E.g. if i deposit $4000 in a TFSA a/c and used that to purchase a stock that I sell for $5000. After selling the stock, I have $5000 cash in my TFSA, do I still have $1000 contribution room left for the same year or not?

THanks.

I just opened up an account today, and was wondering if this feature is available for the TFSA, so any comments on this would be appreciated muchly.

We we wil be using TFSA’s as the first retirement savings plan, since it is superior to RRSP’s for many people, especially anyone saving a comfortable nest egg. Using it for an emergency fund is a wasted opportunity.

There are 2 articles on this blog about TFSA’s vs. RRSP’s and the affect of clawbacks for seniors on the benefits of TFSA’s.

TFSA’s look like they will be basically exactly like RRSP’s, except for the tax consequences for contributions and withdrawals. There were a few questions here about mechanics of the TFSA, which should be just like a similar RRSP.

Ed

Otherwise people would invest outside the account and only transfer the profitable investments to the account, taking the tax loss on the unprofitable ones.

So yes, transferring into the account HAS to cause gains to be taxable as of that date. Otherwise it’s a giant tax loophole, and governments in 2008 don’t create such easy accidental loopholes.

From https://www.tdcanadatrust.com/invest/tax_free.jsp:
Once I’ve withdrawn my money, is that contribution room lost?

A: No, you never lose your contribution room – in fact, you can recontribute amounts you have withdrawn. You have to wait until the next year to recontribute, but you can carry forward the recontribution room indefinitely.

For example, say you contribute $5,000 to your TFSA in January 2009 and another $5,000 in January 2010. Then, in the summer of 2010, you withdraw $3,000 to pay for some repairs to your home. You can’t recontribute that $3,000 in 2010, but in 2011 it will be added to your contribution room again, meaning you could contribute up to $8,000 in 2011.

Let’s say, I deposit 5k into my TFSA at the beginning of the year. Luckly, I get 20% return in 2 months. Then I withdraw all the money , 6k here, from the account.

Here is my question. What is the future contribution room for my TFSA in the rest of the time of the year? 0k, 5k, or 6k?

I actually can’t believe it has taken the banks this long to be the “first” out of the gate. Sometimes the tortoise does win the race!

Does anyone think that a person could hold the ING TFSA until Jan 2 and then start one with an investment broker for stocks instead? The ING details line about registering the account with the Cda Gov makes me feel that you are locked into the account with ING and can’t move your money around like this.

Basically, if you have a $5K account with ING TFSA registered, can you empty it and start a TFSA with someone else?

Thanks. Great blog btw.

Its great positioning by ING. They position themselves as the savings bank. Being the first to offer the product is great for them.

I’ve seen a TFSA analysis reports done by a bank economist. I see this as a product that the banks will be pushing more in 2-3 years when the maximum account size is worth their while.