Investment TSFA Question...

[AllWheelDrift]

I think you missed a part, if you withdraw the $1 million dollars you made in your TFSA, you will still only be able to contribute up to $10,000 next year. ($5,000 principal you withdrew + $5,000).

The $995,000 gains you made will be untaxed and can be withdrawn at any time, but you can't contribute it back.

Nope, I didn't miss a thing.

The math is dead simple
year x+1 contribution room =
year x contribution room
- contributions made in year x
+ withdrawls mande in year x
+ $5000 (indexed to inflation)

If you had to worry about "principal" and "earnings" it would become a nightmare to track, not to mention would end up penalizing withdrawls which is not the intent.

[zoltorg]

You can withdraw unlimited.

You can only contribute your unused room. (If you take out 1 M, you can ONLY contribute 5,000 the next year + any unused room (out of 5000) from previous years.

[AllWheelDrift]

You can withdraw unlimited.

You can only contribute your unused room. (If you take out 1 M, you can ONLY contribute 5,000 the next year + any unused room (out of 5000) from previous years.

WRONG!

Your describing how RRSPs work which is different from TFSA.

For TFSAs, any and all withdrawls get added to the contribution room for next year.

[Thalo]

WRONG!

Your describing how RRSPs work which is different from TFSA.

For TFSAs, any and all withdrawls get added to the contribution room for next year.

I can confirm this, after doing a bunch of research myself on the subject when TFSAs were first announced last year:

After withdrawing $X from your TFSA you are allowed to re-contribute $X the following year. It doesn't matter if the amount grew since being put in the TFSA originally. For example, contribute $5000 to a TFSA today, it doubles in value to $10,000, you withdraw it. Next year you can contribute your regular $5000, plus the $10,000 you withdrew this year.

[billiam]

Can someone explain what this means, I don't understand this part, why is capital gain taxable on contributions? What does that even mean since tfsa are not taxed?

5.Contributions can consist of \"in kind\" contributions of qualified investments.
a)Any resulting capital gain will be taxable
b)Any resulting capital loss cannot be claimed.

To answer your question it is in reference to the in-kind contribution to the TFSA from a non registered account. CG's are subject to tax and CL's are deemed Nil same as for an RRSP.

[Mugen_z]

Question:
Could I use the TFSA money to invest in the US stock market?




Taken from RBC TFSA Q&A:
http://www.rbcdirectinvesting.com/ta...avings-account

TFSA Withdrawals
Withdrawals will be allowed at any time for any purpose (i.e purchasing a car, vacation, home renovations) and they will not be taxed. Contribution room is not lost if you make a withdrawal. However, you need to wait until the next calendar year to re-contribute the money.
Example: You contribute $3,000 per year to a TFSA for 10 years, for a total of $30,000; unused contribution room = $20,000. You earn investment income, including capital gains of $10,000 over the 10 years, which brings your TFSA balance to $40,000.

If you decided to withdraw the $40,000 during year 10 you can do so with no tax consequences. Your contribution room for year 11 is $65,000 ($40,000 withdrawal, $20,000 unused contribution room, $5,000 annual contribution for year 11).

[Chasem]

Sorry for reviving an old thread here, but I think I may over contributed by accident. My situation in my TFSA account:

2009 - Contributed $5000
Mar 2010 - Withdrew $3730
Jun 2010 - Contributed $5000
July 2010 - Contributed $3730

This adds up to $10,000 which I thought is my allowed total for 2010. On my bank statement for my TFSA account it states

Total withdrawals for 2010: $3730
Total Contributions for 2010: $8730

Will I get penalized here? And if so, what is the penalty?

[m85d1]

Sorry for reviving an old thread here, but I think I may over contributed by accident. My situation in my TFSA account:

2009 - Contributed $5000
Mar 2010 - Withdrew $3730
Jun 2010 - Contributed $5000
July 2010 - Contributed $3730

This adds up to $10,000 which I thought is my allowed total for 2010. On my bank statement for my TFSA account it states

Total withdrawals for 2010: $3730
Total Contributions for 2010: $8730

Will I get penalized here? And if so, what is the penalty?

1% each month?

37.3*6 = 223.8

[lewin00]

Sorry for reviving an old thread here, but I think I may over contributed by accident. My situation in my TFSA account:

2009 - Contributed $5000
Mar 2010 - Withdrew $3730
Jun 2010 - Contributed $5000
July 2010 - Contributed $3730

This adds up to $10,000 which I thought is my allowed total for 2010. On my bank statement for my TFSA account it states

Total withdrawals for 2010: $3730
Total Contributions for 2010: $8730

Will I get penalized here? And if so, what is the penalty?

Your March withdrawal doesn't get returned to your contribution room until the following year, so your July contribution put you over by 3730.

[Chasem]

Ack!

I better give the CRA a call and see if they will be kind enough to waive off the penalty.

[FlyingOctopus]

Ack!

I better give the CRA a call and see if they will be kind enough to waive off the penalty.

Last year when a lot of people made the same mistake as you, a provision was added to ask a waiver of the penalty, as long as it would reasonably obvious that it was an honest mistake. I'm not 100% certain, but I'm pretty sure that it still exists.

Here's a blog posting (not written by me) from last year, which may have some info and links that will be useful to you. http://www.canadiancapitalist.com/ap...ion-penalties/


But I think your idea of calling CRA would probably also be a good idea.

[YUP5588]

TFSA Account

Qualified investments will generally include all arm's-length RRSP qualified investments

Borrowing

1.Interest on money borrowed to invest in a TFSA is not tax deductible.

2.A TFSA can be used as security for a loan.

3.Cannot be used to provide margin for linked margin accounts.

Is that true?