T O P
BlueberryPiano

Buying and selling within the TFSA doesn't impact your contribution room directly -- it's only deposits and withdrawals. If you have $5k contribution room remaining and sell something at a loss within the TFSA you still have $5k remaining in contribution room. But if you sell at a loss and withdraw from the TFSA yes you could "lose" contribution room. Say you have a contribution room of $76,500, you deposit $76,500 and buy stocks. If those stocks decrease in value to $66,500 and you sell *and withdraw* the $66.5 k, you would get back 66.5k in contribution room next year on Jan 1 in addition to the new contribution room of $6500 everyone gets (btw next year is 6500). So yes, you have effectively "lost" 10k in contribution room. Conversely, if you'd deposited $76.5k, bought stock which went up in value to $300,000, sold and withdrew - next year your contribution room would be $300,000 plus $6500. It works both ways.


OurManInHavana

This is the side of it that I think the OP is missing. Sure you could say that a loss in your TFSA (that you then withdraw) results in some contribution room permanently lost. However... you could also say that a gain (that you then withdraw) results in some contribution room permanently added!


vmurt

This would be wrong though. The only way to “gain” that contribution room would be to withdraw the funds. Meaning you need to use up this “gained” contribution room just to return to the status quo. Gains and kisses affect the size of your account, not your contribution room. Put another way, let’s say you have $100,000 in your TFSA and zero room. You you take the money out, you have “gained” $100,000 in room, but emptied your account. The best you can do is to put the money back, returning your TFSA to $100,000 and your room to $0. You have actually gained nothing through the process.


OurManInHavana

You can see that I talked about withdrawals and gains/losses. And the person I was responding to... talked about withdrawals and gains/losses. And the OP specifically mentioned rules around *redepositing*. So, we can tailor your example to this conversation... Say you put that $100,000 in your TFSA... and due to lucky market returns it increases in value to $120,000. You then withdraw $20,000. Next year you get your next allotment of regular TFSA room... plus $20,000. That's extra contribution room solely due to the gain. And as the OP was asking about, the opposite would be true if they withdrew after their $10,000 loss.


stolpoz52

> Did i just loose 10k of contribution for ever? You don't technically "lose" the contribution room. You lose $10k in your TFSA. You used the room and then lost the money. > Will I regain that 10k of contribution room the following year or is that gone for ever. That $10k is gone. The government doesn't give you more room because you lost money in a TFSA. The only time you get increased contribution room is January 1st where you get the yearly limit increase ($6,500 this year) + the amount withdrawn the year before. > If you were at your TFSA limit in 2019 and your entire investment went down to $0, your limit for 2020 is not $69,500. Your limit is $6,000. Correct, $6,000 being the new yearly room in 2020.


little_nitpicker

>If i sell a stock at loss and loose 10k (random number) Did i just loose 10k of contribution for ever? Any transactions within the TFSA has no impact on your contribution room. Selling stocks with a 10k loss wont affect contribution room since its within the TFSA, you didnt take money out of the TFSA. If your TFSA is maxed at $76.5k and your stocks went down by $10k, and you sold everything for $66.5k and *withdrew that cash from your TFSA,* only then do you lose the 10k room "for ever".


hodkan

You're contribution room is used the moment you contribute. That's why it's called contribution room. If you have $10,000 in TFSA contribution room and then contribute $10,000 to your TFSA, you now have $0 in contribution room. It doesn't matter what you do with that $10,000 in your TFSA, you still have $0 in contribution room. You can buy a stock that does really well or really badly. You still have $0 in contribution room. The government gives you new contribution room each year (it will be $6500 in 2023). And any amount you withdraw from your TFSA in 2022 will be added to your 2023 contribution room (unless you are withdrawing an over contribution).


mrtmra

Hahaha yes it's lost forever. I turned my TFSA from 100k contribution room to 30k in a span of 30 min due to some degen options gambling 😎


digital_tuna

No one ever loses contribution room. Contribution room is used up as you make contributions. Whatever happens after that is just mental accounting.


mrtmra

I mean, if you have 100k contribution room and you do options and that 100k turns to $0, the ln you can kiss your 100k contribution room goodbye. It's never coming back


digital_tuna

You're confusing contribution room with account balance. Contribution room isn't a hypothetical number that changes daily as your account balance changes. If your TFSA is maxed out then your contribution room is already $0. No matter what happens to that 100k, your contribution room is already gone because you've used it up by making contributions. Your investment performance can make you gain or lose money, but it can't make you gain or lose contribution room.


