I saw this idea in Reddit comments by u/differing:

I often wish I invested early in the weed stock bubble in my TFSA, not so much for the returns but more to supercharge my TFSA room and transition into more conservative investments. Obviously hindsight is 20:20

If you withdrawn when your volatile investment is very high (hehe), you get back that contribution room the following year.

You can then invest in lower risk stuff and pad a $100k+ TFSA full of index funds, bonds, etc.

Am I right that you can legally outstrip the original contribution room?

With the TFSA limit at $6,000 for next year, the total room available in 2019 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009 is $63,500.

I'm not asking anything illegal, like this Reddit thread on Louie v. Canada (2019) FCA 255. This comment ELI5s why it's illegal.

Suppose there are 2 stocks, A and B, which both finish the day at $5 per share and traded between $4-6 during that day with the exact same price throughout the day. She had stock A in her TFSA and B in regular trading account.

If she wanted to swap honestly, she could swap out 1A for 1B as they both closed at $5.

However, as she was able to choose the price she swapped out A at $6 and B in at $4. This is 1A for 1.5B. Because she now has 1.5 B at $5 market price, her TFSA portfolio is worth $7.50 instead of $5 and she created an artificial $2.50 of room at no risk.

1 Answer 1


You are correct that as of 2019, the total room for contributions, for someone who has never contributed, is $63,500. If someone contributed right from the beginning and invested cautiously, you'd expect them to have considerably more than $63,500 in their TFSA. The gains are sheltered from taxes.

So, for example, someone carefully invested the full amount each year in a mutual fund or ETF that was made up of a mix of stocks and bonds. You could reasonably expect they'd have $80,000 - $90,000 by now. Remember, they are contributing money each year into investments, and the returns on those investments are tax-free.

Now, if they had $80,000 as of 2018 and withdrew all of it last year for some reason, they'd be able to contribute it all back this year, all $80,000 plus an additional $6000 contribution room for 2019. If they had invested in volatile stocks, they might have considerably more than $80,000. But of course, they might also have considerably less than that, too. That's the risk with volatile stocks. Or alternatively, they could sell the volatile stocks inside the TFSA and instead, invest it in more sensible mutual funds or ETFs.

This is all completely legal. The only part that is in any way dubious is that you don't normally want to withdraw money from your TFSA. It's not illegal or anything, it's just that this money is meant to be for retirement. Don't forget, you can't replace any withdrawals until the next calendar year. And I'm not sure your retirement savings is the right place to take extreme risk, but that's up to you.

  • 4
    Who says TFSA is only for retirement? I could see someone using it to save for a down payment for a house, then it's reasonable to think they would withdraw most or all of it at once.
    – JBGreen
    Oct 28, 2019 at 14:34

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