TFSA 2016

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gsp_
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TFSA 2016

Post by gsp_ »

Dumb discount broker practical consideration question for those with more experience than I trading in TFSA accounts:

A relative's account I manage at TDDI has HXT in her cash account. In the new year she'll have enough TFSA room to move this asset to her TFSA. It's in a cap loss position so I don't want to transfer it in. I'd also like to switch products(XIC) since the swap structure is no longer necessary. Is there any way to maintain her exposure to CAD equities throughout this process or must she be out of the market while we wait for 3 day settlement in her cash account? I was hoping to sell/buy instantly with both trades settling in 3 days but was told funds must be in the TFSA account before buying.

She does not have funds laying around and it sounds like a PITA for me to loan her the funds from one of my TD accounts(branch visit and forms to fill out!).

Also, how do forum members without a bank account at their brokerage's affiliated bank get money out of their cash brokerage account and into their outside bank? I'm used to the convenience of moving funds in real time through all my accounts at TD and equity trades not having to be settled before 3 days so this stuff seems needlessly annoying. Don't want to have to pick up a cheque in branch and pay a fee. I can lend her the funds at her bank and she can send money in by bill payment but how do we then get the HXT proceeds out 3 days later?

Thanks and happy New Year.
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AltaRed
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Re: TFSA 2015

Post by AltaRed »

Scotia iTrade also requires the cash to be in the account before making the purchase so I think the only way to do as you suggest is to buy XIC in non-registered first and then transfer to the TFSA.

As for getting money out of a brokerage account to a bank account in a different institution, some brokerages like iTrade allow one to set up an EFT to accomplish that (I did that to go from ITrade to CIBC). BMOIL allows one to set up a MyLink chequing account that is associated with the brokerage account and that allows one to use Bill Pay to move funds out. So it varies by brokerage.
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Re: TFSA 2015

Post by kcowan »

AltaRed wrote:BMOIL allows one to set up a MyLink chequing account that is associated with the brokerage account and that allows one to use Bill Pay to move funds out. So it varies by brokerage.
TDCT also allows bill payment links. The best thing is to go online and do a search to see if her bank allows it. You can also make a temporary margin loan from your TDDI account rather than do the loan paperwork.
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Re: TFSA 2015

Post by gsp_ »

Thanks for the replies.
AltaRed wrote:I think the only way to do as you suggest is to buy XIC in non-registered first and then transfer to the TFSA.
Interesting suggestion, hadn't really considered that. Not sure I want to deal with transfer in valuations, possible cap gain reporting or non standard TFSA contribution amount/leftover change in the account.

kcowan wrote:TDCT also allows bill payment links. The best thing is to go online and do a search to see if her bank allows it. You can also make a temporary margin loan from your TDDI account rather than do the loan paperwork.
Her bank(CIBC) allows her to transfer into TDDI, my question relates to getting money out of a TDDI cash account and into CIBC bank. Her RRIF sends monthly payments to CIBC, can a link be setup on TDDI's end to transfer cash out to an external bank in WebBroker just like I can send funds to my TDCT accounts? Obviously not real time but that's not an issue.

I don't understand how the margin loan would work here or the costs involved.
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Re: TFSA 2015

Post by pmj »

gsp_ wrote:
AltaRed wrote:I think the only way to do as you suggest is to buy XIC in non-registered first and then transfer to the TFSA.
Interesting suggestion, hadn't really considered that. Not sure I want to deal with transfer in valuations, possible cap gain reporting or non standard TFSA contribution amount/leftover change in the account.
I also think that's a neat solution.
At TD, when transferring a stock from an RRSP to a TFSA, if you make the transfer after trading has closed for the day, you can choose any value during the day for the value of the transfer. Unless the market had a crazy few days, this should cover any likely gain (or maybe create more loss!). I'd assume the same process would be available for a transfer from a cash account? You'd also be able to transfer any leftover cash at the same time.
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Re: TFSA 2015

