How to transfer stocks to a TFSA

Pay attention to appreciable gains

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From the Summer 2015 issue of the magazine.

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Q: Are there any advantages to transferring stocks from a non-registered account into my TFSA, as opposed to selling the stocks and just repurchasing them in my TFSA? I’ll still have to pay capital gains taxes anyway.—Rick Birn, Cold Lake, Alta.

A: If there is an appreciable gain on those stocks, there isn’t much of an advantage. You’ll save on trading commissions by transferring the stocks in-kind instead of selling and rebuying them, but that amount won’t be significant unless you hold a lot of different stocks. If there is a loss on those stocks, you cannot claim that loss for tax purposes with an in-kind transfer. Better to sell the stock first, wait for 30 calendar days to avoid the superficial loss rules, and then repurchase the stock in your TFSA. And take care not to exceed your TFSA contribution limit. This could happen if you sell, say 1,000 shares in one account and then the prices rise by the time you go to make the purchase in the other account. During that 30 days, there’s a risk that the total value of that purchase might exceed your TFSA limit.

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