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Discussion Starter · #1 ·
Basic question for you guys.

If I invest 3k into my TFSA this year, and then later take it out (minus profits or losses) so that my TFSA balance is 0.00, in 2022 can I invest the max $81,500 which will be the limit. Can I do this on January first? Or will I have to track what I contributed in 2021 regardless of removing funds making the TFSA 0.00 and invest 81,500 - 3000 = $78,500?

Please advise.
 

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You can contribute the full 81,500.

Minus any losses, or plus any gains from the prior year.

You can do this on January 1.
 

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Not sure if either your question is not clear or if I am obtuse today.

If you have a zero balance today and no past contributions and you put in 3,000 today, you may withdraw the whole balance later this year which may be greater or lesser than 3,000.

You may recontribute on Jan 1st.
If you had a loss on your 3,000, you will not be able to contribute 81500.00 It will be smaller by the amount of your loss.
If you had a gain, you will be able to contribute more than 81,500 by the amount of your gain.

This assumes that the 81,500 is the correct contribution room for your years in Canada and time over the age of 18.
 

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Discussion Starter · #5 ·
Not sure if either your question is not clear or if I am obtuse today.

If you have a zero balance today and no past contributions and you put in 3,000 today, you may withdraw the whole balance later this year which may be greater or lesser than 3,000.

You may recontribute on Jan 1st.
If you had a loss on your 3,000, you will not be able to contribute 81500.00 It will be smaller by the amount of your loss.
If you had a gain, you will be able to contribute more than 81,500 by the amount of your gain.

This assumes that the 81,500 is the correct contribution room for your years in Canada and time over the age of 18.
Are you saying that if I put in the max, in one lump sum of 2021 limit of 75,500 earlier this year - never having put any more in a TFSA at all - and I lost all of it on a penny stock, that next year I could only invest the max contribution limit of 6k for 2022? I would essentially restart from the very beginning?
 

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Are you saying that if I put in the max, in one lump sum of 2021 limit of 75,500 earlier this year - never having put any more in a TFSA at all - and I lost all of it on a penny stock, that next year I could only invest the max contribution limit of 6k for 2022? I would essentially restart from the very beginning?
Yes. Withdrawal amounts can be added to next years contribution room, but losses can not be added back next year.
 

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... I would essentially restart from the very beginning?
Yes ... though IMO, it is a continuation of the annual amount versus starting over.

There's only two sources of TFSA contribution room - the annual allotment and withdrawals. If there's no value in the TFSA then a withdrawal is out of the question.


That's why a lot of articles will say to be careful with what one invests in.


Cheers
 

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All the above info is correct.

As others have stated, the TFSA should not be used for gambling, yolo-ing, penny stocks, or otherwise risky investment or trading for the sole fact that when you lose (take a loss), you are taking that loss forever. That loss can have significant impacts on your future returns since you never get that contribution room back.

Be careful in your choices of investment. In my opinion, it is best to stick to companies you know (bigger, blue chip companies with a solid track record and a likely future) or stick to popular, broad ETFs (XIU, XSP, XQQ, etc)
 

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Discussion Starter · #10 ·
All the above info is correct.

As others have stated, the TFSA should not be used for gambling, yolo-ing, penny stocks, or otherwise risky investment or trading for the sole fact that when you lose (take a loss), you are taking that loss forever. That loss can have significant impacts on your future returns since you never get that contribution room back.

Be careful in your choices of investment. In my opinion, it is best to stick to companies you know (bigger, blue chip companies with a solid track record and a likely future) or stick to popular, broad ETFs (XIU, XSP, XQQ, etc)
So then my best bet is to take slightly riskier investments in a standard taxable account where any losses are tax deductible? Is this correct?
 

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So then my best bet is to take slightly riskier investments in a standard taxable account where any losses are tax deductible? Is this correct?
Exactly. You got it.

And just to be clear, losses are not tax deductible, they can be used to offset gains in current or some future years.

But if you only have losses in a given year, that doesn't help you in any way on your tax return. If you had gains the following year, it would. =)
 

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Discussion Starter · #12 ·
Exactly. You got it.

And just to be clear, losses are not tax deductible, they can be used to offset gains in current or some future years.

But if you only have losses in a given year, that doesn't help you in any way on your tax return. If you had gains the following year, it would. =)
Cool. Thanks so much.
 

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All the above info is correct.

As others have stated, the TFSA should not be used for gambling, yolo-ing, penny stocks, or otherwise risky investment or trading for the sole fact that when you lose (take a loss), you are taking that loss forever. That loss can have significant impacts on your future returns since you never get that contribution room back.

Be careful in your choices of investment. In my opinion, it is best to stick to companies you know (bigger, blue chip companies with a solid track record and a likely future) or stick to popular, broad ETFs (XIU, XSP, XQQ, etc)
I can relate to this. I invested a significant amount in my TFSA in what I considered good energy stocks. After all, my entire estate was from my participation In that sector. How wrong I was! Despite making maximum contributions, the value of my TFSA is only $50,000. On the other hand, I invested the funds in my wife’s account primarily in ETF’s, etc. - her TFSA is now valued at $110,000.
 

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I can relate to this. I invested a significant amount in my TFSA in what I considered good energy stocks. After all, my entire estate was from my participation In that sector. How wrong I was! Despite making maximum contributions, the value of my TFSA is only $50,000. On the other hand, I invested the funds in my wife’s account primarily in ETF’s, etc. - her TFSA is now valued at $110,000.
At least you learned and corrected it!
 

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... And just to be clear, losses are not tax deductible, they can be used to offset gains in current or some future years.

But if you only have losses in a given year, that doesn't help you in any way on your tax return. If you had gains the following year, it would. =)
Good point ... but there is an addition to have a more complete picture.

The capital loss is used first for current year capital gains.
If not, then one can carry back the capital lost up to three of the preceding tax years or carry them forward to a future year.
TaxTips.ca - Capital losses, losses carried forward & back, superficial losses

OAS is a long way off for the OP so it won't matter now ... but should one be planning on using a previous year capital loss to keep a capital gain from resulting in the OAS clawback, only current year capital losses will work. There are other tax credits with the same issue.


Cheers
 
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