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No Tax Savings Account - Need answer before 2009!
December 28, 2008
6:39 pm
Max
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November 26, 2008
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Hi everyone, I've got another problem here.

I currently have a $5,000 in my TFSA at ING since the 9th of October. The interest rate is at 2.7% right now and all the interest I've received will be doubled on the 1st of January according to their promotion.

However, since I'm a student and I pay no taxes at all at the end of the year I would benefit more by far of the 3.75% rate offered by HSBC till the 19th of March instead of the normal 2.7% of the TFSA of ING.

My question is: Is it possible for me to withdraw that $5,000 from my ING TFSA on the 1st of January (well the 3rd of January since the 1st and 2nd are Holidays) and deposit it at HSBC in my normal account to get the 3.75% or by opening that pre-TFSA with ING in September have I committed to any agreements I am not aware of?

Also, is it possible to close my TFSA at ING in January and go with HSBC instead? Do they offer any promotions? I once read about an extra 1% too but if would be the same as my normal savings account because I do not pay taxes at the end of the year.

What is the most logic way to follow?

Thanks

Max

The day you become free is the day you work for fun.

December 28, 2008
9:19 pm
Peter
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May 15, 2007
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Generally, you can withdraw money from a TFSA whenever you want. However, you then lose the ability to re-contribute that amount to a TFSA until the next year. This does not apply to a transfer between TFSAs. I read in a CBC article that:

"You can transfer the amounts from one of your TFSAs to another one without any tax implication."

In other words, you can transfer from an ING TFSA to an HSBC non-TFSA -- you just lose the tax advantages, which apparently won't matter for you.

January 1, 2009
2:57 pm
Doug
British Columbia, Canada
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December 12, 2009
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hey Max,

Since you can't actually contribute to a TFSA in Canada until January 2nd, 2009, I would think any contributions you've made to a "pre-TFSA" savings vehicle could be pulled out before then without affecting your 2009 contribution room since you haven't yet made a legal TFSA contribution. The only thing you'd forfeit is any "bonus interest" paid by the "pre-TFSA" vehicle.

Hope that helps,
Doug

January 1, 2009
7:10 pm
Max
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November 26, 2008
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Well I think I got screwed up a bit because ING took care of it all:

Date Transaction Description Amount Balance

1-Jan-2009 Tax-Free Savings Account-Initial Deposit Planholder Contribution 5,000.00 5,000.00

1-Jan-2009 TFSA Registration TFSA Conversion (non-taxable) -5,000.00 0.00

1-Jan-2009 Balance over $5,000 moved to ISA TFSA Conversion (non-taxable) -64.56 5,000.00

31-Dec-2008 Bonus - To Cover the 2008 Taxes 32.28 5,064.56

31-Dec-2008 Interest Paid 11.48 5,032.28

30-Nov-2008 Interest Paid 11.37 5,020.80

31-Oct-2008 Interest Paid 9.43 5,009.43

Everything is already registered on the 1st of January. I could transfer it back to HSBC and not take advantage of the TFSA but since I could, if I ever find a student job somewhere with a descent salary, pay taxes, I'll keep it like this to help the poor Netherland National Government Bank.

The day you become free is the day you work for fun.

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