Transferring a non-registered security to a TFSA | Tax Free Savings Accounts | Discussion forum

Brian said

Not exactly about TFSAs but this article is from the Globe and Mail a few years ago related to swaps between registered and non-registered accounts:

Can a person replace, in-kind, a security from his non-registered investment account into his RRSP (cash replacement from RRSP) without having to sell it first?

The Canadian government closed the option to swap securities with cash, in or out of a registered plan, in 2011. The only way you can, like you said, is to sell it first and then buy it again in the RSP. It is best not to put in the buy and sell orders at the same time to avoid the possibility of you buying the shares you are selling. In other words, put in the order to sell, wait for the confirmation and then buy.

The other option is to contribute the shares if you have enough RSP contribution allowance. Be aware that if there is a capital gain on the security, it will have to be declared. If there is a loss, you would have to wait 30 days before buying back to avoid the superficial loss rule.

Are you sure about this, Brian? Within my Scotia iTRADE account, there is an option to effect an in-kind transfer, commission-free I believe, of a particular security from one's non-registered account into a registered account such that the "book value" of the security remains the same within the "transfer out" and "transfer in" accounts. Presumably, the transfer is reported as an "in-kind contribution" to one's registered account and a tax receipt issued. As well, the transaction would be reported to the CRA and would be considered a taxable disposition at transfer requiring capital gains taxes to be paid at the date of transfer. Similarly, I presume in redemptions, the discount broker redeems a certain number of shares for cash to cover withholding taxes and a T4RSP income tax slip issued.

Perhaps I'm missing something, but I don't think so. At any rate, as always, I appreciate your (and bbt's) contributions, particularly, to these forums, Brian. They were always thought out and resourceful.

Cheers,
Doug