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transfer between tfsa (between different institutions)
March 14, 2010
9:23 am
jacks
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September 21, 2009
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Maxed out my tfsa. I see that ing direct and ally have no transfer fees. Ing direct has a better (promo) rate than ally. Thinking that since I just linked up the accounts (online), could do a eft between them. Then just do an eft when ing drops back down to their 1.x % rate.

Not sure if this would be considered a withdrawal and contribution. Not worth the hassle of having to print up forms, fill them out, mail off, wait for money to be transferred. By the time that all happens, the interest difference would be minimal.

March 14, 2010
3:43 pm
guest
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transfers are not considered withdrawals

March 14, 2010
5:27 pm
Doug
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What you describe is considered a "withdrawal" and subject to annual maximum contribution limits. If you'd "maxed out" your contribution room for the year and prior years, you'd not be able to recontribute until 2011. You can do a transfer this way, to avoid transfer fees, but the trick is to withdraw it near the end of December and recontribute in early January.

Cheers,
Doug

March 14, 2010
5:53 pm
guest
Guest

a tfsa transfer between institutions is not a withdrawal. you can do this little maneuver and make a few bucks if both institutions don't charge a transfer-out fee as you say. but you can't withdraw funds from one tfsa to fund another in the same year unless you have the contribution room to do that.

March 15, 2010
2:27 am
jacks
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September 21, 2009
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It's just that they have special forms to fill out, so that is what I curious about. I have several accounts linked together and transfer money regularly. But would this be the same situation between the tax free accounts? Or do I have to use their forms since there might be extra labour on their part involved? As in it might not be just a simple transfer… I think I might wait till the cra website can actually track these transactions. Right now, login, says I'm maxed out. Click on transactions or something like that and seems that this option is unavailable right now. I guess right now it's only 1% difference for the few months that promo will be active. So not a huge deal.

Would only transfer between ally and ing because of the no fees involved.

March 15, 2010
12:26 pm
guest
Guest

if the cra says that you've maxed out your contributions for 2010, then you can't withdraw money from one tfsa in 2010 and put it in another tfsa in 2010. that would be considered a tfsa contribution and the cra would start charging you a 1% monthly penalty on every penny you are over your contribution limit. you can however transfer your tfsa ACCOUNT from one institution to another without incurring a penalty because you're not actually withdrawing anything. the forms you talk about are standard forms that all banks have you fill out when you want to transfer an account from one institution to another. you fill out the receiving institution's forms (the bank that will be receiving your account), and that bank then initiates the transfer process with the bank where your tfsa is currently held. the forms are easy to fill out (maybe 5 minutes of your time), and after you send them to the receiving institution it takes a few weeks for the account to be transferred provided you filled the forms in correctly and your account at your current institution is in good standing. all you really need to do is look for instructions for transferring a tfsa on the website of the bank where you want your tfsa account to be sent to. it's really quite straightforward.

March 15, 2010
1:29 pm
jacks
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September 21, 2009
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No offence, but everyone seems to keep repeating the same thing. I did say that I maxed it out. I do realize that I cannot withdrawal and depoist till next year or pay a penalty.

What I wanted to know is that if a standard electronic fund transfer would be considered a transfer or withdrawal/deposit.

Only because there are special forms to fill out (like rsp transfer). As opposed to just being able to transfer funds like I would normally do between my several accounts at different institutions. As in the transfer would be done within the 5 standard business days.

If it does take a few weeks to do the actual transfer (processing time I assume as opposed to money actually withdrawal from one account and no where to be found for a few weeks), then not worth it. Since the promo rates usually don't last more than a few months.

March 15, 2010
2:23 pm
guest
Guest

when you withdraw money from an account, it's a withdrawal. it doesn't matter HOW you withdraw the money (eft, cheque, wire transfer, etc…), a withdrawal is a withdrawal. so "yes", an eft is considered a withdrawal, and in your case cra will start charging you 1% monthy interest if you do an eft withdrawal from a tfsa then contribute to a tfsa in the same year.

no offense, but this is all spelled out in previous posts in this thread.

March 16, 2010
4:56 pm
jacks
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September 21, 2009
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I never really paid to close attention in general. Didn't realize that a transfer would considered a withdrawal from one account and deposit into another. I guess it is true in the technical sense in general. For any transaction. Never really thought about it, since always paying taxes on the money anyway, no matter which account 'transferred' to. Although I guess credits or debits should have been the key :) On that note, I get 15 free debits on my chequing account. Was confused for a long time if it meant 15 transactions (withdrawals) or 15 debit card usesages.

