1. The new old guy on October 30, 2009 at 11:07 pm

    This could be a long question but I will try and keep it short. I am almost 38 married with 2 young kids, 2 and 3. I have about 40k in a pension fund with my old job ad my new job does matching RRSPs which is at 10%. My wife has rrsps aswell likely closer to about 5%. We both have lots of top up room in our RRSP’s. I was looking at a TFSA with RBC, but realise ING or someone else will likely be cheaper. I am thinking of using the TFSA for a combo of emergency money, kids educations, retirement top up etc. The TFSA would hold some MMF’s, ETFS, maybe some divedend stocks. I never really thought a lot about these things when was on the pension plan, but now I am playing catch up and trying to learn quickly. I appreciate any feed back.

  2. FrugalTrader on October 31, 2009 at 8:42 am

    new old guy, personally, I would recommend maxing out what your employer will match. Free money is free money. After that, it would be up to you what to do with the money. If you are still in a higher tax bracket after the 10% RRSP contribution, then it may be in your best interest to contribute more.

  3. Income Splitting Options | Million Dollar Journey on November 18, 2009 at 12:17 pm

    […] of the perks of the new tax free savings account (TFSA) is that the higher income spouse can contribute to the lower income spouses TFSA without any tax […]

  4. […] before any RRSP contributions.  Once debt is eliminated, I would personally move to maxing out the TFSA, then to the RRSP.  I would go that route because RRSP withdrawals are taxed as income which would […]

  5. […] you haven’t opened a TFSA yet, now is the time to do it. For the first few years of savings (you get $5000 a year […]

  6. […] TFSA’s – I was pretty slack with the TFSA’s in 2009, but I plan to change that in 2010.  I plan to make good use of the $15,000 remaining in […]

  7. Chris on February 24, 2010 at 3:09 pm

    My spouse signed me up for TFSA at CIBC for a measly 1%. ING is offering 3% TFSA however CIBC is charging $100 to transfer a TFSA to another institution. I think I screwed up my best TFSA option?

    Can’t I just cancel my TFSA at CIBC then open a new one at ING to avoid any $100 transfer penalties?

    • FrugalTrader on February 24, 2010 at 4:09 pm

      Chris, one option is to simply withdraw the money from CIBC near the end of the year, then redeposit into a new account ING or other in 2011. That way, you’ll face no fees. However, in the big picture, if you have $10k in your tfsa, and missing out on 2% for the year, that equates to $200 in lost investment income. But that is also assuming that ING keeps their interest rate at 3%.

  8. keith on April 5, 2010 at 8:07 pm

    Can you move an existing stock(book value 10k) into a new TFSA account?
    and if this is allowed can it still be moved if the stock has a market value above the 10K. 10k being the year 2 contribution limit.

  9. FrugalTrader on April 5, 2010 at 8:41 pm

    keith, if you have $10k contribution limit in your TFSA, then you can only contribute a max of that amount regardless of book value. Note as well that you’d have to pay capital gains tax if you in-kind transfer a stock that has profit to a registered account.

  10. Savings Accounts on June 11, 2010 at 7:43 am

    Wow! This post is really very appreciable. I think some new things if you add to your post like current affairs will increase It is popularity. your post is very advantageous for me and very good. Thanks a lot. Tim, dividends received will go directly into the TFSA and will not count against your contribution room. In fact.

  11. dannycanuck on July 8, 2010 at 4:31 pm

    I opened up a TFSA investment account with Questrade (and am making use of the MDJ promo – thanks FT). My current plan is to keep maxing out RRSPs with mostly index fund investments and use the annual refund to contribute in my TFSA by purchasing mostly Canadian equities. I would also like to purchase US equities if they are attractive.

    One US equity that I would like to purchase is Berkshire Hathaway (B). This is a company I would like to own for the long-term, and as they have never distributed dividends since the 1960’s, I believe I wouldn’t get hit with the 15% withholding tax. I am a total newbie investor, so my questions are:

    A) How do I even buy this security if it’s traded on the NYSE? Can I do it with my Questrade account?
    B) Assuming I can even purchase this security as a Canadian, am I right to believe that there would be no taxation of my investment if held inside a TFSA?

