TFSA confusion

Q – If I book a loss on my investments in my TFSA, can I make up the difference next year? – Kyle Storey, Prince George, BC

A – I assume you are talking about a capital loss within a TFSA. In that case, the answer is no. You do not generate any additional contribution room if your TFSA investments lose money. In that regard, the rules are the same as for RRSPs.

Q – Can term deposits held in a TFSA be used as collateral to secure a personal loan? – P. Collyer

A – Yes. Unlike RRSPs, Tax-Free Savings Accounts can be used as loan collateral. Talk to the financial institution that holds the plan to arrange this.

Q – I recently opened TFSA account with Scotia iTrade. I am an amateur day trader. I would like to do day trading with this account but I have few questions on it.

1. Under tax regulation day-trading is considered as regular business activity against capital gains. But in a TFSA articles I have read mention nothing about the time frame of trading. So is it ok to do day-trades?

2. Is there any restriction or limit on how much profit I can get?

3. Can I reinvest the money when I get the profit out of my trade? – Nithy

A – Good luck on the day trading. It's a risky business. But yes, if you make profits within your TFSA, they are all yours to keep and there is no cap on gains. You can reinvest the money from any trade within the plan. Just don't make the mistake of withdrawing it and then redepositing in the same year.

Q – If you have stocks in your TFSA that pay a dividend, if you reinvest the dividends does it count against your contribution limit? – Cathy

A – No. Any profits can be reinvested within a TFSA without penalty.