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investor clinic

I have a stock in my non-registered account that I want to move into my tax-free savings account to make use of my TFSA contribution room. Do I need to report a capital gain as though I have sold it when I move it in?

With the annual TFSA limit having risen to $7,000 as of Jan. 1, not everyone has sufficient cash to max out their contribution. What’s more, about 90 per cent of Canadians have unused TFSA room from previous years, including many high-income earners who have failed to contribute the maximum each year, according the Canada Revenue Agency.

Transferring securities “in-kind” to your TFSA can be a great solution. But you need to be aware of the tax implications.

When you transfer shares with an unrealized capital gain from a non-registered account into a TFSA, the CRA treats the transaction as if you’d sold the shares. To determine the capital gain, subtract the adjusted cost base of the shares from their fair market value at the time of the in-kind transfer. The good news is that only 50 per cent of the capital gain is taxable.

If you have shares with an unrealized loss in a non-registered account, on the other hand, it’s generally a bad idea to transfer them in-kind to a registered account because the loss will be denied for tax purposes. It’s more advantageous to sell the losing securities first and then contribute the cash, which will allow you to claim the loss. Just remember to wait at least 30 days before repurchasing the securities in your TFSA (or any other account) to avoid running afoul of the CRA’s superficial loss rule.

One other thing to note: Capital losses must be applied against capital gains in the current year, but any remaining losses can be carried back up to three years or forward indefinitely to offset capital gains in other years.

The S&P/TSX Composite Total Return Index has to be one of the most difficult numbers to find. Have you got a good source, and can you tell me what the index returned in 2023?

Yes and yes. publishes the daily closing value of the S&P/TSX Capped Composite Total Return Index, which you can find by entering the full index name into the search box or using the symbol TRSPTSECP3. The total return index assumes all dividends were reinvested, unlike the regular S&P/TSX index, which reflects price changes only and excludes dividends.

To calculate the change in the total return index for 2023, click on “historical data” and expand the date range to look up the index’s closing values for 2022 (87,332.43) and 2023 (97,594.53). The difference between these two numbers is 10,262.10, which works out to an increase of about 11.8 per cent. That was the S&P/TSX’s total return last year, compared with a gain of about 8.1 per cent for the index without dividends. You can use this method to calculate the index’s total return for any time period.

If you want to find total returns for individual Canadian stocks, check out the compound returns calculator at Total returns for U.S. stocks can be found at, which stands for Don’t Quit Your Day Job.

The BMO Covered Call Canadian Banks ETF (ZWB-T) has an annual dividend yield of 7.5 per cent, based on the most recent monthly distribution. How can this be when the Big Six banks yield, on average, a little more than 5 per cent?

The answer is in the ETF’s name – specifically the words “covered call.” To generate additional income, the fund sells call options on a portion of its underlying bank shares. A call option gives the buyer the right to purchase a stock at a specified “strike” price before a certain date. (They’re referred to as “covered” calls because the ETF owns the stocks on which the options contracts are written, as opposed to “uncovered” or “naked” calls, in which the option seller does not own the stocks.)

Selling options generates additional income for the fund, which allows it to pay a fatter yield. The downside is that, in a rising market, the fund will have more of its stocks “called away” if the market price rises above the strike price. This is why covered call ETFs tend to do best in flat or falling markets and underperform when stock prices are rising. Keep that in mind, especially now that interest rates appear to have peaked and many beaten-down dividend stocks, including banks, have posted double-digit gains in the past few months.

E-mail your questions to I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.

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