  12. Ardee on July 16, 2010 at 2:43 pm

    TFSA -> Regular Accoutn transfer? Looks like I might have overcontributed couple hundred dollar in my TFSA. Stock A is at minus 5% and Stock B is at plus 5%. Should I

    1. Transfer A to regular account or B . Will this transfer be treated as sell and buy. As in I have to take up loss if I move stock A ?

    2. Should I sell B and keep profit and then transfer money out to my bank account (later can sent it back to regular trading acc). That way I keep profit and buy any stock later.

    Sorry if its confusing. I am trying to figure out if transfering from Tfsa to regular account is the best option to reduce my over contribution ? thanks – Ardee

  13. Chris on July 23, 2010 at 4:03 pm

    I think I know the answer to this already since it says “you never lose contribution room” but I really want to be sure.

    I currently have 5k cash in a TFSA that I put in last year, since it’s now 2010, I can put in another 5k correct? Now what if I put in another 5k, but then decide I want to put 5k worth of REIT’s in it, can I withdrawl the 5k cash, put in 5k of REIT and have 5K REIT & 5K cash sitting in my TFSA?

    Thanks for any replies!

  14. FrugalTrader on July 23, 2010 at 4:07 pm

    Chris, if you put cash in a discount broker and you purchase a stock, like a REIT, then it will not affect your contribution room. However, if you have $10k in a tfsa like ING, then withdraw, and redeposit into a discount broker account, then you have overcontributed. To fix that, you can “transfer” $5k from the savings account to the brokerage account and it will fall within the rules.

  15. Chris on July 23, 2010 at 4:09 pm

    Dang, your fast :)

    I have 5k cash in a TFSA with TD Canada trust, so if I were to put another 5k cash, then in a month or so decide I wanted to put an investment in the TFSA rather then cash, I could open up a discount broker account, and “transfer” 5k to the discount broker, then withdrawl cash from that account, then put 5k investment in it, and I would be good to go?

    Thanks again!

  16. FrugalTrader on July 23, 2010 at 4:22 pm

    Chris, when you have cash in a discount broker account, you don’t withdraw the cash to buy an investment, the cash is used to “buy” the investment.

    In your case, you are probably better off depositing the money into an investment account now so that you can avoid the transfer fees later.

    Here’s an article on how to buy and sell stocks:

  17. Zig on September 20, 2010 at 6:02 pm

    Sorry if this is a repeat question. In the recent past, I have transferred funds from my credit union TFSA account to my Credential Direct TFSA account. This has always been done in one step: I would print out a transfer authorization form from Credential’s website, bring it to the credit union and we would send the form off with the transfer in the form of a cheque.

    I have since switched credit unions and the new credit union is a little unsure of the process. I called Credential Direct on the process and they state to fill the form out, mail it to Credential and then the credit union will transfer the funds after Credential contacts the credit union. Does anyone know if this is the proper procedure? It was much easier to just do it all in the one shot. I am unsure if I contacted a questionable Credential agent on the phone or if it has been done incorrectly in the past? The difference in time to do it one way versus the other way is substantial.

    Does anyone have any experience with transferring funds from a credit union TFSA to a Credential Direct TFSA?


  18. David on October 30, 2010 at 6:01 pm

    I found something that I do not understand on official web-site

    “Under proposed changes announced on October 16, 2009, certain withdrawals made in the previous year may not be added back in the following year, after that date. The exclusion in the first bullet above also applies (after that date) to:

    * withdrawals of amounts included in the definition of “advantage”,
    * amounts upon which income tax was required to be paid by the TFSA trust; and
    * any other income related to those amounts”

    What is the definition of “advantage”? I have tax advantage saving account with cibc. Does it mean that If I withdraw my money I cannot reinvest it?
    Thank you

  19. George on October 30, 2010 at 6:08 pm

    @David The CRA’s definition of Advantage can be found here: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/glssry-eng.html

    In the normal course you can withdraw money from your TFSA and re-invest it, but you need to be careful not to exceed the contribution limits. If you withdraw money from a TFSA, the withdrawal amount isn’t added to your contribution room until the next calendar year.

