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Question about renewing a GIC in TFSA
March 12, 2024
5:16 am
asaveront
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I have a TFSA GIC maturing soon. The GIC's principal, plus interest, exceeds my 2024 TFSA contribution limit. If I renew the TFSA GIC again, will the renewed/re-invested amount be counted as my new TFSA contribution for 2024 or will it still be counted as my contribution from previous year? Could someone, with experience of renewing a TFSA GIC at People's Trust, share your experience?

Thank you!

March 12, 2024
5:48 am
dougjp
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Your interest earned doesn't count as an added contribution, because its just the tax free return earned on an existing investment within the TFSA.

Same does for dividends earned on stocks held in a TFSA, or interest earned on a HISA, for example. None of them count towards the annual contribution limit for either year.

The main accomplishment of almost all organized protests is to
annoy people who are not in them.

March 12, 2024
7:14 am
Bill
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I would make sure I had a Peoples TFSA savings account with instructions for them to put the matured TFSA GIC funds directly into it. Then I'd buy another TFSA GIC with those funds. That way everything is never not in "TFSA status".

March 12, 2024
8:33 am
smayer97
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Actually, if a TFSA GIC is redeemed, any growth increases your contribution room by that same amount. The only catch is that if instructions are not for it to mature directly into a TFSA product, be it a TFSA Savings account or another TFSA GIC and its growth will be considered withdrawn. This means you would not be able to recontribute that amount until the following Jan 1.

March 12, 2024
3:55 pm
Bill
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Not sure what you mean by redeemed, but when you say that interest earned on a TFSA GIC increases your contribution room you need to explain that - ? It would have no effect on your contribution room, far as I can see.

Anything withdrawn from a TFSA, be it matured GIC principal, interest or a combo, can be put back in starting following year.

March 12, 2024
7:39 pm
PassiveandWary
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Redeemed just means the GIC has matured and been cashed out rather than renewed for another term. And yes, the interest earned increases your contribution room by however much was accumulated, provided it goes directly back into the TFSA. That does not mean you can now contribute that much in addition to what you made from the GIC, just that your maximum room has been increased by the GIC earnings and is immediately filled by said interest if it is remitted back into a TFSA. If it's withdrawn instead, the contribution room is still increased by that much but cannot be used until Jan 1st.

March 12, 2024
8:44 pm
AltaRed
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PassiveandWary said
Redeemed just means the GIC has matured and been cashed out rather than renewed for another term. And yes, the interest earned increases your contribution room by however much was accumulated, provided it goes directly back into the TFSA.   

That is not the proper mechanics. Interest earned stays within the TFSA unless one specifically makes a withdrawal. Interest remaining in the TFSA has nothing to do with contribution room. It is investment growth within the TFSA.

March 13, 2024
12:16 am
smayer97
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Bill said
Not sure what you mean by redeemed, but when you say that interest earned on a TFSA GIC increases your contribution room you need to explain that - ? It would have no effect on your contribution room, far as I can see.

Anything withdrawn from a TFSA, be it matured GIC principal, interest or a combo, can be put back in starting following year.  

We are saying the same thing in different ways.

March 13, 2024
12:19 am
smayer97
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AltaRed said

That is not the proper mechanics. Interest earned stays within the TFSA unless one specifically makes a withdrawal. Interest remaining in the TFSA has nothing to do with contribution room. It is investment growth within the TFSA.  

PassiveandWary's reply about interest increasing the TFSA room is in the context of a withdrawal.... so the reply is correct.

March 13, 2024
4:12 am
dougjp
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Why is all of this relevant? The OP simply has an existing GIC within an existing TFSA account, and the sole context of the post was renewing said GIC. sf-confused

The main accomplishment of almost all organized protests is to
annoy people who are not in them.

March 14, 2024
1:05 am
smayer97
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Because it depends on the instructions given as to where the maturing TFSA GIC are to be placed on maturity.

If they stay within a TFSA product (savings account or renewed to another TFSA GIC) immediately on maturity, then this is a non-issue. If not, the above are considerations to take into account.

March 14, 2024
9:47 am
RetirEd
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What smayer97 said is correct. Trying to be clearer, let me say:

What you put into a TFSA (stocks, bonds, savings account or GIC/term) can stay in TFSA status as long as you want. Any term deposit can be deposited (on maturity if it's a term deposit - any time if it's a demand account like a savings account) into any other TFSA instrument, such as deposit in a savings account or rolled into a new TFSA. It has no effect on the next year's contribution room.

What some people are confusing the issue with is what "redeemed" means. In this context, a GIC is "redeemed" when the term expires. This will NOT remove it from TFSA status unless one requests it.

This became an issue with Oaken/Home Trust/Home Bank, who until this year offered Tax-Free GIC terms but NOT TFSA savings accounts. That meant GIC holders had to either arrange an immediate roll-over into a new TFSA GIC at Oaken or have a transfer into a tax-free instrument at another institution. I think this is one reason why they did not impose a TFSA transfer fee.

Once again, I will try to make everyone aware that the term "TFSA" refers to a registered tax-free deposit of any sort. It does not have to be a term deposit; it can be a savings account or any of a range of other instruments.

