If I want to move my stock portfolio from a non-registered account to a TFSA, do I need to pay capital gains tax?
There are some considerations if you’re thinking of moving investments from a non-registered account to a tax-free savings account (TFSAs). TFSAs allow investors to save for any goal and, as the name suggests, grow their investments tax free. Contributions to a TFSA is not tax-deductible (it is after-tax income). However, income earned in the account and withdrawn is generally tax free.
There are certain investments that are permitted in a TFSA – visit the CRA website for a complete list. In transferring a qualifying stock portfolio to a TFSA, you may trigger a tax event. You usually don’t need to sell your stocks first (you may need to sell if you are transferring between financial institutions), but this type of “in-kind” transfer is considered a disposition by the Canada Revenue Agency – meaning you may need to report a capital gain if the fair market value of the stock has gone up since you purchased it. If the stock value has gone down, you cannot claim the capital loss. As tax rules are enforced by the Canada Revenue Agency, if you have questions about this type of transfer, contact them. You can also learn more about TFSAs in this CRA publication: Tax-Free Savings Account (TFSA), Guide for Individuals. You may also want to speak with an accountant or your financial advisor to assist you in determining whether this move is right for you.