Personal Finance

Can I transfer from a TFSA into my RRSP?

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  • Jan 18th, 2012 10:00 am
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Newbie
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Sep 23, 2008
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Barrie

Can I transfer from a TFSA into my RRSP?

I have some securities invested in my TFSA that I wanted to dump into my RRSP... I'm trying to figure out if this is allowed? I called my broker and they said I had to transfer from my TFSA-->CASH-->RRSP. I explained that I wanted to keep my securities (not cash them out) and I was afraid I'd be hit with some sort of capitals gains transferring them between my CASH and RRSP accounts. The rep essentially said Canadian revenue service doesn't allow direct transfers... Is that true or is he just brushing me off cause his firm (qtrade) doesn't do it that way?

Thx
13 replies
Deal Fanatic
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Mar 20, 2009
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There's no way to go directly from TFSA to RRSP, but I think you should be able to remove the securities from your TFSA without selling them, then contribute them to your RRSP in two separate steps. You don't gain back any TFSA contribution room from doing that of course. Did he say that you had to dispose of the securities, or just move them to your non-TFSA trading account?
[OP]
Newbie
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Sep 23, 2008
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Barrie
He indicated that I would just have to move the stocks and yes it was a 2 step process the way he outlined it (TFSA-->CASH-->RRSP), but I'm worried that I'll get hit with some kind of capital gains once I expose them before I move them into my RRSP...

THx
Deal Addict
Aug 16, 2005
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I guess it depends on the company. When you sell your stocks in TFSA, your broker makes commission. When you buy the same stock back, your broker again makes commission. Great for your broker...not so great for you. LOL

Questrade lets their customers fill out a simple form to make transfers between TFSA and RRSP accounts, no fees/commissions involved. Obviously this only works if both your TFSA and RSP is with questrade. Your holdings are not technically cashed out, but for TFSA withdrawl and RSP contribution purposes, there obviously needs some kind of price so that the values of each can be determined. So when the transfer is requested, they will use whatever your securities are valued at the time they process your transfer.
Member
Oct 5, 2009
469 posts
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Calgary
Campin wrote:
Jan 17th, 2012 11:06 am
I was afraid I'd be hit with some sort of capitals gains transferring them between my CASH and RRSP accounts.
Why would you have capital gains? The TFSA is tax free, so there is no tax on everything you withdraw...
[OP]
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Sep 23, 2008
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Barrie
Really? Questrade allows this? I went with Qtrade more on reputation... But what good is customer service if all they are going to tell me is no they can't do that when other, cheaper, brokers have found a way. Kinda annoys me... and makes me wonder why I'm there...
[OP]
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Sep 23, 2008
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Barrie
theBeachBoy wrote:
Jan 17th, 2012 12:08 pm
Why would you have capital gains? The TFSA is tax free, so there is no tax on everything you withdraw...
Cause they way I understand it when you transfer a stock from a cash account to an RRSP (which is step two if this 2 step process) they (CRA) will attach a dollar value to it and since it's a CASH account maybe tax it... Just to make clean, I don't know if there will be capital gains, I was just just afraid there would and the safest bet then would have just been to transfer direct from one tax-shelter to another.. But my broker Qtrade said they can't do that and nor did they reassure me one way or the other if it would be taxed or not...
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Jul 30, 2005
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Campin wrote:
Jan 17th, 2012 12:18 pm
Cause they way I understand it when you transfer a stock from a cash account to an RRSP (which is step two if this 2 step process) they (CRA) will attach a dollar value to it and since it's a CASH account maybe tax it... Just to make clean, I don't know if there will be capital gains, I was just just afraid there would and the safest bet then would have just been to transfer direct from one tax-shelter to another.. But my broker Qtrade said they can't do that and nor did they reassure me one way or the other if it would be taxed or not...

The reason transfers from a non-RRSP-non-TFSA account to an RRSP are taxable is because the current value of those securities becomes the amount of that RRSP contribution and any untaxed capital gains up to that point have to be realized as though you had disposed of them as cash, otherwise you'd be sheltering your pre-RRSP taxable capital gains within a tax-deferred RRSP account. Mechanically, think of it as selling the securities in your non-RRSP-nonTFSA account, realizing the gains (getting taxed on them), taking the cash and contributing it to your RRSP and then re-buying those same securities.

