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Old 09-29-2011, 02:37 PM   #1
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help with understanding TFSa contribution rules

could someone please shed some light on how this would work.

let say this is year one of the inception of the tfsa. Therefore, i can contribute 5000 dollars to my tfsa. I contribute 5000 and used it to buy some stocks which grows to 10000 in that same year. in that same year, i sell half of my portfolio, leaving 5000 in my tfsa and the rest is made as a withdraw back to my checking account. The next year on january 1st, I can contribute another 5000 dollars because it is a new year. also, from what I understand, the withdraw amount of the previous year will add to the contribution room of the following year. Does that mean that in this scenario, I can contribute 10000 dollars to my Tfsa in year 2, or is ay contribution room only 5000?

thank you for all advice
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Old 09-29-2011, 02:39 PM   #2
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could someone please shed some light on how this would work.

let say this is year one of the inception of the tfsa. Therefore, i can contribute 5000 dollars to my tfsa. I contribute 5000 and used it to buy some stocks which grows to 10000 in that same year. in that same year, i sell half of my portfolio, leaving 5000 in my tfsa and the rest is made as a withdraw back to my checking account. The next year on january 1st, I can contribute another 5000 dollars because it is a new year. also, from what I understand, the withdraw amount of the previous year will add to the contribution room of the following year. Does that mean that in this scenario, I can contribute 10000 dollars to my Tfsa in year 2, or is ay contribution room only 5000?

thank you for all advice
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Old 10-02-2011, 11:44 AM   #3
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Hey guys,

I'm likely moving to the USA long-term in the next several months due to work, and would be declaring non-resident status.
If I maintain a TFSA in Canada and wire cash into it, would it still be tax free?
As well, do any of you have offshore savings accounts etc?
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Old 10-02-2011, 09:31 PM   #4
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your answer
I dont think this is right. You already contributed 5000 during the first year, meaning you only have 5000 the second year. If you take money out it doesnt mean you can put more back in.

I may be wrong though. Ill ask my coworker to see what he thinks.

Edit: im wrong you're right

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Last edited by Drow; 10-02-2011 at 10:35 PM.
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Old 10-02-2011, 10:14 PM   #5
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AFAIK You can contribute 5000 per year.

Say this is year 2 and you've contributed 10000 already. Then say you decide to take 1000 out sometime during that year. You won't be able to put that 1000 back in until year 3.

In year 3 your quota/limit/contribution or whatever you want to call it is increased to a total of 15000. But you can put up 6k in for that year (5000 for year 3 + the 1000 you withdrew from year 2)
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Old 10-05-2011, 11:42 PM   #6
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$10,000 is correct for your year 2 contribution room. Any amount you withdraw from one year, you can contribute back that same amount the following year + $5,000. Say if I contributed $5000 this year and play the stock market with this amount and my stock value skyrockets to $100,000. I decide to sell my stocks and withdraw $95,000 and put it in my chequings account. Next year my contribution room will be $105,000.
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Old 10-06-2011, 07:06 PM   #7
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Also, if you are unsure you can always call the cra on the phone. They can look into your account and let you know. Otherwise, you can wait until you get your tax return and it will tell you how much yiu can contribute as of that date
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Old 11-05-2011, 05:16 AM   #8
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$10,000 is correct for your year 2 contribution room. Any amount you withdraw from one year, you can contribute back that same amount the following year + $5,000. Say if I contributed $5000 this year and play the stock market with this amount and my stock value skyrockets to $100,000. I decide to sell my stocks and withdraw $95,000 and put it in my chequings account. Next year my contribution room will be $105,000.
wait but this doesnt really make sense...so say you dump the $105,000 back in the next year...you take a hit and is only left with $50 grand and take it all out.
Then in the 4th year whats ur contribution room?
$55,000? or $110,000?...
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Old 01-04-2012, 11:25 AM   #9
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The better question is.... What stocks are you buying to go from $5000 to $10k? lol
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Old 03-24-2012, 06:03 PM   #10
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Sorry for the bump, but I opened a TFSA two years ago and need to start moving funds soon. I was wondering if I could have a balance of less than 5k? Like i anticipate that I will move 2 out of the 6k that is in it. Do I require a balance of 5k for my tfsa to keep going?
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Old 03-24-2012, 09:07 PM   #11
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No balance needed, just watch if you move money out of one TFSA account into another, if you withdraw, you can't contribute that money until jan 1 next yr - to do a proper transfer it takes time and paperwork

The balance limit is only a maximum of $5k per year you can contribute each yr

Cra.gov.ca or whatever it is is your best place to learn about these things beyond this
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Old 03-25-2012, 11:47 AM   #12
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^ Yeah, i Know about that. I'm not going to move more than the limit. I need money for schooling in the future, but I also want to put some away in a GIC.
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Old 03-25-2012, 12:51 PM   #13
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^ Yeah, i Know about that. I'm not going to move more than the limit. I need money for schooling in the future, but I also want to put some away in a GIC.
not to be a dick, but if you know so much, why did you ask such an obvious question before?
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Old 03-25-2012, 02:13 PM   #14
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I meant I knew about the withdrawal limit as in If i take stuff out, there's only a certain amount i can put in. When the bank appraoched me aabout the tfsa, they said i had to put in 5k as a deposit or something. So i was asking if I had to have a minimum balance of 5k at all times. ><
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Old 03-25-2012, 02:38 PM   #15
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I meant I knew about the withdrawal limit as in If i take stuff out, there's only a certain amount i can put in. When the bank appraoched me aabout the tfsa, they said i had to put in 5k as a deposit or something. So i was asking if I had to have a minimum balance of 5k at all times. ><
Here's a way more important lesson, don't ever listen to a bank when it comes to investments, what are they offering, 0.5% return unlocked, 2% locked in forever?
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Old 03-25-2012, 02:42 PM   #16
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I'm just with the bank, because it's more convenient I guess. The interest rate flunctuates so it's not steady. I just got the TFSA because I wanted some kind of savings account. It's about 1%, which is pretty shitty, but I am a student so a commercial bank does give me some mobility.
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