No tax. It's a Tax Free Savings Account. (so are you going to share the ballooning stock with us? )
But please DON'T withdraw the profits. You only grow your wealth when you allow profits to compound. And when the profits were tax-free and will compound tax-free for the next 50 (?) years of your life, this is too good to pass up.If I withdraw 5k and another 5k in Aug and Sept 2009 ...
Well let's compare what we said....Not sure where you're getting all those numbers from. I believe the contribution for consecutive years is simply a new $5000 (adjusted periodically for inflation) + withdrawals in previous year - over contribution for previous years
But that's not what really happens because that contribution limit is only increased until you re-contribute that money. So there is no difference at all between a TFSA where you put in $5000 year one, it goes to $50,000 in value, you don't withdraw it, and year two you put the maximum $5,000 in (it's worth $55,000), vs. one where you put in $5,000 year one, you withdraw the $50,000, then the next year you put it back in along with the $5,000, and your TFSA now has $55,000. In short, as soon as you recontribute, you're no better off than if you had never withdrawn.The $50,000 is permanently "locked in" to your contribution limit, and you have secured a tax shelter for life for that amount of money.
Profit-taking is a better description of what we have been discussing. As you say, locking-in is a borrowed term that is probably not appropriate here. The poster who first used the term was trying to say that if you "profit-take", and then withdraw the profits from your TFSA (presumably because you want to spend it on something), you don't lose the contribution room, because the withdrawal is added to your next year's contribution room. This is an important difference from RRSPs, where you can't regain contribution room after making withdrawals.Ok, I need some terminology lessons
I always thought "locking in" was when you did something like sell and rebuy an item to force a reset of the ACB and dealt with the tax issues then.
And I thought selling your stock and putting it in something different to make sure you kept your gains was "profit-taking".
Anyone know a good definitive site for the actual definitions of these?