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Comtech CU in ON have promo GIC for investment $10000 and above
October 19, 2016
7:23 am
Jon
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New investment of $10000 and above have 2.25% for 18 month GIC and 2.75% for five years GIC, apply to TFSA and RRSP.

Too bad I max out my limit for TFSA, I will try in-kind transfer by January through, and beware that interest rate appears to start to increase (Japan - "steepen the yield curve", ECB - rumors of slowly closing down QE, US - raise rate by December, only exception is BOE as Brexit is wrecking havoc).

October 19, 2016
5:04 pm
Loonie
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Thanks, Jon.
Only open to residents of Ontario.

There may be more offers by January. I note that this one was posted at the end of June, so may or may not last until then.

October 19, 2016
7:36 pm
Jon
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Thanks Loonie, i just want to ask have you try a in kind contribution to tfsa before, as I plan to to get to GIC now and move it to inside the TFSA account by january.

October 19, 2016
9:08 pm
Loonie
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No, I haven't tried that, Jon. Maybe someone else has. I believe CRA has a rule about it but don't know if they're for it or against it. Assuming it is allowed, the issue might be to make sure that you have the exact value of your GIC as of the date of transfer. Otherwise you might accidently deposit too much into TFSA. I'm not sure how that value would be determined since you would not yet have received any interest. Maybe it wouldn't matter, but I would want to be sure about that before buying the GIC.

Interesting approach.

I haven't noticed any FIs offering an anticipatory TFSA account rate yet, as Tang used to do in the Fall.

EDITED TO ADD:
It appears to be permitted. http://www.taxtips.ca/tfsa/swa.....ctions.htm but all the examples have to do with transferring stocks.

October 20, 2016
3:54 pm
Norman1
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In-kind contributions to RRSP's and TFSA's are allowed by tax rules.

Value of an in-kind GIC contribution would include accrued interest. The accrued interest will need to be reported. This is from RBC Dominion Securities: Making Contributions to Your RRSP:

Contributions Made by Securities

If you don't have the cash to make your RRSP contribution, you can contribute eligible investments from outside your RRSP at their fair market value. For tax purposes, investments transferred into the RRSP (i.e. an in-kind contribution) are treated as if the investment was actually sold. Therefore, this transfer triggers a taxable capital gain.

Unfortunately, if the fair market value of the transferred investment is less than its original cost, the resultant capital loss cannot be claimed. Also, any accrued interest up to the transfer date must be reported as income (i.e. interest that has been earned but not paid).

Unfortunately, not all TFSA accounts are full featured and can accept an in-kind contribution. That depends on the account and the financial institution.

October 20, 2016
8:22 pm
Loonie
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So, the question might be how much interest, if any, has been "earned but not paid". This is what I was thinking about in my previous post but couldn't find the right words to explain it.
I still find it ambiguous. Has the interest been "earned" if the first year of the GIC is not yet completed? It's not cashable at that point, so it seems to me it's a matter of opinion.

Unreliable answers from CRA are legion, but you should probably ask them anyway. I think the safest thing would be to contribute slightly below the maximum TFSA contribution. If, for example, you planned to contribute $5500,then it would be safer to reduce that amount by whatever interest you would calculate as being attributable to the days between purchase of GIC and Jan 1. Then buy the GIC only for that amount. It won't be a lot of money anyway, and better to be safe than have CRA ion your case.

October 20, 2016
9:22 pm
Norman1
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Loonie said

So, the question might be how much interest, if any, has been "earned but not paid". This is what I was thinking about in my previous post but couldn't find the right words to explain it.
I still find it ambiguous. Has the interest been "earned" if the first year of the GIC is not yet completed? It's not cashable at that point, so it seems to me it's a matter of opinion.

I think the interest, for tax purposes, is "accrued interest" which is not necessarily "earned interest."

It is similar to the accrued interest, for tax purposes, of strip bonds that must be reported and taxed annually, even though there's no legal right to any funds from the issuer until maturity.

October 21, 2016
12:22 am
Loonie
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I find the language confusing. In this case, can we say that no interest has been "accrued" in less than one year into a GIC if it has annual compounding? And can we be confident that CRA would agree?

October 21, 2016
6:04 pm
Norman1
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Loonie said

I find the language confusing. In this case, can we say that no interest has been "accrued" in less than one year into a GIC if it has annual compounding? And can we be confident that CRA would agree?

For tax purposes, as well as bond trading, interest would deem to accrue daily. Each day, 1/365 or 1/366 of the next annual interest payment would accrue.

October 21, 2016
6:43 pm
JustMe2016
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Loonie said

Thanks, Jon.
Only open to residents of Ontario.

There may be more offers by January. I note that this one was posted at the end of June, so may or may not last until then.

I called them and I was told the offer expires on October 31st.

October 23, 2016
2:48 pm
Loonie
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Norman1 said

Loonie said

I find the language confusing. In this case, can we say that no interest has been "accrued" in less than one year into a GIC if it has annual compounding? And can we be confident that CRA would agree?

For tax purposes, as well as bond trading, interest would deem to accrue daily. Each day, 1/365 or 1/366 of the next annual interest payment would accrue.

So, then, my earlier advice to Jon (#4) suggesting he reduce the amount going into the GIC accordingly, would apply?

October 23, 2016
6:38 pm
Norman1
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Norman1 said

For tax purposes, as well as bond trading, interest would deem to accrue daily. Each day, 1/365 or 1/366 of the next annual interest payment would accrue.

Loonie said

So, then, my earlier advice to Jon (#4) suggesting he reduce the amount going into the GIC accordingly, would apply?

Yes, your advice would apply.

One will overcontribute if one invests $5,500 in a GIC today and contributes it to a TFSA on January 2, 2017, if one will have only $5,500 of TFSA contribution room then. CRA will consider the GIC to have a value of $5,500 plus 71 days of accrued interest.

October 23, 2016
9:05 pm
Loonie
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Thanks.
I hope Jon is still listening and hasn't bought it yet..
Others may also find this helpful.

The amount of interest on a one-year contribution would be quite small, but, still, I believe CRA dings you every month for an overcontribution, so you don't want to go there. I suppose, if necessary, you could transfer it back out again? But that defeats the whole purpose of buying it in the first place.

October 24, 2016
1:23 am
Jon
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Loonie said

Thanks.
I hope Jon is still listening and hasn't bought it yet..
Others may also find this helpful.

The amount of interest on a one-year contribution would be quite small, but, still, I believe CRA dings you every month for an overcontribution, so you don't want to go there. I suppose, if necessary, you could transfer it back out again? But that defeats the whole purpose of buying it in the first place.

Thanks! I currently have 8500 dollars of room, so it should be OK when new years come by. Although I need to give a call to Comtech to ask can they do in-kind transfer first.

October 24, 2016
11:23 am
Loonie
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Oh! Jon, you said in your original post that you were maxed out in TFSA, so I thought you would only have the 2017 new room at $5500. Perhaps you made a withdrawal in the interim.

In any event, just make your GIC for $8450 instead of $8500 and you should be fine when you transfer it.

October 24, 2016
12:39 pm
Jon
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Loonie said

Oh! Jon, you said in your original post that you were maxed out in TFSA, so I thought you would only have the 2017 new room at $5500. Perhaps you made a withdrawal in the interim.

In any event, just make your GIC for $8450 instead of $8500 and you should be fine when you transfer it.

The promotion only work on 10000 dollars and above, but I only have 8500 room, so when new year come there will be enough space. I was somewhat confusing on the top.

Anyway I call and I was told in kind transfer is not allow by their credit union. I guess I will just stick with promotion from Tangerine in my non register saving account than, it offer more liquidity anyway.

October 24, 2016
1:16 pm
Loonie
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too bad.
I suspect there may be some better promos out there in January, especially since Tang doesn't seem to be chasing that money this year. However, it's good to keep some liquid.
Alterna has a pretty good rate for eSavings or eTFSA,, and you don't have to renegotiate every few months. You could always deposit in TFSA for the tax benefit for as long as you can leave it there, then, if you need the money, take it out of TFSA and re-deposit the following year or thereafter. Need to check if there's a withdrawal fee though. I know there is a transfer fee.

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