Post by Shakespeare »

At TD, when transferring a stock from an RRSP to a TFSA, if you make the transfer after trading has closed for the day, you can choose any value during the day for the value of the transfer.
Didn't CRA cut down on that a few years ago after some people used exaggerated valuations to boost the TFSA? In fact, IIRC the RRSP/TFSA transfer was halted. Has it been re-opened?
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Re: TFSA 2015

Post by snowback96 »

pmj wrote:At TD, when transferring a stock from an RRSP to a TFSA, if you make the transfer after trading has closed for the day, you can choose any value during the day for the value of the transfer. Unless the market had a crazy few days, this should cover any likely gain (or maybe create more loss!). I'd assume the same process would be available for a transfer from a cash account? You'd also be able to transfer any leftover cash at the same time.
Hmmm, this has me thinking. I want to transfer a non-registered REIT into my TFSA at BMO-IL. The closing price on Dec 31 is almost perfect to transfer in my entire holding and use almost all my contribution room. On the other hand, if the REIT moves up as little as 0.9% on Monday, the holding will be too large to transfer in its entirety.

Does anyone know if I can call BMO-IL early on Monday (before markets open) and contribute the stock at the Dec 31 closing price? This would be ideal and provide price certainty.
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Re: TFSA 2015

Post by pmj »

Shakespeare wrote:
At TD, when transferring a stock from an RRSP to a TFSA, if you make the transfer after trading has closed for the day, you can choose any value during the day for the value of the transfer.
Didn't CRA cut down on that a few years ago after some people used exaggerated valuations to boost the TFSA? In fact, IIRC the RRSP/TFSA transfer was halted. Has it been re-opened?
I know that something was restricted, but I don't know the details. I have made RRSP to TFSA transfers at TD each year for about 4 years. You can only choose from within the low - high range for the previous trading day.
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Re: TFSA 2015

Post by Koogie »

pmj wrote:
Shakespeare wrote:
At TD, when transferring a stock from an RRSP to a TFSA, if you make the transfer after trading has closed for the day, you can choose any value during the day for the value of the transfer.
Didn't CRA cut down on that a few years ago after some people used exaggerated valuations to boost the TFSA? In fact, IIRC the RRSP/TFSA transfer was halted. Has it been re-opened?
I know that something was restricted, but I don't know the details. I have made RRSP to TFSA transfers at TD each year for about 4 years. You can only choose from within the low - high range for the previous trading day.
Current CRA wording....
"""Transfer from your RRSP
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. The tax withheld on the withdrawal, can be claim at line 437 of your income tax and benefit 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 TFSA is deferred, the amount of the contribution will be the FMV of the investment at the time of that contribution.

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). For more information, see the definition Swap Transactions.""
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... s-eng.html
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Re: TFSA 2015

Post by max88 »

Koogie wrote: Current CRA wording....
Transfer from your RRSP
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. The tax withheld on the withdrawal, can be claim at line 437 of your income tax and benefit 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 TFSA is deferred, the amount of the contribution will be the FMV of the investment at the time of that contribution.

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). For more information, see the definition Swap Transactions.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... s-eng.html
This may have been discussed before... how is the "withholding tax" withheld when the withdrawal/transfer is in-kind? Does CRA require cash equaling withholding tax debited somewhere?
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Re: TFSA 2015

Post by pmj »

max88 wrote:This may have been discussed before... how is the "withholding tax" withheld when the withdrawal/transfer is in-kind? Does CRA require cash equaling withholding tax debited somewhere?
Speaking only for TDDI, you have to have enough cash in your account on the day of the transfer to pay the tax. And you have to remember that the tax is calculated as the prescribed rate * (transfer + tax). And it's also (transfer + tax) that triggers each tax rate threshold.
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Re: TFSA 2015

Post by BRIAN5000 »

These may be simple questions

TFSA contributions can only be made by the plan owner what is the purpose of this restriction?

