# TFSA - Transfer Stocks?



## kingzamzon (Feb 13, 2011)

Here is my situation.

-I have not used about any of my TFSA contributions for this year and past.
-All my savings are tied up in Employee Stock Purchase Plan.
-I have for the past two years being contributing significant portion of my income towards this plan (it is in scotia bank itrade pan)
-Due to increase in stock price/15% discount price I have made healthy gains in this account.

How can I take advantage of TFSA in my certain situation? Is it possible to transfer my money in this account into TFSA account? I'm trying to withdraw my gains with the least tax bill.


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## m3s (Apr 3, 2010)

Investments are only tax sheltered while they're in the TFSA. You can't just transfer them in to avoid taxes, if so you could just pick the ones with the most growth


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## Eclectic12 (Oct 20, 2010)

mode3sour said:


> Investments are only tax sheltered while they're in the TFSA. You can't just transfer them in to avoid taxes, if so you could just pick the ones with the most growth


+1.

A transfer to the TFSA with the aim withdraw capital gains with the smallest tax bill won't work because the stock is not in a TFSA. The transfer will be a "deemed disposition" (i.e. treat it like a sale) and generate a capital gain.
The only option that might reduce the capital gains tax that comes to mind is if there is other stock to sell for a loss (or un-claimed capital losses) to write-off against the capital gain.

If the stock is likely to keep growing - transferring now will shelter any future gains.

Cheers


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## kingzamzon (Feb 13, 2011)

Thanks for the response mode3sour. It makes sense, and it was probably wishful thinking on my part.



Eclectic12 said:


> +1.
> 
> A transfer to the TFSA with the aim withdraw capital gains with the smallest tax bill won't work because the stock is not in a TFSA. The transfer will be a "deemed disposition" (i.e. treat it like a sale) and generate a capital gain.
> The only option that might reduce the capital gains tax that comes to mind is if there is other stock to sell for a loss (or un-claimed capital losses) to write-off against the capital gain.
> ...


So once the stocks are in my itrade account, sell and buy investment in the same stock that are TSFA? Is that correct? Currently I'm riding out my investment in same stock. So by buying stocks in TSFA account, I'm atleast shelter my capital gains.

I'm not very familiar with TFSA stock instruments. I have seen bonds/fixed investments. Anywhere I can more information on this?


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## Eclectic12 (Oct 20, 2010)

kingzamzon said:


> [ ... ]
> 
> So once the stocks are in my itrade account, sell and buy investment in the same stock that are TSFA? Is that correct? Currently I'm riding out my investment in same stock. So by buying stocks in TSFA account, I'm atleast shelter my capital gains.
> 
> I'm not very familiar with TFSA stock instruments. I have seen bonds/fixed investments. Anywhere I can more information on this?


Hmmm ... I'm not really clear on what you mean by "sell and buy" the same stock as the TFSA.

What I was saying was that the only way I can think of that you can reduce the capital gain on the Employee stock is if you have other stock which is at a loss (i.e. trading for less than you paid).

If you transfer or sell the Employee stock and also sell the stock that worth less than you paid, the total capital gain to pay tax on is the gain of the employee stock minus the loss of the other stock.

Maybe if I explain what I did with my TFSA transfer.

In 2010, I had stock A which had a capital gain $10/shared for a total of $1000. I also had stock B which traded at a loss of $5/shared (i.e. I bought for $6 and it now trades for $1). So the day I transferred stock A to my TFSA, based on the day's trading range, I choose a value that resulted in a capital gain of $1000. I then sold 200 shares of stock B (i.e. loss of $1000).

When I file my 2010 tax return, for capital gains I'll report for stock A a capital gain of $1000 and for stock B a capital loss of $1000. The gain equals the loss making the net is zero - meaning I owe no taxes.


From what you have written - it appears you have no other stocks, so this won't work.


However, the good news is even if you can't avoid tax on the capital gains, it is one of the cheapest taxes to pay.


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## CanadianCapitalist (Mar 31, 2009)

A TFSA is not an investment. It is a bucket to hold investments. Check out this thread for a humorous explanation:

http://www.canadianmoneyforum.com/showthread.php?t=5522

There are plenty of online resources available on the TFSA. Make Google your friend.


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