Found this article which offers an explanation of what happens:
In-Kind Transfers of Securities
Income Tax Act s. 39(1)(a), 248(1)
Securities are transferred from a non-registered investment account into a registered retirement savings plan (RRSP), registered disability savings account (RDSP), tax-free savings account (TFSA), or registered retirement income fund (RRIF).
In this case, the deemed proceeds will be the market value of the securities at the time of transfer to the registered account. Note that if a loss has occurred in the transfer to an RRSP, RDSP, TFSA or RRIF, it will not be deductible for tax purposes. See our article Transfer shares to a registered account, but not at a loss.
You would update the ACB of the in the remaining shares (the non-transferred ones) as if you'd made a sale in a foreign currency:
When calculating the capital gain or loss on the sale of capital property that was made in a foreign currency:
- convert the proceeds of disposition to Canadian dollars using the exchange rate in effect at the time of the sale
- convert the adjusted cost base of the property to Canadian dollars using the exchange rate in effect at the time the property was acquired
- convert the outlays and expenses to Canadian dollars using the exchange rate in effect at the time they were incurred
You will have to call in your brokerage and send them transfer instructions. They should be able to quote you a fair market value per unit, a transaction fee, and an exchange rate. (the transfer will likely be done later, but at the value you got quoted)
You then update your TFSA contribution limit based on the canadian dollar amount of the transaction. If it is not quoted to you by the brokerage when you call in the transfer, the CRA provides some guidance to establish a conversion:
The foreign exchange rate used to convert the foreign currency transaction into Canadian dollars is either
- the rate in effect on the date of the transaction, or
- the average annual exchange rate for the taxation year
as quoted by the Bank of Canada on the particular day or on the closest preceding day for which a spot rate is quoted, as per the definition of "relevant spot rate" in s. 261(1) of the Income Tax Act.
When assets, including investments, are purchased or sold, the exchange rate in effect on the date of the transaction should be used. Dividends received throughout the year can be converted at either the transaction date rate or the average annual exchange rate for the taxation year, but the method used should be consistent from year to year.
_Source: https://www.taxtips.ca/filing/reporting-foreign-transactions.htm#:~:text=Converting%20Foreign%20Amounts%20to%20Canadian%20Dollars _