  20. noobie on November 5, 2010 at 9:19 am

    I went to the bank to ask about the TFSA and just want to reconfirm my understanding of it.

    I wanted to open a TFSA and contribute $5k because I thought that if I withdraw it, then next year I would be able to contribute $10k.

    But, the lady at the bank told me that the TFSA started last year and so my contribution room for this year $10k and next year it would be $15k. Therefore, I didn’t have to open a TFSA now, and just open one next year while still having an contribution room of $15k.

    It this the correct understanding of the TFSA?

    Thanks for your help!

    • FrugalTrader on November 5, 2010 at 6:34 pm

      noobie, yes the bank rep was correct.

  21. David on November 13, 2010 at 11:49 pm

    What If I contribute 10000$ then after a year when I have 10000$ + interest withdraw my 10000$ + 5000$(for 2011)and transfer it elsewhere. Basically I will have two TFSAs
    one with interest and another with my 15000$ of the new contributions. Will they penalize me

  22. FrugalTrader on November 14, 2010 at 7:50 am

    @David, my understanding is that any withdrawals would need to be recontributed the following year or else it would be considered a contribution in the current year which could result in over contribution penalties.

  23. David on November 14, 2010 at 11:55 am

    Thank you for your replay
    maybe I did not explain myself properly.
    I do not ask when to recontribute this money.
    I withdraw 10000$ from my A. account which currently has 11000$(1000 is an interest during 2010). Withdrawing 10000$ creates a contribution room of 10000$ for the next year. Next year I invest 15000$ into account B. Thus I will have 16000$ in TFSAs which exceeds my contribution room of 15000$ for 2011. Is there any difference between contribution room and total money on TFSAs?
    Thank you in advance

  24. George on November 14, 2010 at 12:26 pm

    @David The account balances don’t have anything to do with contribution room. Contribution room accumulates at a rate of $5000 per person per calendar year, starting in 2009. The amount of any withdrawals in a given calendar year are added to the contribution room allotment for the next calendar year.

    The contribution room is per-person, not per-account. If you have multiple TFSA accounts, you need to track the contribution room across all of the accounts to avoid an over contribution (and penalty tax) situation.

    Contribution room is a measure of how much you can add to your TFSA(s) in a given year, not a measure of how much is already in the account(s).

  25. David on November 14, 2010 at 12:41 pm

    George Just to avoid misunderstanding with reagard to your answer
    “The amount of any withdrawals in a given calendar year are added to the contribution room allotment for the next calendar year”.

    So, If I withdrow 11000$ will I be able to add up 11000$ to my 2011 contribution room?

  26. George on November 14, 2010 at 1:53 pm

    @David Yes, if you withdraw $11000 from your TFSA account(s) in 2010, you can re-contribute that money in the next calendar year (2011), in addition to the 2011 contribution room ($5000).

    The problem people get into is when they withdraw funds from a TFSA, and then re-contribute them in the same calendar year. This is considered an overcontribution by the CRA and subject to a penalty tax.

  27. Michael on November 14, 2010 at 4:56 pm

    Here is the definition of unused contribution room from the CRA web site

    Unused TFSA contribution room
    The amount, either positive or negative, at the end of a particular calendar year after 2008, determined by the holder’s unused TFSA contribution room at the end of the year preceding the particular year

    the total amount of all withdrawals made under the holder’s TFSA in the preceding calendar year, other than a qualifying transfer;
    the TFSA dollar limit for the particular year if, at some point in that year, the individual is at least 18 years old and a resident of Canada. In all other cases, the amount is nil.

    the total of all TFSA contributions made by the holder in the particular year excluding a qualifying transfer or an exempt contribution.

