If you can transfer the options into your TFSA (i.e. they qualify as acceptable investments that can be held in a TFSA) then you should be able to do what you say.

I just don’t know how you can transfer them into a TFSA. Only once was I ever offered stock options in a company I worked for. They never moved into the money but if I remember correctly, they were held by a US brokerage. I was thinking that I would simply exercise them at the brokerage rather than transfer them.

Let us know what you find out.

I am not sure but I think that TFSA works the same as RRSP. You just have to tell them how much you put in the TFSA and how much you have taken out. The rest, you don’t have to tell them about that.

But I am not sure.

As I knew and read here the gain made in a TFSA is tax free. But now my question: Will you have to report the potential income to the CRA even if you don’t have to tax them?

Or do we just keep the TFSA unmentioned?

To my knowledge, you cannot claim capital losses which come from a TFSA.

Thanks a lot,
Dale

Yes

“So if I, let’s say, open a TFSA savings account with ING with the max value of 5K, will I be able to withdraw and move it to ICICI in the middle of 2009?”

You can TRANSFER it to ICICI, likely for a fee. If you withdraw it and open a second TFSA, you would pay a 1%? penalty on a $5000 over contribution. It would be seen as having two TFSA open with $5000 in each. Interestingly, the transfer fee is often equal to (you guessed it) 1% of the max contribution.

“But if I withdraw my TFSA fund from ING, would I have to wait until next year before I can deposite it into my new ICICI TFSA account?”

Yes. You could withdraw on December 31, and deposit on January 1, to minimize the uninvested time.

DAvid

Thanks for any explanation for this ignorant person…

If you have a registered plan (e.g. RRSP), you could use that to “meltdown” the HELOC while not touching your investment account.

If you borrow from your HELOC to invest in a TFSA, then why not invest it in an RRSP instead where you likely have a greater amount that can be invested? Or was this asked from a hypothetical question where the RRSP’s have been maxed?

If you borrow from your HELOC to invest in a non-registered account, you would not only be able to deduct the interest if it was the appropriate investment, but you could also claim a capital loss should that arise. If the investment was a high interest bearing investment, then it would make sense to use the TFSA rather than a non-registered plan.

Your plan for the TFSA sounds like a great start. For the time being, put what you can in there, set it and forget it. It can also double as your emergency fund for the time being and should make a wonderful co-retirement savings vehicle when combined with your RRSPs.

My RRSPs are not maxed-out yet. Not quite as lucky as you Sampson!!

I’ve been contributing to RRSPs for ~10 years, but I still have about $20,000 worth of contribution room. Hopefully over the next few years, I can get that contribution room down. The only reason I continue to contribute to RRSPs (index funds), is because I need to off-set my income. Hopefully I can keep my job (in this economy) and continue that trend to build a nest egg of >$250,000 K for retirement. It’s a great bet that my retirement income won’t be as high as it is now, so the RRSP plan works for me, I will be at a lower marginal tax rate.

That said, I need to start finding the money this year to begin my CDN dividend paying journey. Start getting into DRIPs. That will be another income stream in retirement. No DRIPs in TFSA, simply reinvest everything for many years to come.

I see this new TFSA as a vehicle to buy some funds or bonds and let those grow into another egg (third stream; tax-free :)

This new TFSA has lots of potential long term!

Only eligible dividends from (usually big) corporations are subject to the enhanced dividends tax credit.

The income trusts’ distributions are not.
They are taxed mostly like interest income (highest marginal rate).

In this sense, you are right – they should be placed inside TFSA.

You are not missing out on any favourable tax treatment.

KK

I was originally planning on moving my non-registered US stocks (decent dividend payers) into my TFSA – my RRSP is full of almost nothing but US dividend payers. However, when I finally did a calculation, it turns out that at my tax rate it makes more sense to put high yielding holdings (income trusts) even though they benefit from the dividend tax credit. Under my situation, the magic yield is around 10% vs. 5% (US dividends). At or above yields of 10%, I pay more tax on the same dividend from $5000 (TFSA limit).

I agree that the TFSA will be a very useful retirement tool for many.

I think I’m going to open a TD Discount Brokerage TFSA.

I have my $5,000 contribution “used up” this year already, in my PC Financial TFSA, but later this year, I think I’m gonna transfer that money to the TD TFSA, and buy some funds, bonds, etc. in the process. The prices are too low this year not to.

After reading these posts, it sounds best to hold all CDN dividend-paying stocks outside any TFSA or RRSP. This is probably the right for the long-haul since CDN dividend-paying stocks enjoy a favourable tax break/tax credit. This way, I won’t get “hit” at my marginal tax rate in my retirement.

Mark