Should I transfer stocks into my TFSA?

Should I transfer stocks into my TFSA?

Thanks to a reader question, I’m going to tackle this today and offer some perspectives:

“Hi Mark,

I don’t know if you have covered this anywhere in your blog but I’ve got a question about transferring shares from non-registered account to a TFSA account. I’m not sure I’ll have necessary cash saved to invest into my TFSA as of January 1 (as I have maxed out all my RRSP contribution room). I have shares in BNS, BMO, RY and others and I’m thinking of transferring $5500 or more worth of shares into my TFSA.

My questions are:

  • Is this wise?
  • Will it trigger a capital gain (if I sell)? If so, is that reportable to CRA?
  • What about calculating the adjusted cost base? I didn’t always keep track but it is doable.

Just wondering if you have experience with this.

Thanks. I really enjoy your blog!”

First of all reader, thanks for being a fan – always great to hear from readers and get questions!

Second thought, I need to warn you I’m not a professional tax accountant or an investment guru. This means the information that follows is not professional advice but rather my DIY perspective on things.

Third, let’s tackle those questions!

Is it wise?

Like everything in life – it depends!

What I mean is, it depends on your financial plan, goals and tax strategies that you want to employ.

Personally, I’m a fan of maximizing all registered accounts first (tax free = TFSA; tax deferred such as RRSP; tax deferred such as RESP, if you have kids) BEFORE non-registered investing.

The reason is – why pay tax today when you can let assets grow, defer tax, or in some cases keep Mr. Taxman away in the future?

Other reading:  What should your financial plan cover?

That said, I actually didn’t follow my own advice many years ago. A decade ago, I opened (and still retain) a non-registered investing account. In the years that the TFSA has been available, I have moved non-registered stocks to my TFSA in some years.

This is where some of my Canadian dividend paying stocks are held for tax purposes

Anyhow – back to you, I believe anytime you have an opportunity to maximize contributions to your TFSA in any year, you should.  The TFSA is a gift of an account for all adult Canadians to use. 

This account can be for short-term saving street or long-term investing boulevard!

Investing 101

Where you get the money (or assets) for your TFSA contribution every year is up to you.

For the most part, if you have non-registered assets like the Canadian bank stocks you mentioned (disclosure – I own some of these stocks as well) then you should be able to transfer those stocks “in-kind” from your non-registered investment account to your self-directed TFSA account at your brokerage.

Consider “in-kind” like “as-is”. Just call your brokerage up and tell them you want to transfer shares “in-kind” to your TFSA.  Nothing else is really needed – they will take care of it. The transaction time is typically about three business days for all assets to “settle” inside the TFSA after you make the call.

Will it trigger a capital gain (if you sell)?

If so, is that reportable to the CRA (Canada Revenue Agency)?

It might and yes are my answers.

Again, I’m not a tax professional but I’ve done what you are considering in the past. In my situation, I sold a non-registered asset and triggered a tiny capital gain in the process. I reported that small gain to the CRA in that tax year.

If your investment when sold triggers a capital gain (i.e., you sold an asset for more than you paid for it), then a percentage of tax must be paid in the year that gain occurred. That gain is added to your regular income in that tax year.

If you want to keep the shares you own (and not sell them for cash), then I believe transferring shares “in-kind” in the manner I mentioned above is the way to go. When you transfer shares to your TFSA the CRA considers this a “deemed disposition”. You technically sold the assets at market value for your upcoming TFSA contribution. This means your TFSA contribution amount is the market value at the time of transfer.  For tax purposes, you have effectively disposed of the shares so any capital gain is taxable to you. If however, you have a loss on the shares in your non-registered account before making the “in-kind” transfer then the capital loss is not deductible.

Let’s summarize, regarding the TFSA:

  • Use savings to invest in eligible investment vehicles (like stocks) and the capital gains and other investment income earned in your TFSA will not be taxed, even when withdrawn. Hooray!!
  • TFSA contributions are not deductible from income for tax purposes.
  • Unused TFSA contribution room can be carried forward to future years.

The implications of TFSA transfers from a non-registered account:

  • You will likely be ‘selling’/transferring an existing investment. If that occurs, then selling non-registered investments can produce capital gains or losses and therefore tax implications:

a) If your non-registered investment is in a gain position, making an ‘in-kind’ transfer directly into your TFSA will trigger a ‘disposition’. You’ll pay tax in the year of the transfer on 50% of the gains but then the asset will be inside your tax-free TFSA going forward.

b) If your non-registered investment is in a loss position, making an ‘in-kind’ transfer directly into your TFSA, you will lose the loss. Regarding the loss position, in order to claim the capital loss you would need to sell your stock(s) outside the TFSA first (no “in-kind” transfer). Then a superficial loss rule kicks in. This rule prevents investors from selling a stock to claim a loss and then buying it back right away. The rule means if you sell a stock outside of the TFSA and buy it back within 30-days, the loss will be denied.

Read more on CRA here.

What about calculating the adjusted cost base? I didn’t always keep track but it is doable.

Doable, please do.

