RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Capital Gains Tax - Just Buy and HoldDca8605 wrote: The way you describe it seems very one sided. There would be a huge flaw in the tfsa system if you could artificially inflate your contribution limit like that. This would make having the limit almost pointless to have
while I do agree with your latter example of the $100 withdraw and losing your gains. Because you have not withdrawn the funds you won't get that room back. But if you exceed the contribution ceiling because of investment gains and then take the funds out why would they allow you to put in more than the average person without incurring the penalty? Unless I'm out to left field on this one, that's the whole point of having the contribution limit in the first place.
its not really artificially inflating your TFSA room, you have to earn it. Its not like you can call up your broker and say "I know OGI is only trading at 2.50...but I want to sell my 100 shares for $1,000,000 to my Margin account".
The reason you're allowed to put whatever money back into it is because the whole TFSA system doesnt care what happens inside the TFSA.
Shamelessly stolen from a some guy named "shar_blue" on reddit who probably stole it from someone else because I've seen it a few times in various wordings
Think of it this way - there's a party for bunnies happening in the backyard. A bouncer is hired and given 3 rules:
1) only 100 bunnies can come through these doors to start the party
2) any bunny that leaves gets a stamp on the paw that grants them access back into the party
3) each week, 50 more new bunnies can come in
Now lets say a bunch of bunnies line up to get in, and 100 are let in while the rest are told to go home and come back next week. A fight breaks out and 10 bunnies get killed. The bouncer doesn't know this - all he knows is he was only allowed to let 100 bunnies in, and he has already done so.
The mood changes and the bunnies start breeding. Soon there are 120 bunnies in the backyard and 15 of them decide to step out for some fresh air and to stretch their legs. As they leave, the bouncer stamps each one of their paws, which grants them access back in.
The next day is a new week, so a bunch of bunnies line up to get in, and the 15 that stepped out (with the stamped paws) return. The bouncer lets in those 15 bunnies along with 50 new bunnies.
The bouncer has no idea whats going on in the backyard...the only thing he knows is that he HAS to let in 50 bunnies per week, and any bunny that has their paw stamped. If 20,000 bunnies leave...next week, 20,000 bunnies + 50 bunnies are allowed back in.
CRA is the bouncer.