Q&A: TFSA losses

Question: Are losses within a Tax-Free Savings Account re-contributable in the same way as withdrawals, i.e., in the following year? For example, suppose I was to invest $15,000 in my TFSA account (assuming that’s my limit in 2011) entirely in call and/or put options and they all expired worthless. Could I then contribute a maximum of $20,000 to my TFSA in 2012 ($15,000 in losses plus $5,000 in new contribution room)? – Jim E.

Gordon Pape answers: No. Losses incurred within a TFSA do not give rise to additional contribution room, nor are they eligible capital losses for tax purposes. In the example you cite, your contribution room in 2012 will be only $5,000. The $15,000 you blew on options is lost forever.

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