TFSA Transfers and Contributions (Canada)

[beerbaron]

Hi, I'll need to liquidate my TFSA this year as I need liquidity. Let's say I liquidate 200K$ from my TFSA in 2022, does it mean I'll have available contributions space of 200K in 2023?

 

Thanks

BeerBaron

[lessthaniv]

Yes. You have to wait 1 calendar year after the withdrawal is made but you’ll be able to contribute all those funds back + 2023 allowance once were in 2023. 
 

Edit: Assumes your maxed out already. 
 

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/making-replacing-withdrawals-a-tfsa.html

 

 

Edited August 2, 2022 by lessthaniv

[Xerxes]

Absolutely 

 

inverse is also truth. 
 

You put the maximum allowed ($80k or whatever that is). You make a bad investment that reduces the $80k to say $5K. 
 

you sell at a loss and withdraw the $5k from TFSA. 
 

by doing so you have “reduce” your TFSA capacity down to only $5K.
 

Permanent damage to TFSA. 

[gokou3]

12 hours ago, lessthaniv said:

Yes. You have to wait 1 calendar year after the withdrawal is made but you’ll be able to contribute all those funds back + 2023 allowance once were in 2023. 
 

Edit: Assumes your maxed out already. 
 

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/making-replacing-withdrawals-a-tfsa.html

 

 

I believe he would just need to wait until the next January 1st, not 365 days, to re-contribute the $80k?

[lessthaniv]

1 hour ago, gokou3 said:

I believe he would just need to wait until the next January 1st, not 365 days, to re-contribute the $80k?

Yes, correct. Thats what I intended to convey but probably could have chose my words better. 

[scorpioncapital]

and you can add on the extra 6500 or whatever will be next year's additional room.

 

[beerbaron]

So to recap for anybody reading this thread later. The attached chart gives the contribution limits by year. Total is $81500.

 

If you have 200K in you TFSA you can take it all out today (Aug 3rd 2022)

On Jan 1st 2023 you can contribute $81 500 (2009-2022) + $6 000 = $87 500

On Aug 3rd 2023 you can contribute $200 000 - $87 500 = $112 000

 

Did I get this right?

 

Thanks

BeerBaron

 

Edited August 3, 2022 by beerbaron

[StubbleJumper]

No.  On January 2, 2023, you can recontribute the full 200k that you withdrew, plus the allocation for 2023 (~$6k).

 

 

SJ

[beerbaron]

Thanks for everybody, who needs the Canadian Revenue Agency when you have thecobf.com!

 

Thanks

BeerBaron

 

[scorpioncapital]

ok say you have 6000 room for 2022.

you withdraw 6000 today.

you cannot recontribute the 6k until Jan 1 2023 but can you still contribute 6000 today as part of the original amount for 2022?

will the cra track this properly?

 

[MikeL]

Yes, you can. 

[Parsad]

On 8/3/2022 at 11:56 AM, beerbaron said:

Thanks for everybody, who needs the Canadian Revenue Agency when you have thecobf.com!

 

Thanks

BeerBaron

 

 

Just a reminder...while we have some of the most intelligent investors on the cobf board, any tax, accounting, financial, estate planning queries/answers should always be qualified by an outside expert in that area.  If something goes wrong without discussing it with a qualified outside expert, that is your responsibility and error.  Cheers!