    Under proposed changes announced on October 16, 2009, certain withdrawals made in the previous year may not be added back in the following year, after that date. The exclusion in the first bullet above also applies (after that date) to:

    * withdrawals of amounts included in the definition of “advantage”,
    * amounts upon which income tax was required to be paid by the TFSA trust; and
    * any other income related to those amounts.

    Under the first bullet point, it is important to determine how the $1000 in your example was made. If it falls under the condition of “advantage” then it can’t be used in your next years TFSA’s contribution room.



  28. David on November 19, 2010 at 2:16 am

    Thank you everybody for your answers

  29. Jim on December 20, 2010 at 5:38 pm

    What are you all putting in your TFSA?

    I am trying to work the TFSA into my portfolio and was curious about what type of investments are most tax efficient to place inside. I can see the benefit in placing bonds inside the TFSA – interest is no longer taxable at income rate. What about stocks?

  30. David on December 20, 2010 at 8:50 pm

    With regard to TFSA
    Do no put Canadian stocks put international stocks only

  31. Mark on February 24, 2011 at 6:06 pm

    I just read on Questrade’s site that the US doesn’t recognize TFSA’s and any capital gains made in USD are taxed. I can’t find any more information on this anywhere. I think there is a 15% withholding tax on US dividends, what of capital gains? I’m not tax savvy by any means, can anyone explain this to me in more detail. Lets say I deposit 10,000 in my TFSA and set currency to USD and gain 2000 dollars. How is it taxed? If capital gains in USD are taxed, can capital losses be used for deductions?

    What if I have an unrealized loss one year, and then gain it back the next year and sell it all. Is it a wash? or because the gain comes in a different calendar year I have to claim it?

    Any help with this would be greatly appreciated.

  32. karma2000 on February 24, 2011 at 6:47 pm

    OMG, I am in the same situation: I deposit 10,000 in my TFSA and set currency to USD and gain 2000 dollars ? Will I be taxed on this ?

  33. Showtime on August 18, 2011 at 1:18 am

    I understand all the general concepts of the tfsa. I have a specific question about the withdrawal and contrib room rules. CRA uses verbiage like “full” and “total” when referring to tfsa withdrawals, and adding to contrib room the next year. But is that regaining of contrib room capped to $5k (or whatever the limit is at the time) or is it unlimited, eg if someone makes massive cap gains and withdraws $50k from tfsa, do they get that much room next year or is it capped? But even if capped, it doesn’t seem like it’s limited to principal withdrawals, eg if someone puts $3k in tfsa, gets cap gains and withdraws $5k, then would likely get that full $5k in contrib room the next year right? So i guess a summary question might be is everyone’s lifetime tfsa contrib room the same based on years of tfsa’s existence and limit per year, or does it vary per person depending on the size of their withdrawals? Thx in advance.

  34. George on August 18, 2011 at 9:19 am

    @Showtime – it’s the latter. If you have a large capital gain and withdraw $50k, you’ll have $50k of ‘extra’ contribution room added to your limit for the following year. Anything withdrawn from the TFSA (whether contributions, interest, dividends, or capital gains) can be re-contributed in a future year.

  35. Showtime on August 18, 2011 at 1:03 pm

    George, thx for the reply. That is interesting. Do you have a link to CRA or similar ~official source that details this…or perhaps you know firsthand because CRA has calculated your own limit that way? Every example I’ve seen from CRA so far just shows withdrawals equal to or less than the annual contrib limit. Thx.

  36. chad on September 11, 2011 at 7:59 pm

    is XIN worth holding in a TFSA????

  37. Donna on March 2, 2012 at 11:27 am


    I hold dual Canadian/USA citizenship. I am want to set up a TFSA but have heard that the IRS tax treatment is not very kind for these investments. Can you please spell out what I am to expect?



