Q&A With Gordon Pape: Tips for Transferring Money to a TFSA


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In this Q&A, financial expert Gordon Pape offers up some guidance to a reader who is transferring funds from a non-registered Canadian investment account to a TFSA.


Q – I am considering using an in-kind transfer to move funds from a non-registered Canadian investment account to my TFSA account. I currently have $17,800 contribution room in my TFSA). I am semi-retired and otherwise I’m not able to use all the available TFSA contribution room.  

I understand that if I transfer non-registered shares and ETFs to my TFSA, Canada Revenue considers it a deemed disposition. None of the investments in my non-registered account are in a loss position, so I understand I will have to pay 50 per cent capital gains on the amount I have earned from these investments (which will be about $1,200). I also understand that once the funds have been transferred into my TFSA, any further increase in value will not attract capital gains tax. This is my rationale for transferring the funds to my TFSA.

My questions are as follows:

1. Even though it will attract capital gains, is it a good idea to transfer investments from a non-registered account into my TFSA, given that I have contribution room and no other way to contribute that much?

2. Is there a better or worse time of year to transfer investments from a non-registered account into my TFSA?

3. If my income is less in 2024 than it was in 2023, will that make any difference to the amount of capital gains? (I think not, but thought I’d ask).

4. Is there a way to offset the capital gains? – Kathleen D.

A – Your rationale is correct, and I suggest you go ahead with your plan. As to timing, the sooner the better. The markets are on the rise right now and the coming interest rate cuts should be a stimulus for more gains. To the extent that happens before you make the change, your capital gains will increase and so will your tax bill. 

Your income does make a difference in the tax you will be assessed. The rule is that 50 per cent of your gains are taxable at your marginal rate. So, the higher your income, the higher your rate. 

Capital losses can be used to offset capital gains, but you say you don’t have any. Once the money is in the TFSA, gains and losses have no tax impact. – G.P. 

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