Kimorin

the only thing that gains or lose contribution room in TFSA is 1. government gives you the contribution room every year 2. deposits uses up contribution room 3. withdrawals releases contribution room next year profits or losses within the TFSA does not matter. you cannot deposit more than you had contribution room for even if you lose everything in TFSA, and likewise you can deposit whatever your contribution room is even if you gain 1 million in profit.


pfcguy

You understand correctly, other than the correct spelling of 'lose'. That is why you should only make safe long term investments in your TFSA. If you must gamble, do so in a taxable account.


CanadianCryptoChris

It is gone, but not technically 'forever'. If you have 10k contribution room lets say, and lose 10k in a trade (means stock or whatever goes to 0) The initial 10k is lost, however lets say you take that next years 6k or so (new contribution room), and it turns into 16k. You withdraw 16k from your tfsa, the year after you can put in 16k as if you had the original 10k.


digital_tuna

If you take 16k out and put 16k back in, then you're in the same position.....it doesn't change anything. The extra contribution room you "created" by withdrawing, is then used up when you contribute. You cannot "create" contribution room. Contribution room is only increased annually by the CRA and by your ability to re-contribute any money you withdrew the following year.


CanadianCryptoChris

If your contribution room is only 6k, and you make 10k, you can take out 16k. Your contribution room is 16k now, just the same. You can lose contribution room, just like you can make contribution room.


digital_tuna

>You can lose contribution room, just like you can make contribution room. No you can't, that's the point. You can gain or lose ***money***, but you can't gain or lose ***contribution room***. People view their account balance as hypothetical "contribution room" because if they withdrew that amount they could put it back, but if you put the money back then nothing changes. If you have 16k in your TFSA and your contribution room is zero, if you do nothing then you'll have 16k in your TFSA and your contribution room is zero. If you withdraw 16k and re-contribute the next year, then you'll have 16k in your TFSA and your contribution room is zero (ignoring the CRA's annual increase). See what I mean? It doesn't change anything. Either way, you have 16k in your account and zero contribution room. You can't artificially inflate your contribution room. You can make large gains to make back money you lost, but that's a completely separate issue from your contribution room. Picture if you have a maxed out TFSA with 200k inside and your contribution room is zero (because it's maxed out). Whether that 200k turns into 50k or 500k that year, you don't lose or gain any contribution room. Your contribution room is already at zero, so what happens inside your TFSA is irrelevant to your contribution room.


CanadianCryptoChris

I see your point. Would you say a 19 year old let's say with 6k contribution room with 0 in the tfsa being the same as someone with 6k contribution room with 100k in the tfsa already being the same?


digital_tuna

In terms of contribution room, yes they are in the ***exact*** same position. They both have 6k of available contribution room. The CRA would also view these two individuals as being the same in terms of contribution room, because it's the same amount.


Bacon-And_Eggs

Ok i didn’t know about increasing the contribution room when withdrawing gains. Learning everyday here thank you! So i shouldn’t be too worried about a bad move I’ve done and sold at loss a stock a few months ago (not a big amount of money). I am no where near my limit yet, but working towards maxing my tfsa eventually. So this is something i can calculate and plan down the line when i will be approaching my limit.


all_way_stop

Ok technically your contribution room isn't really increasing when "withdrawing gains". Your contribution room is set and only increases yearly each January 1st ($6500 next year) Whatever amount you take out of the TFSA, can be "re-contributed" the following years So you need to keep track of what goes in and out.