  38. oldnestor on April 12, 2012 at 11:26 pm

    Perhaps somebody has already commented on the following in the 193 posts above?–

    ‘Invest in strong foreign dividend companies and withdraw the dividends TAX FREE. Right now, if you receive foreign dividends, they are taxed at your marginal rate. If you put these foreign dividends in an RRSP, they grow tax free, but you are taxed when you withdraw. The TFSA provides a great way to get exposure to those juicy American dividends, tax free at that’

    Remember that under the US / Canada tax treaty, TFSAs–unlike RRSPs–are not considered to be a pension trust. This has an effect on the amount of withholding tax Uncle Sam skims off the dividend. If you receive $10 dividend from a US company in a RSP, the withholding tax is 0%, nada. On the other hand, because the TFSA is not recognized as a pension trust, a 15% withholding tax will be taken off US dividends in a TFSA. That is to say, the $10 becomes $8.50. So the juicy American dividends are not quite tax free because there is a withholding tax.

    To me, the RSP is the best place for the juicy American dividends. Second best would be the TFSA or non-registered account. How the tie breaker would be decided would in part depend on one.s marginal tax rate in the non-registered account, seeing that foreign dividends will be taxed at the marginal rate: i.e. if the marginal rate is below the 15% withholding tax, then the non-registered account would be preferable. If one.s marginal rate is higher (this would be most people), then the TFSA would be second best after the RSP. And it will have to be considered as well that capital gains would be completely sheltered in both RSP and TFSAs. Some food for thought.

  39. Johnny Canuck on October 25, 2012 at 4:08 pm

    I am consideering using the following combined TFSA / RESP strategy. Do you think this is a good idea or some variation of this?

    Step 1 – contribute max amount to TFSA each year in January
    Step 2 – withdraw the increase in TFSA value each year in December
    Step 3 – contribute the TFSA withdrawal amount to RESP in December and get the 20% CESG grant

    Repeat the process while contributing back the withdrawal amount to TFSA

    Here is a table with hypothetical situation (married couple, both working, start with $40K in TFSA between them, and earn 5% annually in the TFSA, 2 kids – target RESP contribution of $5K annually to get $1K CESG)

    Year TFSA January TFSA December Xfer to RESP RESP CESG
    2012 40,000 42,000 2,000 400
    2013 52,000 54,600 2,600 520
    2014 64,600 67,830 3,230 646
    2015 77,830 81,720 3,890 778
    2016 91,720 96,310 4,590 918
    2017 106,310 111,625 5,000 1,000
    Subsequent years
    +15,000 5,000 1,000

    Note: the TFSA contribution limit is assumed static at $5K, but I know that it will increase eventually. This is just to illustrate the point

    After 6 years, 106,625 in TFSA and 25,570 in RESP

  40. Johnny Canuck on October 25, 2012 at 4:38 pm

    Sorry, I don’t know how to display the numbers as a table.

    But the general gist is that you save up during the year to make next years TFSA contribution and eventually the TFSA income entirely funds the RESP max contribution.

    I did not discuss RRSP, but it assumes that you are contributing to an RRSP as well as previously stated the RRSP/TFSA combo is best tax strategy and RESP falls further down the list.

  41. Kit on December 3, 2012 at 9:16 am

    Hi, question about contribution room…

    If I withdrew $2,000.00 in September 2011 while contributing $5,000.00 in January 2012, will I be able to contribute additional $2,000.00 in 2013 for total of $7,500.00 ($2000 + $ 5500)?

  42. Tax Free Savings Account on December 3, 2012 at 12:50 pm


    Yes. Any leftover contribution room from one year, is carried over to the next year. So in 2012 you had $7000 contribution room ($5000 + $2000 that you withdrew in 2011). You then contributed $5000 in 2012 leaving $2000 in leftover contribution room that will be carried over into 2013. So your contribution room for 2013 will be $5500 + $2000 = $7500.

  43. Vivianne on February 7, 2013 at 4:09 pm

    I am being charged by my institution at $50 plus HST rate to have this TFSA account. Do all Institutions charge to have this type of account?

