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Thread: TFSA investing questions

  1. #1
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    Last year I maxed out my TFSA contribution room.
    Last last year, in error, I sold at a huge loss (which the TFSA doesn't care about).
    Now I'm wondering if there's anything I need to be concerned about when I get into the market again (probably with the same equity I just sold). I have a little more contribution room which I will use. The 30 day rule shouldn't matter as I'm trading only every few months.
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    Last edited by smart2u; Wed, Jan 4th, 2023 at 06:22 PM.
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  2. #2
    tightwad and proud of it! brunt's Avatar
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    30 day rule does not even come into play in registered accounts.

    Just for background, the 30 day rule deals with "superficial losses", that is losses that one could argue are not real losses. Say you bought a stock at $100, and it went down to $50 where you sold it. You bought it back later the same day for $50 again. Let's look at the tax consequences here. Normally, when you sell a stock at a loss, you can use a "capital loss" to offset some of your "capital gains", and reduce your taxes. But in this extreme example, you didn't really effectively sell the stock since you bought it right back. In order to avoid this situation, CRA has bought in rules where they do not allow capital losses if you bought the same thing back within 30 days. So you have to either wait for more than 30 days, or buy back a similar, but different stock (say if you sold a bank, you could buy back a different bank immediately, or with ETFs, there are many that are almost the same, so you could buy a different one that holds nearly the same things in it).

    https://www.canada.ca/en/revenue-age...cial-loss.html

    With registered accounts (RRSP, TFSA), you don't get to write off capital losses, so there is no concern about the 30 day rule.
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  3. #3
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    The bonus this year is that you are allowed to put $6500 new funds into a TFSA

    And yes - the capital losses are not considered in a TFSA - you have just lost that value for the rest of time

    However, if you ‘withdrew’ funds and had to claim that on your income tax - I believe, you can redeposit that amount.

    Make sure you keep clear records of deposits and withdrawals over the years because CRA will follow up on overdeposits and demand that you withdraw it immediately.


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    Last edited by endi2000; Tue, Jan 24th, 2023 at 07:56 PM.
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    tightwad and proud of it! brunt's Avatar
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    Quote Originally Posted by endi2000 View Post
    The bonus this year is that you are allowed to put $6500 new funds into a TFSA

    And yes - the capital losses are not considered in a TFSA - you have just lost that value for the rest of time

    However, if you ‘withdrew’ funds and had to claim that on your income tax - I believe, you can redeposit that amount.

    Make sure you keep clear records of deposits and withdrawals over the years because CRA will follow up on overdeposits and demand that you withdraw it immediately.


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    Just a couple of points:

    1) If you withdraw money from your TFSA, this does not get claimed on your income tax. There is no deduction at time of contribution, so no claiming when you withdraw. This is entirely unlike an RRSP.
    2) You can redeposit, but it can only be done in the next tax year (assuming that you have already used up your contribution room). The amount you withdraw gets added to your next year's contribution room. If you return it in the same year, it will be counted as an overcontribution, and there will be a penalty assessed.
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