Calculating your adjusted cost base can be a pain so I typically refer people to this free software tool to do it (no affiliation). On my end, I keep few spreadsheets up to date on this for my non-registered account. To keep things easy, I might turn off off all DRIPs (Dividend Reinvestment Plans) in my non-registered account so I don’t have to deal with the adjusted cost base calculations any longer. I have my market value and my base cost documented for about a dozen stocks. If/when I sell any of these non-registered assets, the calculation will be very straightforward on the CRA tax forms.

Should I transfer stocks into my TFSA?

Generally, you can transfer investments in-kind from a non-registered investment account to a Tax-Free Savings Account (TFSA) as long as you have the available contribution room.

However, you may have to pay tax if the value of the investments has gone up since you purchased them (in other words, you have a capital gain). Once your investments are in the TFSA, they will grow tax free.

Learn more about in-kind contributions to a TFSA – including what happens if your investments have gone down in value – from the Canada Revenue Agency.

I can’t tell you the correct decision to make on this but I hope this post highlighted some considerations related to transferring stocks into a TFSA. 

Good luck with your decision and thanks for reading.

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

28 Responses to "Should I transfer stocks into my TFSA?"

  1. As a 23 year retiree I transfer the required minimal withdrawal amount from my RIF as in-kind equities and in some cases more than the minimum accepting that there is a sliding scale of withholding taxes on the over minimum amount. For Estate planning reasons I’m trying to draw down the RIF balance and increase the TFSA balance while not losing potential equity growth. The stocks in both accounts are DRIPs and continue to produce dividends and hopefully increase in value. Attention should to be paid to the asset balances and diversity within both accounts. Also, if the in-kind equities being transferred into the TFSA are American and the dividends they generate are large enough there may be taxes payable to the US government. Another consideration is making that in-kind transfer when the market and share prices are down which allows you to transfer a greater quantity of in-kind shares for the dollar amount of the minimum RIF withdrawal. Optimistically, when the market goes back up the value of the in-kind transfer increases accordingly.

    1. Nice to hear from you!

      Congrats on your success in retirement!

      For those estate planning purposes, I think that’s very smart. When we run the math and show folks the tax consequences of keeping their RRSP/RRIF into their 70s and 80s – some are shocked when CPP + OAS + other income streams are already in place.

      So, to that point, it can make great sense to kill off/withdrawal all RRSP/RRIF assets by early 70s and move all funds not needed for living expenses to the:

      1. TFSA first, then
      2. Non-reg.

      The U.S. withholding tax of your U.S. stocks inside a TFSA is a pain but I suspect it’s still better than paying tax on that in your taxable account…



  2. Thanks Mark, great post!

    Would you mind citing the CRA form/document from which the following ensues:

    > “When you transfer shares to your TFSA the CRA considers this a “deemed disposition”.

    I can’t find an governmental source for it and I have a hunch that it applies to just about any form of trust for which the “giver” is also one of the trust’s main beneficiaries. (DPSP, RRSP, etc)

    Also, if we transferred Canadian dividend-generating equities into a TFSA, would you recommend enabling DRIP on them, or should we let the dividends accumulate in the account and periodically reinvest. OR if we have a choice, should we try to keep canadian dividend-generating stocks out of the TFSA so that we reserve the room for assets with more compound growth potential?

    1. Most welcome 🙂

      Deemed disposition
      This expression is used when a person is considered to have disposed of a property, even though a sale did not take place.

      I can’t offer tax advice, but I can say that transferring Canadian dividend-generating equities into a TFSA, would mean you need to claim a capital gain from non-reg. to TFSA before doing so OR if at a loss, the loss doesn’t count 🙂

      In terms of DRIPs, I personally like DRIPping as much as I can, including taxable but periodically I do stop the DRIPs, some DRIPs, let some cash build up and deploy for some purchases.

      I like CDN stocks in my taxable and TFSA 🙂


  3. Hi Mark, in my situation I have a LIF which I am thinking of transferring stocks in kind from to my TFSA. As you probably know, the LIF has a minimum and a maximum withdrawal amount. The max is either a pre-determined percentage of the account value on Jan 1st, or the gain in value over the previous year (which ever is higher). In my case I did really well last year and have a high max withdrawal value. Since the account consists of all dividend paying stocks does it make sense to transfer the max out of the LIF (while I can) and put the stocks into my TFSA? I will take a tax hit on what I move, but it seems to me from a estate planning prospective this would make sense. Get as much money out of the LIF as possible and take the dividend income tax free for life. I also have another related question, can I transfer stocks in kind from my LIF to my wife’s TFSA? What do you think?

    1. Nice to hear from you HM.

      Without knowing all your details, can’t offer advice, etc. yes, aware of LIF mins and max and I always think it makes sense to max out the TFSA in any way reasonable, each January.

      Since I’m still working, I intend to max out the TFSA with new cash every year for a few years.
      Other options I see from others including taking out small RRSP withdrawals and/or turning the LIRA into a LIF and using withdrawals from that to fund the TFSA every year for tax-free compounding.

