounds like you've got a fair amount in your TDW TFSA so you may already qualify for the cheaper trades. If not, you can link the non-registered and the TFSA accounts (and an RRSP account if you open one) so that both the total of both accounts will get you to the cheaper commissions faster. 


The key factor IMO is whether you see this as a one time transfer to the TFSA.

If you think you'll be doing this several times, then I'd get the TDW non-registered account setup. I don't see any advantage to selling the stock to transfer cash. Worse, if the stock keeps rising in price - it may cost a lot more than just the buy commission when converting the cash that was contributed to the TFSA back into stock.





Bighairybeast said:


> ps recently my forums has had every individual post shrunken onto scrollable screen. Is there a way to go back to where I can see entire posts?


Are all web sites showing up this way (i.e. the browser setup changed)? Or just CMF?

The times I've noticed this, I've hit the wrong keys and shrunk all web sites.


Cheers


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## Bighairybeast (Feb 24, 2011)

Thanks for yet another detailed reply. They just stated that my unregistered shares couldn't be transferred by them to my registered acount. My bank manager has his TD representative attempting to contact Solium and do this transfer with the form I already submitted. If not I'll open an unregistered account and and do the transfer from within TDW.

I guess my browser was shrunk a little. It didn't affect any other forums I browse so I didn't think of it. Financial and computer advice! Thanks


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## Zoombie (Jan 10, 2012)

Sounds like you may have figured this out already, but just in case - 
I have Solium and TDW TFSA as well, and can transfer quite easily. The only caveat is that you need to transfer between like accounts, so registered-> registered or unregistered-> unregistered. 
Call TDW to get the information (acct #, address) that you need for the "transfer in kind" form on Solium. 
Then have Solium transfer to your unregistered TDW account. 
Lastly, you need to phone TDW (can't do online) and they will give you the lowest price of the day (call at the end of the day so you have a full days' prices to choose from). This part needs to be done on the phone from what I've gathered, there is no online form.


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## My Own Advisor (Sep 24, 2012)

Correct Zoombie, no online form.

I transferred some stocks from unregistered > TFSA earlier this year and maxed out my contribution for 2013 that way. I will need to pay some capital gains on my 2013 tax return, but I have capital losses carried forward from previous years (a few hundred bucks) which should offset that.

I will probably continue this process until most of my CDN dividend paying stocks are kept in the TFSA. Tax-free dividends for life, gotta love it.


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