Here is the direct quote form CRA:

You can also make “in kind” contributions (for example, securities you hold in a non-registered account) to your TFSA, as long as the property is a qualified investment.

You will be considered to have disposed of the property at its fair market value

(FMV) at the time of the contribution. If the FMV is more than the cost of the property, you will have to report the capital gain on your income tax return. However, if the cost of the property is more than its FMV, you cannot claim the resulting capital loss. The amount of the contribution to your TFSA will be equal to the FMV of the property.

If you want to transfer an investment from your RRSP to your TFSA, you will be considered to have withdrawn the investment from the RRSP at its FMV, and that amount will be reported as an RRSP withdrawal, and included in your income in that year. Tax will be withheld on the withdrawal, which can be claimed on your tax return. If the transfer into your TFSA takes place immediately, the same value will be used as the amount of the contribution to the TFSA. If the contribution to the FSA is deferred, the amount of the contribution will be the FMV of the investment at the time of that contribution.

However

, under proposed changes

announced on October 16, 2009, you cannot exchange securities for cash, or other securities of equal value, between your accounts, either between two registered accounts or between a registered and a non-registered account (swap).

The guide to TFSAs can be found here: