How to (legally) evade capital gains tax on stock

This doesn't work. 

Method:

Essentially, the profits made on your margin account can be funneled into your TFSA. See below for explanation.

THIS ONLY WORKS ON MARGIN ACCOUNT, NOT CASH ACCOUNT, BECAUSE IT REQUIRES SHORTING (momentarily.)

Very simple concept, I will use example:

If you make a (realized) profit on $AAPL in your margin account of $5000, normally 50% of $5000 is taxable at your marginal tax rate. This strategy will reduce your taxable capital gains to zero.

These are the four steps to pay 0 tax on your $5000:

Find a very illiquid stock that has very little volume (eg. CNSX: SQUID)

eg. Currently for SQUID, the Bid is $0.315 and the Ask is $0.55.

1) In your TFSA, put limit buy at $0.35. 

2) In your margin account, put limit sell at $0.35. 

Essentially you are selling stock to yourself. You shorted with your margin, and went long in your TFSA.

WAIT 30 DAYS. Otherwise wash sale rule applies and tax deduction doesn't apply.

3) In your margin account, put limit buy for $0.50. 

4) In your TFSA, put limit sell for $0.50. 

Done. Now you don't have to pay tax.

What does this mean? What did we do?

Essentially in your margin account you bought shares for $0.50 and sold for $0.35, taking a 

net loss of $0.15/share. 

In your TFSA, you bought at $0.35 and sold for $0.50, taking a net gain of $0.15/share. 

Do this with however many shares you need to offset your capital gains in your margin account.

Then the $5000 that you technically lost, can be deducted from the capital gains for $5000 that you got from apple. No tax paid. (all the profits funneled into TFSA)

Risks: Someone might come in and sell at your bid, or buy at your ask. You don't want anyone interfering with your trade while you're doing it, that's why you must do it quickly, and only works on illiquid stocks that trade rarely (low/no volume) (eg. SQUID).

Even if the stock price moves up or down in the 30 days that you're waiting, as long as there is a bid ask spread, you can sell back to yourself and cover your short position. No loss.

The only cost of this method is $40 in commissions, because there are four trades ($10/trade.) Or would you rather pay thousands in taxes? And also the interest rate on the short position that you will be holding for one month. 

Another risk: Risk of short squeeze, if the stock price starts to violently go up, sell back to yourself and close your short position so that you don't have to buy back unfavorably. Try with another stock. Usually shouldn't happen to illiquid stocks with no volume. 

Reason you need a margin account, is because you cannot short in TFSA.