Be very careful about TFSA overcontribution. Strictly speaking, you could lose the entire gain on the deliberatly over-contributed portion! From http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/txtn/txtn-eng.html :
Important notice
Effective October 17, 2009, any earnings or increase in value reasonably attributable to a "deliberate excess contribution" will be considered an advantage and treated accordingly. For more information, see Tax payable on an advantage.
Then, from http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/txtn/vntg-eng.html :
If the holder of a TFSA or a person not dealing at arm's length with the holder was provided with an advantage in relation to their TFSA during the year, a tax is payable which is:
- in the case of a benefit, the fair market value (FMV) of the benefit; and
- in the case of a loan or a debt, the amount of the loan or debt.
So, to summarize -- deliberately overcontributing to a TFSA doesn't appear to be an effective tactic, to avoid taxation of capital gains on the stocks purchased with the overcontributed amount. In fact, it is much worst than that -- the taxation rate is 100% of the gain on those stocks purchased with the overcontribution!
Just though y'all might want to know...
