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TFSA kickstart for 2016 NOW OPEN!
June 3, 2015
3:28 am
musicalmaestro
Montreal
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June 3, 2015
10:58 am
bb123
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More gimmicks from Tangerine while their standard rates are just brutal. They continue to bonus the new customers while taking significant advantage of their old customers. 1.05% on their Savings and TFSA Savings cannot be considered High Interest Savings. And their GIC rates are just as brutal.
1 Year @ 1.30%
2 Year @ 1.50%
3 Year @ 1.60%
4 Year @ 1.80%
5 Year @ 2.00%

Why anyone continues to save with them is a mystery.

Implicity and Hubert have the best GIC rates out there. While Accelerate leads the way on Savings, with Implicity, Achieva, and the other MB C.U's closely behind. They each differ a bit regarding the accessibility to your funds and service fees which can researched elsewhere within this site. Scotia Bank has destroyed this virtual bank.

June 3, 2015
12:03 pm
Loonie
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This is really a very bad deal compared to a variety of other institutions such as Hubert, Accelerate, Peoples Trust.

1. Tang is only guaranteeing to double whatever their prevailing rate is during the remainder of the year. Many think rates will decline over forthcoming months.

2. In order to make any headway financially in 2016 with this TFSA, you will almost certainly need to move it to another institution. This will cost you at least $45. This fee could go up in the interim.

3. $45 is .45% of $10,000. This brings your effective rate down to 1.65% IF the current rate remains stable, and less if interest rate goes down or the fee goes up.

Hubert is still offering its one-year GIC with a staggered rate. If you were to put your money into the 1yr GIC at Hubert, it would earn about 2.1% (per annum), and you wouldn't have to worry about rate going down in the interim. After the second interest payment at 6 months, you take it out and put it in daily interest (currently 1.9%) for the remaining few weeks until Jan 1. If, when January comes along, you don't like Hubert's TFSA rates, you can move your money elsewhere without penalty because Hubert does not (yet) charge a fee and you would not have been obligated to deposit your money into their TFSA anyway (as you are with Tang).

Does anyone know if it is legally possible to transfer a GIC in-kind into a TFSA? If so, that would be the best deal, in terms of cash/GICs.

June 5, 2015
11:05 pm
Norman1
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Loonie said
...
Does anyone know if it is legally possible to transfer a GIC in-kind into a TFSA? If so, that would be the best deal, in terms of cash/GICs.

In-kind contributions into RSP's and TFSA's are allowed by the Income Tax Act. The challenge is whether or not the GIC is transferable. The ownership of the GIC needs to be transferred from the person to the trustee of the TFSA.

June 5, 2015
11:36 pm
Loonie
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thanks, Norman. Would this be more straightforward if "old" GIC and 'new" TFSA both with the same institution, do you think?

I wonder, too, if there would be a problem establishing the dollar value of the TFSA contribution on the day it was transferred.

June 6, 2015
5:01 pm
Norman1
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I think there's more chance of success if the GIC and the receiving TFSA are with the same institution. But, I think it really depends on the specific GIC itself. The back of the Scotia iTRADE RSP transfer form suggests there isn't consistent transferability, even within a bank group:

Often a Guaranteed Investment Certificate (including Term Deposits) is not transferable "IN KIND" (as is) prior to its maturity. .... There are some exceptions, please check the terms and conditions with the Institution which issued your GIC.

Please note: Most Scotiabank Group issued GICs are readily transferrable "IN KIND" within the Group.

Valuation of the in-kind contribution is not a problem. It is more a question of which valuation the TFSA trustee choses to use.

One could value the GIC like a Canada Savings Bond:

  1. face value plus
  2. compounded interest plus
  3. accrued interest to date of contribution.

One could also value it like a marketable bond:

  1. accrued interest to date of contribution plus
  2. face value and compounded interest, both adjusted for any change in current interest rate for a GIC of remaining term.
June 6, 2015
5:26 pm
AltaRed
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I have never run into a problem transferring GICs in kind (between brokers) but I have only done that 2 times when switching brokers. In some cases, a receiving institution will accept the transfer of a GIC from an issuer they don't do business with, but when it matures, a new one from the same issuer cannot be purchased.

I have never tried to transfer a GIC between account types, e.g. Cash to RRSP, etc. but I would assume if it could be done it would be valued at PAR + Accrued Interest.... not what it could be bought/sold on the secondary market... simply because there is not much of a secondary market for GICs.

June 6, 2015
10:07 pm
Norman1
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GIC transferability is all over the place.

Some are fully transferrable and assignable like Peoples Trust GIC's. Others are not transferable, not even to another account, like these TD Special GIC's.

Strictly speaking, in-kind contributions are to be valued at fair-market value (FMV). This is from CRA: Types of investments (TFSA):

"In kind" contributions

You can also make "in kind" contributions (for example, securities you hold in a non-registered account) to your TFSA, as long as the property is a qualified investment. You will be considered to have disposed of the property at its fair market value (FMV) at the time of the contribution. If the FMV is more than the cost of the property, you will have to report the capital gain on your income tax return. However, if the cost of the property is more than its FMV, you cannot claim the resulting capital loss. The amount of the contribution to your TFSA will be equal to the FMV of the property.

I agree. I suspect there's leeway allowed for things like GIC's that aren't actively traded.

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