RetirEd

March 14, 2024
10:08 am
Norman1
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asaveront said
I have a TFSA GIC maturing soon. The GIC's principal, plus interest, exceeds my 2024 TFSA contribution limit. If I renew the TFSA GIC again, will the renewed/re-invested amount be counted as my new TFSA contribution for 2024 or will it still be counted as my contribution from previous year?

Maturing GIC's in a TFSA don't affect TFSA contribution limits.

It is not a TFSA withdrawal when a GIC matures inside a TFSA or interest from the GIC is paid inside a TFSA.

It is also not a TFSA contribution to renew a maturing GIC inside a TFSA or reinvest any GIC interest paid inside a TFSA.

March 14, 2024
11:03 am
savemoresaveoften
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asaveront said
I have a TFSA GIC maturing soon. The GIC's principal, plus interest, exceeds my 2024 TFSA contribution limit. If I renew the TFSA GIC again, will the renewed/re-invested amount be counted as my new TFSA contribution for 2024 or will it still be counted as my contribution from previous year? Could someone, with experience of renewing a TFSA GIC at People's Trust, share your experience?

Thank you!  

It has ntg to do with ur new contribution limit. Think about it, if it does, one can never really grow their TFSA. Seems obvious what the answer should be..

March 14, 2024
8:32 pm
asaveront
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Thank you for all the help!

At People's Trust, I only have a tax-free GIC and I do not have a savings
account with tax-free status.

What I want to find out is how People's Trust handles renewing
a TFSA GIC, on the maturing date, with respect to whether People's Trust
will report the renewing of the maturing TFSA GIC as a new 2024 TFSA
contribution to CRA or not.

Will the matured TFSA GIC be re-invested into a new TFSA GIC without
ever lossing its tax-free-saving status during the renewing process?

Or will the matured TFSA GIC will be "redeemed" first and loss its
tax-free status first before it is put into a new TFSA GIC?

I was hoping someone, who had renewed a TFSA GIC, on maturity date, could
share the experience.

Thank you!

March 14, 2024
9:01 pm
phrank
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asaveront said
Thank you for all the help!

At People's Trust, I only have a tax-free GIC and I do not have a savings
account with tax-free status.

What I want to find out is how People's Trust handles renewing
a TFSA GIC, on the maturing date, with respect to whether People's Trust
will report the renewing of the maturing TFSA GIC as a new 2024 TFSA
contribution to CRA or not.

Will the matured TFSA GIC be re-invested into a new TFSA GIC without
ever lossing its tax-free-saving status during the renewing process?

Or will the matured TFSA GIC will be "redeemed" first and loss its
tax-free status first before it is put into a new TFSA GIC?

I was hoping someone, who had renewed a TFSA GIC, on maturity date, could
share the experience.

Thank you!  

You really need to call the business you are dealing with when you have questions like this. It really doesn't matter what some stranger on the internet tells you, even if they are very knowledgeable and correct.

Your questions show a large lack of understanding in what a TFSA is and how they work. IMO, you need to attempt you educate yourself much better before asking questions to greatly improve your chance of getting quality answers which you can learn from, but end of the day you need to discuss with the business who is actually doing the work if you do not understand what is happening.

March 14, 2024
9:25 pm
MDJ
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@ asaveront

People’s Trust usually sets up a TFSA eSavings account if you have TFSA GICs.

If not, call them and get it set up. There is no cost for it.

Also when you look at the GIC online about a third of the way down, what does it say in bold printing?

While not decipherable to most, it will tell you if the GIC will go to TFSA savings or renew same as it was, ie the matured value in the same term as before.

Just say if this year you invested your $7000 limit. That is your limit. But once in a TFSA investment it can grow and grow…..nothing to worry about. You can “transfer” to another FI and nothing to worry about. And PT does not charge to transfer out or in. BUT if you cash in to a non registered account …. say $7500 … you have to wait till January 1 of the next year to recontribute the $7500.

Your maturing GIC has nothing to do with your 2024 limit.

Look at your CRA account in April or May .. it will show your TFSA transactions. It will never show transfers though. They only care about deposits and withdrawals taking the funds out of TFSA.

Hubert, Oaken and PT do NOT charge for transferring out. Transferring keeps it in the TFSA. Withdrawals take it out of TFSA.

I never let any GIC automatically roll over (other than Oaken RRIFs) …. they always move to an associated savings account at maturity. At PT do the GIC and then call them to set up maturity instructions and/or annual interest payments.

March 15, 2024
9:36 pm
smayer97
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savemoresaveoften said

It has ntg to do with ur new contribution limit. Think about it, if it does, one can never really grow their TFSA. Seems obvious what the answer should be..  

No it's not. Context is everything...

asaveront said
...
At People's Trust, I only have a tax-free GIC and I do not have a savings
account with tax-free status.
...
 

And here we have @asaveront confirming context, which is what many of the responses are providing considerations for. This means that the end result all depends on the instructions given to People's Trust as to how to handle the maturing TFSA GIC which is NOT in a TFSA account.

Therefore, many of the comments above apply.

Please write your comments in the forum.