March 19, 2010
12:45 am
Doug
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I work in a bank and people get confused when you refer to "withdrawals" as "debits" but also your bank card as a debit card so they think that debits only mean ABM cash withdrawals or point-of-sale purchases. When banks refer to chargeable debit transactions, it generally means every transaction where you debiting your account (decreasing your balance or increasing it if it's a line of credit/overdraft). Some banks will give you Internet banking transfers between accounts as free (not-chargeable) debit transactions but again you need to read their Statement of Disclosure.

Cheers,
Doug

March 22, 2010
9:05 pm
Sean
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11

Did anyone get a receipt for their TFSA contributions yet? I haven't got anything.

I guess CRA can keep track of the accounts as each TFSA is "registered" with them.

March 23, 2010
12:07 am
guest
Guest
12

no receipts yet, but when i log into my cra account they have my contributions/withdrawals and contribution room there. data is acccurate too…

March 23, 2010
5:30 am
jacks
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September 21, 2009
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Haven't seen mine either. Hope they don't go and start charging me tax on that $10 in interest so far :)

I went online, said my limit was maxxed out. But wouldn't show me anything further when I try to click through.

March 25, 2010
6:26 am
jacks
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September 21, 2009
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Sean said:

Did anyone get a receipt for their TFSA contributions yet? I haven't got anything.

I guess CRA can keep track of the accounts as each TFSA is "registered" with them.


I'm wondering if it is the same as regular interest accounts. Institutions don't have to send off a (t5?) investment interest form if the funds are under $50. Basically meaning, if you make under $50 interest a year on any one account, it's not taxed anyway.

March 25, 2010
2:10 pm
Doug
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TFSAs won't generate a T5 as the interest income earned inside the TFSA is tax-free. If you over-contribute, you are subject to a penalty tax instead. So, you should not expect a T5 for your TFSA.

As well, if all of your accounts at a single institution generate less than a certain amount, usually $50, you are correct they don't send a T5. However, you are still required to report all interest income to the Canada Revenue Agency either by estimating the amount or adding up your interest paid in each month. If you choose not to, that's fine too. CRA chooses to ignore amounts in a certain value anyway and they generally don't audit people with such small tax returns either.

Cheers,
Doug

March 25, 2010
2:12 pm
Doug
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Institutions don't send any notices like RRSPs either, indicating what you contribute. It's up to you to track through CRA's My Account service. That's why you haven't got anything – and you won't.

Cheers,
Doug

May 8, 2010
3:14 am
silencer
Toronto
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May 7, 2010
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jacks said:

No offence, but everyone seems to keep repeating the same thing. I did say that I maxed it out. I do realize that I cannot withdrawal and depoist till next year or pay a penalty.

What I wanted to know is that if a standard electronic fund transfer would be considered a transfer or withdrawal/deposit.

Only because there are special forms to fill out (like rsp transfer). As opposed to just being able to transfer funds like I would normally do between my several accounts at different institutions. As in the transfer would be done within the 5 standard business days.

If it does take a few weeks to do the actual transfer (processing time I assume as opposed to money actually withdrawal from one account and no where to be found for a few weeks), then not worth it. Since the promo rates usually don't last more than a few months.


No, an EFT will be considered as a "withdrawal" and "deposit again" which is not what you want. You need to fill that "special form" for "transfer" purpose.

October 9, 2011
3:44 pm
Dan
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18

This thread is a little old but was just wondering about this too…
Taken directly from the CRA website:

If you have more than one TFSA, you can transfer funds between them without affecting your TFSA contribution room, as long as you arrange for the transfer to be done directly between the TFSAs. This would be considered as a qualifying transfer, and would have no tax consequences. If the transfer is not done directly, that is, if you withdraw the funds from one TFSA and subsequently contribute that amount to another TFSA, the subsequent contribution will be considered a separate contribution that will reduce, and may even exceed, your TFSA contribution room for the year, and as a result you may be subject to the tax on excess contributions.

(http://www.cra-arc.gc.ca/tx/nd…..s-eng.html)

October 9, 2011
11:04 pm
Peter
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From my understanding that is all correct. What are your exact source(s) of confusion ("all of it" is a possible answer too!)?

October 10, 2011
7:51 pm
Yatti420
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20

Print the receiving institution's tfsa transfer form.. Then it will be a "transfer" and not a withdrawal and then a deposit.. See yal..