How you can use a TFSA to reduce your taxable income.

   I had a thought in the early days of my Stock Market adventures... was it possible to use dividends from my TFSA to help cover my monthly expenses then shift stocks from my Cash (unregistered) account to my TFSA (the following year) to maximize my TFSA contributions and minimize my taxable income? At that point it was just a vague idea and being new to investing I didn't follow up on it, but that idea would resurface every once in a while.

   Based on my previous work experience I know that when I have an idea which keeps popping up, there's probably something to it and I should have a closer look. So, a few months later when the idea was better formed I sat down with a spreadsheet and started to "play". As you can see from the spreadsheet, taxable dividends from the Cash account can eventually drop to zero while increased dividends in the TFSA account offset that reduction.

   It turns this idea does work, but only if your monthly expenses are greater than your earned and/or other income. As was my situation when there were cut-backs at work and I was reduced to working part-time for quite a while.

For this to work, the following conditions and assumptions were used:

   The values shown in the spreadsheet are not my mine, they're simply for demonstration purposes. The spreadsheet can be downloaded here if you'd like to play with it.

   This idea is still very much a work-in-progress. Let me know if you have any comments, suggestions, etc.

  I am not an investment or tax professional and I'm not responsible for the content of external webpages. The information in this document is not intended to be educational, nor does it constitute financial or tax advice. It is simply an outline of my personal experience, investing philosophy and things I've learned along the way.