So I can't send money from my account to my wife's TFSA, if I do what's the penalty?
I write a check to the wife she puts it in her account and then into her TFSA :roll:

Is this the same for RRSP contributions?
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Re: TFSA 2016

Post by Peculiar_Investor »

Brian, while CRA's TFSA Contributions states:
CRA wrote:As the account holder you are the only person who can contribute to your TFSA. You can give your spouse or common-law partner money to contribute to their own TFSA without having that amount, or any earnings from that amount being attributed back to you, but the total contributions you each make to your own TFSAs cannot be more than your individual TFSA contribution room.
in my experience this isn't strictly enforced. Over the past year or so I've done a number of contributions to my spouse's TFSA and children's TFSA that have been readily accepted by banks.

I have no idea why CRA has worded things this way.
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Re: TFSA 2016

Post by ghariton »

Peculiar_Investor wrote:in my experience this isn't strictly enforced.
How could it be? As Brian says, I transfer money from my savings account to a joint savings account, then from the joint savings account to her savings account, then from her savings account to her TFSA. (I have trading authority in her accounts.) I don't really need the second step, but I believe it keeps TD off my back. When I told a TD employer what I was doing, she blanched and said she was going to pretend she hadn't heard that.

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Re: TFSA 2016

Post by AltaRed »

George, I think if one uses Bill Pay from a bank account (person 1) to an investment account that is in the name of Person 2, there is no institutional electronic check from Person 2's account of who the owner of Person 1's account is.

Now if a cheque was written, that might be an entirely different story.
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Re: TFSA 2016

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AltaRed wrote:George, I think if one uses Bill Pay from a bank account (person 1) to an investment account that is in the name of Person 2, there is no institutional electronic check from Person 2's account of who the owner of Person 1's account is.

Now if a cheque was written, that might be an entirely different story.
Got a call from TDDI saying I can't go from my account to wife's TFSA several months after it was done so they knew both account holders, all electronic. Thought it was a TDDI rule.
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Re: TFSA 2016

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Peculiar_Investor wrote:Brian, while CRA's TFSA Contributions states:
CRA wrote:As the account holder you are the only person who can contribute to your TFSA. You can give your spouse or common-law partner money to contribute to their own TFSA without having that amount, or any earnings from that amount being attributed back to you, but the total contributions you each make to your own TFSAs cannot be more than your individual TFSA contribution room.
in my experience this isn't strictly enforced. Over the past year or so I've done a number of contributions to my spouse's TFSA and children's TFSA that have been readily accepted by banks.

I have no idea why CRA has worded things this way.
Yup might be one of those things that's just enough to trigger an adult. I like to follow the rules if I can figure out what they are.
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Re: TFSA 2016

Post by patriot1 »

Peculiar_Investor wrote:I have no idea why CRA has worded things this way.
Because the owner of the TFSA is liable for penalties for overcontributions. They have to legally restrict the authority to make contributions to the owner so the owner can be held responsible.
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Re: TFSA 2016

Post by Peculiar_Investor »

Thanks, that makes sense.
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Re: TFSA 2016

Post by longinvest »

I've been reading this thread with interest. I knew that I could pay 100% of our expenses and let my wife invest all of her net salary. I didn't know that I could reimburse her paycheck deductions. I thought that she would be considered as having paid the deductions and any reimbursement would be considered a gift, subject to attributions rules.

Is there an official Canada Revenue Agency (CRA) document that explains that it is OK to reimburse my spouse's expenses? What is the allowed time-frame for the reimbursement not to fall under attribution rules?

I guess that she would have to reimburse me any excess reimbursement when she gets a tax refund. That's a lot of fun for record keeping!

Isn't this a perfect recipe for problems, in case of a CRA audit?


