Personal Finance

Transfer RRSP to TFSA

  • Last Updated:
  • Jul 6th, 2020 1:44 am
[OP]
Deal Addict
Aug 22, 2009
1714 posts
1239 upvotes

Transfer RRSP to TFSA

Is there a way to transfer funds from RRSP to put them into TFSA instead?

Any way other than withdraw from RRSP - pay the tax - deposit into TFSA?
6 replies
[OP]
Deal Addict
Aug 22, 2009
1714 posts
1239 upvotes
Kiraly wrote: There's no way to avoid paying the tax, if that's what you're getting at.
Basically withdraw it, then deposit it in TFSA
Member
User avatar
Jan 7, 2019
368 posts
373 upvotes
When you initially deposited money into your RRSP, you were getting a "Tax Shield" in the form of lower taxable income. TFSA is an after tax product and therefore this no way to move Tax Shielded money into an after tax product. If this was allowed, everyone would be putting money into their RRSP, get a tax rebate, then transfer to TFSA where they would earn tax free money.
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[OP]
Deal Addict
Aug 22, 2009
1714 posts
1239 upvotes
BrokeMillennial wrote: When you initially deposited money into your RRSP, you were getting a "Tax Shield" in the form of lower taxable income. TFSA is an after tax product and therefore this no way to move Tax Shielded money into an after tax product. If this was allowed, everyone would be putting money into their RRSP, get a tax rebate, then transfer to TFSA where they would earn tax free money.

I figured, but also thought it didn’t hurt to ask
Member
Aug 25, 2009
359 posts
332 upvotes


Found this. I watched it a few times but I don’t understand it. Maybe someone smarter can comment on the video.
Deal Addict
May 16, 2017
2277 posts
2969 upvotes
Timo wrote:

Found this. I watched it a few times but I don’t understand it. Maybe someone smarter can comment on the video.
I looked up their written explanation and it contains dubious information at best regarding MICs (Mortgage Investment Corporations):
1. You can't be the only shareholder to be an eligibile MIC (you need minimum 20 shareholders and no shareholder can be more than 25%) - maybe they try to skirt the rules by using the concept that RRSP and TFSA are trusts - not directly yours - wouldnt' want to try that on for anti-avoidance opinion with the CRA.
2. MICs MUST investment in mortgages - so the assertion about putting money back in the "same investments" can't be true unless those were mortgages.
3. The CRA approving a MIC is absolutely NO assurance it will be treated as an eligible investment for RRSP and/or TFSA purposes (which this blurb claims).

When an "investment scheme" contains obvious errors the obvious choice is to forget it.

That said, a MIC can be a good investment because of certain tax rules that apply.

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