  44. Guillaume on December 7, 2014 at 4:15 pm

    When transferring a TFSA from one financial institution to another, the losing financial institution typically charges a Transfer-Out Fee (sometimes to the tune of $125). The losing financial institution takes the Transfer-Out Fee from the TFSA.

    Question: How does that affect the remaining contribution room on the TFSA? Can you re-contribute the $125 without penalty?

  45. Seth on December 27, 2014 at 9:07 pm

    I find it shocking how years after the TFSA was introduced, we still have so much confusion surrounding it. The personal contribution room / withdrawal rules are actually relatively simple. Here’s a pretty clear explanation for how it all works: http://tfsahelper.ca/general-tfsa-information/your-personal-contribution-room-limit/

    I think the biggest question about the TFSA is what will happen in 2015 if the Conservatives don’t win the federal election. Although I don’t think the Liberals would scrap it anytime soon, I do wonder if the increased limit to $10k annually that Harper promised once the books are balanced, would be…

  46. Guillaume on December 29, 2014 at 11:14 am

    Seth: Are you saying that the Transfer-Out Fee is to be treated as a Withdrawal? That was the essence of my question. My thoughts are that it should indeed. Looking for confirmation.

  47. Guest on January 16, 2015 at 10:35 pm

    The dividends earned from US based company withing TFSA is subject to tax at source, i.e., they withhold tax before crediting it to your account. Don’t they? Am I missing something here?

    According to your blurb above, you say juicy US dividends can grow tax free and withdrawn tax free. My understanding is correct?

    • FrugalTrader on January 18, 2015 at 1:26 pm

      @Guest, from my experience in withholding tax, you will see the full dividend come into your account, then the withholding tax taken out right after. But yes, you can withdraw from your TFSA tax free.

  48. DAI FURUTA on January 26, 2015 at 4:03 am

    Hmmm, I want to open TFSA with RBC Direct Investing yet I have not done…
    So it is tax free but you are saying dividend will be taxed. so it is not really tax free then??? Kinda confusing…
    “Invest in strong foreign dividend companies and withdraw the dividends TAX FREE. Right now, if you receive foreign dividends, they are taxed at your marginal rate. If you put these foreign dividends in an RRSP, they grow tax free, but you are taxed when you withdraw. The TFSA provides a great way to get exposure to those juicy American dividends, tax free at that”

  49. Guest on January 26, 2015 at 10:49 am

    Put it his way – if it is a foreign stock, dividends are declared, after tax for that corporate entity. Your tax is withheld at source before depositing in your account. So, yes you are paying tax. But remember – this applies to foreign entities only. Most people invest in US for their “juicy” dividends. So you are paying tax now and withdraw tax free later.

    That said, why not choose only Canadian companies?. There are a few excellent ones out there. The dividends are declared by these Cdn. companies as grossed up. In a away you are paying tax in this situation too. Bottom line? Death and taxes are inevitable. TFSA is good for a long term holding and with DRIPS (dividend reinvestment). Watch it increase phenomenally over time.

    In a cash account, (non registered) similar scenario will attract taxes and the dividends are treated at lower tax rate.

    In Tfsa, does not pay taxes. That’s where the difference lies. Of course you know the similar situation in RRSP will attract taxes later when you withdraw. Another difference between TFSA and RRSP – you are investing after tax dollars in TFSA. In RRSP, your money is before taxes but you pay taxes later. Any which way you cut it, you cannot escape taxes. This is my take on this. If I am wrong, anyone in this forum can please correct me.

  50. SST on April 30, 2015 at 10:39 am

    To Ed, FT, or any other accounty types: how does the new TFSA contribution limit increase effect previous over-contribution penalties?

    E.g. a person with $5,500 contribution room in 2014 deposits $16,500, which triggers penalty payments (on 24 months, correct?). With the new limits, would those penalties now be calculated on only 12 months?

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