On the other hand, since all capital gains realized within a TFSA are non-taxable, then there should be no taxation when you transfer securities from a TFSA to a RRSP. It would be as though you'd sold them all within the TFSA tax-free, withdrew the cash from the TFSA tax-free, contributed it all to your RRSP then re-bought the securities. It's just fewer steps and saves you a few bucks on the brokerage fees from the sell and then the buy. But the effect is the same - ergo, no tax.
Iv ta'be' Hev SoH, ghobe' Qoy lIj mu'mey, as SoH jaH pa' vo' vetlh tuq joq vetlh veng, shake lItha' the dust vo' lIj qamDu' (translation from the original Klingon: And whosoever shall not receive you, nor hear your words, when ye depart out of that house or city, shake off the dust of your feet)
Deal Addict
Oct 4, 2009
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Montreal
If the entire process is done on the same day you won't have any tax consequences. TFSA to cash account is tax free and sets your ACB. Transfering from cash to RRSP results in a deemed disposition on the day of the transfer so as long as it's all done at the same time no gain or loss will be realized.

Check with them and make sure it's all done in one event.
Member
Dec 1, 2010
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I did this with Questrade. Previous posters have covered this already but it was a "deemed disposition" so that they had to attach a market value/cost basis to the securities in order to calculate: (1) the withdrawal value for the TFSA and (2) the contribution value for the RRSP.

Weirdly, the two values were slightly different (I guess the stock's value changed) so my TFSA withdrawal was, say, $5000 but my RRSP contribution was $4950. But the number of shares transferred was the same.

They also didn't charge any commissions, which was nice.
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lewin00 wrote:
Jan 17th, 2012 2:48 pm
I did this with Questrade. Previous posters have covered this already but it was a "deemed disposition" so that they had to attach a market value/cost basis to the securities in order to calculate: (1) the withdrawal value for the TFSA and (2) the contribution value for the RRSP.
That makes no sense. Why would there be a deemed disposition when gains generated within a TFSA are non-taxable?! If you converted everything into cash before taking it out of the TFSA and then contributed that cash to an RRSP there would be no taxable consequences on the TFSA side, so why should there be when you're doing a contribution in kind from the TFSA to thr RRSP??
Iv ta'be' Hev SoH, ghobe' Qoy lIj mu'mey, as SoH jaH pa' vo' vetlh tuq joq vetlh veng, shake lItha' the dust vo' lIj qamDu' (translation from the original Klingon: And whosoever shall not receive you, nor hear your words, when ye depart out of that house or city, shake off the dust of your feet)
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Dec 1, 2010
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ronin1701 wrote:
Jan 17th, 2012 3:22 pm
That makes no sense. Why would there be a deemed disposition when gains generated within a TFSA are non-taxable?! If you converted everything into cash before taking it out of the TFSA and then contributed that cash to an RRSP there would be no taxable consequences on the TFSA side, so why should there be when you're doing a contribution in kind from the TFSA to thr RRSP??

Maybe I used the term deemed disposition incorrectly, though that's what they called it. There were no tax consequences but what I mean is that they still needed to attach a dollar value to the shares so that I knew how much RRSP contribution I've lost (and how much TFSA contribution room I've regained). They can't put "100 shares of VTI" on an RRSP receipt.
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lewin00 wrote:
Jan 17th, 2012 6:28 pm
Maybe I used the term deemed disposition incorrectly, though that's what they called it. There were no tax consequences but what I mean is that they still needed to attach a dollar value to the shares so that I knew how much RRSP contribution I've lost (and how much TFSA contribution room I've regained). They can't put "100 shares of VTI" on an RRSP receipt.

Yeah, a deemed disposition is the wrong term for it then - you only need to know the ACB of an investment for tax purposes. If there's no tax, then the ACB is irrelevant except for your own personal tracking to see how the investment is performing. They can easily fair value your holdings for the purposes of determining the value of the RRSP contribution without having to look at how much the investment cost you originally.
Iv ta'be' Hev SoH, ghobe' Qoy lIj mu'mey, as SoH jaH pa' vo' vetlh tuq joq vetlh veng, shake lItha' the dust vo' lIj qamDu' (translation from the original Klingon: And whosoever shall not receive you, nor hear your words, when ye depart out of that house or city, shake off the dust of your feet)
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Dec 1, 2010
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ronin1701 wrote:
Jan 17th, 2012 7:37 pm
Yeah, a deemed disposition is the wrong term for it then - you only need to know the ACB of an investment for tax purposes. If there's no tax, then the ACB is irrelevant except for your own personal tracking to see how the investment is performing. They can easily fair value your holdings for the purposes of determining the value of the RRSP contribution without having to look at how much the investment cost you originally.

Gotcha, thanks for the clarification. (And no thanks to the outsourced Questrade customer service reps!) Whatever you call it, they slapped a dollar value on it and transferred the shares over without hassle. The relevant point for the OP is that unless my brokerage is breaking the law, there's no CRA regulation preventing an in-kind transfer.
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