TFSA, stocks, and taxation - a tricky question

Hey!

Quick question about TFSAs. So I know that based on the 2009 changes to the TFSA, you can't contribute more to a TFSA per year than is allowed for that year even if you make 'withdrawals' that year (there's lots of information about this rule on the net).

BUT... what is a 'withdrawal'? Here's a scenario: Let's say you have $10000 worth of contribution room in 2010 and you put it all in a questrade TFSA (or any generic online trading TFSA) and invest it all in stock A. That same year, the stock value goes up so your stock are now worth $15000. You decide to sell the stocks because you expect it to drop and buy $15000 worth of shares in stock B (all in 2010).

So here's the question... does this constitute an over contribution? Is a withdrawal from your TFSA classified as (a) the actual selling of the stock OR (b) withdrawing cash from the amount. If it's the former, then my scenerio results in an over contribution. If it's the latter, then i haven't over contributed... and I can buy and sell shares within a TFSA in a single year without over contributing.

Tried to find the answer to this question and couldn't find it. Really appreciate your help! 


No it doesn't constitute as an over contribution.

b) Doesn't matter what you do in the account, what matters is what you transfer into the account and what you transfer out of it. Buying/selling stocks in a TFSA doesn't put money in or take money out of the account.

To clarify, a withdrawal would be considered as a transfer of cash or a security out of a tfsa to a non-tfsa.