I moved my question to the appropriate threads: Re: Income Splitting
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Re: TFSA 2016

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gsp_ wrote: A relative's account I manage at TDDI has HXT in her cash account. In the new year she'll have enough TFSA room to move this asset to her TFSA. It's in a cap loss position so I don't want to transfer it in. I'd also like to switch products(XIC) since the swap structure is no longer necessary. Is there any way to maintain her exposure to CAD equities throughout this process or must she be out of the market while we wait for 3 day settlement in her cash account? I was hoping to sell/buy instantly with both trades settling in 3 days but was told funds must be in the TFSA account before buying.
If her cash account were a margin account, and she has enough margin, she could immediately make the cash transfer without actually selling HXT yet. Once the cash arrives in TFSA she can sell HXT to flatten the margin and buy XIC immediately. Risks:
- If HXT goes down during the 3 days, the difference will be a negative balance on her margin account. If she adds new money regularly this is not a big issue.
- If HXT goes up, not a problem aside from realizing a smaller capital loss.
- A couple days of margin interest which is usually not going to add up to much.

She could sell HXT, buy XIC in non-registered and then initiate the transfer on XIC. Tax risks:
- If XIC goes up, a one-time capital gain is triggered. But compared to being out of the market for 3 days, a capital gain is still better than missing out right? Also this would be easily compensated by the capital loss on HXT.
- If XIC goes up, the contribution could accidentally exceed the limit so leave some leeway here.
- If XIC goes down during this time, the extra capital loss cannot be captured. But on the plus side, she consumes a bit less TFSA room transferring it in.
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Re: TFSA 2015

Post by adrian2 »

BRIAN5000 wrote:These may be simple questions

TFSA contributions can only be made by the plan owner what is the purpose of this restriction?

So I can't send money from my account to my wife's TFSA, if I do what's the penalty?
I write a check to the wife she puts it in her account and then into her TFSA :roll:

Is this the same for RRSP contributions?
From my perspective, in which most of my family's investments are with TD Waterhouse but none of the personal banking accounts are with them, it's easy-peasy: money going into TDW travels in the form of bill payments initiated from the "other" bank.

Same as AltaRed, no questions asked by TDW where the money is coming from.
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Re: TFSA 2016

Post by BRIAN5000 »

patriot1 wrote:
Peculiar_Investor wrote:I have no idea why CRA has worded things this way.
Because the owner of the TFSA is liable for penalties for overcontributions. They have to legally restrict the authority to make contributions to the owner so the owner can be held responsible.
So it would be the same for an RRSP then?
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Re: TFSA 2015

Post by gsp_ »

gsp_ wrote:Her bank(CIBC) allows her to transfer into TDDI, my question relates to getting money out of a TDDI cash account and into CIBC bank. Her RRIF sends monthly payments to CIBC, can a link be setup on TDDI's end to transfer cash out to an external bank in WebBroker just like I can send funds to my TDCT accounts? Obviously not real time but that's not an issue.

To answer my own question, spoke to TDDI today. A link can be made to EFT out to an outside bank but it requires filling out an EFT form in branch along with a void cheque. They can't just duplicate the RRIF link "since it's a different account". Takes about a week to be setup. No online transferring ability, withdrawals must be done by phone.

It it was my money I'd just stay out of the market 3 days to avoid the hassles but she has chosen to visit the branch and fill out the form. I'll lend her the funds for a week or so.

BTW the TDCT concept of a personal payee where you can add a friend or family member's TDCT account to your bill payment list and send them funds electronically for free does not exist at CIBC so that's a branch visit each.
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Re: TFSA 2016

Post by optionable68 »

Here's a question I can't seem to find the seemingly simple answer for:

Mrs. Senior Spouse has maximized her TFSAs since inception. Now, lets say Mr. Senior Spouse has been lazy and has deposited just $10,000 into a TFSA since inception with no withdrawals, and then dies having previously willed and named Mrs. Senior Spouse as successor holder. Given the total allowable deposits as of today should have been $46,500, does the Ms. Senior Spouse get not only the $10,000 (plus earned int) but also the remaining $36,500 in contribution room?
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