Comments on: TFSA – Tax-Free Savings Account Announced in 2008 Canadian Budget

By: Preet

Preet — Thu, 02 Apr 2009 22:17:18 +0000

@ Gordel – correct. No capital gains on the way out (or while inside). Happy gambling! :)

By: Gordel

Gordel — Thu, 02 Apr 2009 21:52:00 +0000

So – trying to understand this – if I contribute 5000$ to my TFSA and I increase it to $500,000 or however much more (exact same way as with a “trading” account.. then I withdrawl 100,000 and pay no taxes on the 100,000? or whatever amount I withdrawl? What about capital gains?

By: Preet

Preet — Sat, 20 Dec 2008 17:16:11 +0000

@ Carl J – I’m just guessing about TD’s e-Series, but my guess is that it should be no problem as long as you have set it up properly. I do know the answer to the second question: You could have 5,000 TFSA accounts with $1 of contributions to each if you wanted.

By: Carl J

Carl J — Fri, 19 Dec 2008 14:05:08 +0000

Hi Preet,

Probably a stupid question (since my knowledge with RRSP, Investing, stocks, mutual funds and all that fun stuff is a bit lacking), but can you put TD’s e-Series into a TFSA?

And also, is it possible to have multiple TFSAs (which total the $5000 a year)? So say I want to open a TFSA with my bank, but also one with an online broker such as QuestTrade or ShareOwner (I believe that the both will be offerering TFSAs).

Thanks,
Carl J

By: Preet

Preet — Fri, 19 Dec 2008 03:12:53 +0000

@ Mackel – again you are correct. The tax-free savings account is truly tax-free. It is a registered account, and anything that happens in there is sheltered from taxes as long as you remain within your contribution limits. The value of the account growing rapidly will not affect your contributions or attract any penalties, I’m just referring to the fact that if your NOA indicates you can contribute $5,000 for the year, you can only put in $5,000. But if you can grow that $5,000 to a million – nothing to worry about (at all!)

By: Mackel

Mackel — Thu, 18 Dec 2008 20:34:13 +0000

So their are no restrictions on the length of time a stock or mutual must be held? Therefore the only restriction would be the length of time it takes to sell a stock, it being in the TFSA would not slow the process down?

By: Preet

Preet — Thu, 18 Dec 2008 06:37:23 +0000

@ Mackel – you are correct on both counts. Have fun!

By: Mackel

Mackel — Thu, 18 Dec 2008 00:22:48 +0000

Can the TFSA be used to shelter gains on day or short term stock trades? Can an individual make daily trades from within the TFSA sheltering the potential gains?

By: sundae1888

sundae1888 — Thu, 28 Feb 2008 11:09:33 +0000

@Traciatim: if you are the high income spouse, why do you need to "wash" the trail by contributing into TFSA and withdraw? Can’t you just "gift" the money to the spouse for investment?

By: Preet

Preet — Thu, 28 Feb 2008 09:47:21 +0000

Hi Xenko, you are correct.

When you make a withdrawal, the contribution room will be credited for the following tax year from what I understand (and that makes sense from an administrative point of view too). If you put in $5,000 in 2009 and your investment grows to $10,000 you can withdraw the $10,000 with no tax. The following year, you will have normally generated another $5,000 in contribution room, plus you will receive contribution room to offset your withdrawal of $10,000. That means the next year you will be able to contribute $15,000 instead of $5,000.