TaxTips.ca
Canadian Tax and
Financial Information
TFSA and Swap Transactions

Ads keep this website free for you.
TaxTips.ca does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

Looking for US tax information?
See
USTaxTips.net

Need an accounting, tax or financial advisor? Look in our Directory.      Stay Connected with TaxTips.ca!

Home
What's New
Calculators
Personal Tax
Business
Sales Taxes
Free in 30!
Financial Planning
RRSP RRIF TFSA
Real Estate
Stocks Bonds etc.
Seniors
Disabilities
Canada
Alberta
British Columbia
Manitoba
Ontario
Quebec
Saskatchewan
Atlantic Provinces
Territories
Federal Budget
Provincial Budgets
Statistics etc.
Glossary
Site Map
Directory
Advertise With Us
Contact Us/About Us
Links & Resources



RRSPs RRIFs and TFSAs  ->  Tax-free savings accounts (TFSAs) -> Asset transfer transactions

TFSA Asset Transfer (Swap) Transactions

Income Tax Act s. 146.2(1), s. 207.01

Asset transfer transactions, also known as swap transactions, are transactions where property is transferred out of an account, and cash or other property is transferred into the account.  These transfers, for instance between a TFSA and another registered account such as an RRSP, are not treated as a withdrawal and recontribution, but as a purchase and sale.

Amendments to the Income Tax Act which became law (Bill C-47) in December 2010 prohibit asset transfer transactions between registered or non-registered accounts and TFSAs.  The prohibition would apply to transfers between accounts of the same taxpayer or that of the taxpayer and an individual with whom the taxpayer does not deal at arm's length.

The amendments apply tax at a rate of 100% of the amount of the asset transfer transaction, for transactions occurring after October 16, 2009.

Where the asset transfer transaction has occurred inadvertently after October 16, 2009, the Minister of National Revenue may waive or cancel all or part of the tax payable, if the taxpayer promptly rectifies the situation by restoring each account to its position before the asset transfer occurred.

Note:  These rules do not apply to in kind contributions or withdrawals of property to or from a TFSA.  An in kind contribution or withdrawal is different from a swap transaction, because nothing is being transferred (swapped) out of or into the TFSA in return for the contribution or withdrawal.

Department of Finance information - October 16, 2009 proposal re technical changes to TFSAs

Tax Tip:  Swapping investments between a TFSA and other accounts can be costly.

Previous:

    - What is Better - TFSA or RRSP?

    - TFSA Contribution Rules and Limits

    - Don't Overcontribute!

    - Unused Contribution Room

    - TFSA Investments - qualified, non-qualified, and prohibited

    - TFSA Withdrawals

Next:

    - Taxes Payable re TFSA

    - Marital Breakdown

    - Death of the TFSA Holder

Back to TFSA main page.

Revised: September 21, 2017

 

Copyright © 2002 - 2017 Boat Harbour Investments Ltd. All Rights Reserved  See Reproduction of information from TaxTips.ca

Facebook  | Twitter  |  Google + |  Monthly Newsletter Sign-up  What’s New E-mail Notification RSS News Feed
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.