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Caution on contributions in kind to TFSAs
5/26/2019 1:16:11 AM
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Wealth Builder
Gordon Pape writes on common-sense wealth-building strategies.

By Gordon Pape  | Thursday, December 30, 2010


Q – When transferring equities in kind from a non-registered account to a TFSA, is capital gains tax payable if the value of the equities is greater than the cost base? I understand that there is no provision for claiming a capital loss if the cost base is more than the value of the equity transferred. Therefore I assume that there is no capital gain when the cost base is less. Am I correct? – John W., Calgary, Alberta

A – When a contribution-in-kind is made to a TFSA or RRSP, it is considered to be a sale by the Canada Revenue Agency. If the stocks are worth more than the cost base at the time they go into the registered plan, a taxable capital gain is triggered. But no deductable capital loss is allowed under these circumstances, which is why I always warn against transferring losing securities to a TFSA or RRSP. – G.P.

Gordon Pape is one of Canada’s best-known personal finance commentators and mutual fund experts and a regular contributor to the Fund Library. Click here to submit your question to Gordon.

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The foregoing is for general information purposes only and is the opinion of the writer. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. However, please call the author to discuss your particular circumstances.

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