Quote:
Originally Posted by Sylvanfan
I suppose one way to win might be to try and hit one out of the park thru your TFSA, and if you did, you could than take that money and make a huge lump sum contribution to your RRSP assuming you have carry over room. As an example I have enough carry over room where I could contribute enough and be at my basic personal claim level. In which case the tax savings could become pretty significant. So if my 5000 TFSA contribution blew up to 60000 in 5 years time, I could take that out and make a large lump sum RRSP contribution and get all my income tax money back. Of course it's a highly flawed strategy. Would that be legal, because it could allow someone to hit a big gain, than parlay that into good tax savings.
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It is legal, but not necessarily a great idea.
If you make $60000 a year in Alberta you would pay $12736 in taxes this year.
Contributing your entire TFSA windfall into your RRSP in one year would then net you a return of $12736. Instead, if you contribute $15000 the first year you will get a refund of $4800. If you do that for the next four years your total refund would be $19200 or 50% more than the single lump sum contribution.