Q&A With Gordon Pape: Transferring Stocks to a TFSA
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Financial expert Gordon Pape advises a reader who is considering transferring stocks to her TFSA instead of contributing cash.
Q – I am trying to figure out how I can put $6,000 into my TFSA. Is it a worthwhile idea to transfer some of my stocks from another investing account into my TFSA instead of using cash? – Kathie S.
A – Stock transfers to a Tax-Free Savings Account are permitted by law. If your account allows you to hold stocks (some don’t) it won’t be a problem. But there are two factors to consider before you decide.
First, you should never transfer losing stocks into a TFSA, or any registered plan. The Canada Revenue Agency will not allow you to claim any capital losses in that situation. You should sell the losers into the market, thereby legitimizing any capital losses. Then contribute the cash.
If you have winning stocks, transferring them to a TFSA is deemed as a sale and will trigger a capital gain. You must decide if you want to incur that tax liability now. The shares will be valued at their current price when they go into the TFSA and future capital gains will be tax sheltered.
As you can see, there is quite a bit to think about. – G.P.
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