Just found this question answered from a globe and mail article...

Can I move stocks from a registered retirement savings plan to a tax-free savings account?

Yes, you can transfer shares from an RRSP to a TFSA, but it’s a two-stage process and there are tax implications.

First, you must withdraw the shares from your RRSP to a non-registered account. When you make an RRSP withdrawal, whether of cash or an “in-kind” transfer of shares, the amount will be added to your income for that year. As a result, the financial institution will hold back some tax: 10 per cent for withdrawals up to $5,000, 20 per cent for amounts from $5,000.01 to $15,000, and 30 per cent for withdrawals of more than $15,000. (Withholding tax rates are different in Quebec.)

If you don’t have enough cash in the account to cover the withholding tax, you’ll have to sell some investments and possibly pay a commission. What’s more, you may have to pay a deregistration fee. At my discount broker, it’s $25. Once the shares are in your non-registered account, you can contribute them to your TFSA. Because of the tax consequences, you must carefully weigh the costs and benefits of making an RRSP withdrawal. “You would only withdraw from an RRSP in a year where you have unusually low income, unless of course you need the money,” said Derek Moran of Smarter Financial Planning in Kelowna, B.C.

full link here...

http://www.theglobeandmail.com/globe-investor/investor-education/be-mindful-of-taxes-when-making-transfers/article15355199/