Q&A with Gordon Pape: TFSA Contributions
Is it true that you can put back any money that you have withdrawn?
Q: Suppose I contribute for the very first time to my TFSA and I put in $46,500 today (the maximum limit). Then I buy some small stocks worth $46,500. Two months later the value of my account is worth $100,000 (for instance). On Dec. 31, 2016 I decide to withdraw the full amount ($100K) from my TFSA.
My question is this: Is it true that, on Jan. 1, 2017, I can put $100,000 back into my account plus the 2017 year’s contribution? — Alexandre D.
A: Yes, it’s true. But I fail to see the logic of such a move. If you want to sell the stocks for a capital gain, you can do so within the plan with no tax consequences. If you take the shares out and do not sell, you would be liable for capital gains tax on any further profits after the day they are withdrawn. — G.P.
Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to www.buildingwealth.ca.