Investing

Transfer non-reg to TFSA yearly worth it?

  • Last Updated:
  • Aug 13th, 2016 9:04 pm
[OP]
Newbie
Dec 11, 2006
82 posts
3 upvotes

Transfer non-reg to TFSA yearly worth it?

I have a TD TFSA account that has been topped up yearly and also a TD non-registered account, both are invested in index ETFs. I received a lump sum inheritance that I had invested in the non-registered account. Is it worth it to sell from the non-registered account yearly and put the money in TFSA to enable tax free growth? I have TD e-series in my TFSA and some Vanguard/iShares ETFs in the non-registered.
6 replies
Deal Addict
Mar 11, 2016
1735 posts
607 upvotes
yes worth it...pretty easy for them to do it but keep in mind triggers deemed disposition so potential capital gain each yr
Deal Addict
Oct 7, 2011
1067 posts
356 upvotes
Toronto
Generally yes. The money inside TFSA grows tax free. That is unless as fjr indicated if your holding in the non-reg account has no cash that you can move and you need to sell some holdings that'll trigger capital gain (that gets taxed).

But hopefully you'd have earned dividends or is ok to have some capital gain but can put those money into TFSA to grow tax free.
[OP]
Newbie
Dec 11, 2006
82 posts
3 upvotes
Do I need to take into account MERS? The MERS of the e-series in TFSA (0.5%) are much higher than the ones in non-registered (0.2%)
Banned
Jul 18, 2016
2014 posts
779 upvotes
Only if you don't have the cash on hand to save into your TFSA. Ideally, select investments that are suffering a capital loss. Best to realize the loss outside of a registered vehicle so you can write them off against your unregistered gains.
Deal Addict
User avatar
Dec 26, 2010
1734 posts
767 upvotes
Calgary
There's a few factors to consider, but the good news is you can mathematically answer the question.

First, if you have money that you'd normally invest in your TFSA than it is obviously better just to use that.

Secondly, you can calculate your taxes on a capital gain, so taking the one time hit and letting it grow tax free can be determined if it's good or not. It's 5.5k, so... not too much in taxes unless they've been sitting for like a decade.

As per the question of MER, this depends on time. 0.3% (the difference) compounded over 20 years versus tax cost can be computed. But you don't have to leave the money you move to your TFSA in e-series for the rest of your life. You can hang onto it for a few years and eventually move to ETFs.

Also, if you have an actual brokerage TFSA account (rather than an TFSA mutual fund account), you can call up TD and tell them to transfer in 5.5k in kind (as close as they can get) into your TFSA. This saves you the transaction costs, and you keep the ETF. It still counts as a sell, but cleaner, easier and cheaper.
Indexer, non-yield chasing, low cost, broad based, as simple as possible investor.
Deal Addict
Oct 7, 2011
1067 posts
356 upvotes
Toronto
The MERs of ETFs are mostly small, and compared to the average gains you should have, is small.

About where to get the money from, the capital gains vs capital loss from your existing holdings, should be compared to why you are holding them in the first place and if they should continue to be held.

Top