TFSA hack!Hey guys and gals, I wanted to share a bit of a TFSA hack that I've used a couple of times...
If you have shares of a company in your non-registered brokerage account that have already settled, you can make an "in kind" contribution to your TFSA and the contribution will be marked at the previous day's close.
Where this comes in is in the scenario that let's say you have bought BABY at 0.20-ish per share in your non-reg account, and earnings blow the roof off the stock and it gains significantly, you can immediately call into your broker (during trading hours) and ask to perform an in kind contribution of the shares in your non-reg account to your TFSA.
If, for example, you bought at 0.21/sh, the stock closed the day before at 0.23/sh, and today it is trading at 0.45/sh (> 100% gain from your ACB) you can transfer and the contribution room used will be 0.23 X # of shares transferred. Once they show up in your TFSA you can immediately sell (or hang on for more gains) and it has effectively more than doubled your TFSA contribution. You will have a capital gain on the stock from your non-reg account of 0.02/sh that you may need to pay taxes on.
Some caveats:
- you must have the available contribution room or you will get seriously penalized!
- the transfer is considered a "deemed disposition" by the CRA and you will be on the hook for any capital gains on the stock in your non-reg account
- if you incur a loss on the shares in your non-reg account, you CANNOT claim the capital loss on your taxes!
**** I am not a financial or tax professional! This is not financial advice! Always consult a financial and/or tax advisor! ****