      All approaches have pros and cons but from an estate planning perspective, getting rid of LIFs/RRIFs while you are younger and moving that money into TFSAs as much as possible makes great sense to me and something I’m planning on doing.

      Did you see this? 🙂

      Curious about your thoughts!

  4. Another great article! Thank you Mark for sharing your knowledge!
    This process works the same for any type of investment, right?
    If, for example, you have mutual funds in my taxable account and want to transfer to a registered account, the tax implication is the same as how it is explained in your article, is that right? Thank you again Mark.

  5. Hi Mark. I was wondering. I am holding WAYL.cse in my. TFSA. it is currently halted, last trade at .74.

    I was wondering if i could transfer the stock in kind from my TFSA to my non registered account, and claim a capital loss when it starts trading again.

    Any advice would be great

      1. Hi Mark, I have the same question as Jacques above. However the article that you have linked is the opposite scenario of Jacque’s question. Like Jacques, if I’m holding a losing stock in my TFSA, would it be possible to move it to a non-registered account like CAD Cash account and sell it there in order to report a capital loss? Many thanks!

        1. Hey Dave,

          Thanks for your question.

          I shared with Jacques the link to MoneySense since it covered the superficial loss rule if he went from non-reg to TFSA; more for context.

          I should have answered his question more directly 🙂

          When you or other investors go from TFSA to a non-registered account, you cannot claim a capital loss inside the TFSA. Tax free account = tax free and therefore no tax consequences good or bad. If you want to move out the asset dud from TFSA, and then sell inside the non-registered account, fine, I see no reason why you can’t take your capital loss then.

  6. Hi Mark,

    I thought so, but something you mentioned has me scratching my head, I’m hoping you can clarify.

    2 Things:

    1) “no gains or tax when you go from one registered account to another as long as you have contribution room” – I understand if you are transferring from a TFSA to an RRSP, but, If you are transferring a stock in kind from one RRSP to another RRSP, will that affect your contribution room? Since its not a deemed disposition, I’d assume it won’t affect your contribution that you may still have available. No?

    2) “You cannot transfer investments directly between TFSAs and RRSPs” – I think this is incorrect isn’t it? Meaning, if I own Apple stock in one RRSP and I have another RRSP account which also holds Apple stock and let’s say I want to consolidate my Apple stock position into only one RRSP account, I cannot do this?

    1. Hi MoneyHelp – no, I meant to write/clarify TFSA to RRSP you need RRSP contribution room but RRSP to RRSP is really just an in-kind transfer. RRSP to RRSP is all good!

  7. This may be a dumb question. I was already aware of a deemed disposition when transferring shares “in kind” from a non-registered account to a registered account, and either have to pay tax if there was gain or cannot claim a loss due to triggering the superficial loss rule; however, does the same apply when transferring from a registered account to another registered account (ie. RRSP to TFSA OR from one RRSP to another RRSP)?

    I assuming no, but thought I’d ask.

    1. Hey MoneyHelp – based on my understanding, no gains or tax when you go from one registered account to another as long as you have contribution room…but….


      Funds can be withdrawn from a TFSA at any time, for any reason, without tax consequences. In fact, the contribution room will be returned to you the following calendar year. If your TFSA investments have done well and you’re looking for a tax break for the current calendar year, that money may be better invested in your RRSP.

      You cannot transfer investments directly between TFSAs and RRSPs but you can sell for cash in one and repurchase them in another. Just be sure you have the contribution room in your RRSP, which is usually posted with CRA. Best idea: RRSP contributions are fully taxed when they are withdrawn (ideally in retirement), but they can be deducted from your 2018 taxes if you make the contribution before next March.


      If you withdraw from an RRSP the funds will be subject to an immediate withholding tax. Once you file your taxes for the year you could wind up paying more or you could pay less, depending in your income level. It makes more sense to withdraw from an RRSP if your income is low. Unlike a TFSA, the re-contribution space from an RRSP withdrawal will be lost.

      Assuming you have not maxed out your TFSA, you can put the funds right back in your TFSA. The CRA also keeps a record of your TFSA contribution space.

      A quick Google will tell the tale but essentially once you have cash inside your RRSP, keep it there. Depending upon investing strategies, you might want to withdraw from TFSA to feed RRSP in your asset accumulation years.

      I personally leave both alone!

  8. In time this will be a consideration for me likely with unregistered accounts. For registered accounts my broker has said I can’t make a direct in kind contribution to another registered acct -TFSA. I didn’t really pursue this further as didn’t have any need at the time. If this is correct I suspect there is an easy work around: RRSP>unregistered>TFSA

      1. Good stuff Barry, but I assume that’s an in-kind transfer per se? My understanding is you cannot transfer directly since you’re going to be taxed on RRIF withdrawals but I could be wrong.

        Happy Holidays!

  9. For us older folks who have to withdraw funds from a RRIF, I always transfer the max allowable of shares In Kind to the TFSA. The funds are being taxed regardless, but it allows us to get some stocks that are generating a nice return and growing into the TFSA.


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