2019 annual TFSA limit set at $6,000.00 | Page 3 | Tax Free Savings Accounts | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

No permission to create posts
sp_Feed Topic RSS sp_TopicIcon
2019 annual TFSA limit set at $6,000.00
December 9, 2018
9:48 pm
Vatox
Member
Members
Forum Posts: 439
Member Since:
October 29, 2017
sp_UserOfflineSmall Offline

Guilty until proven innocent. Our society is evolving quite nicely.
No accountability.

December 10, 2018
12:07 am
Loonie
Member
Members
Forum Posts: 5065
Member Since:
October 21, 2013
sp_UserOfflineSmall Offline

And for this "service", they charge us in most cases for doing the transfer!

It makes sense that transfers would not be reported, since, really, they are of no consequence to CRA. They have no reason to care where your money is once it's been contributed unless it is actually withdrawn or put in an 'unqualified" investment.
This does imply, though, that they are somehow watching what we do. How else would they know if we used an unqualified investment? We know that they have in the past come down on people who were deemed to be trading too frequently, for example.

December 10, 2018
5:40 am
Norman1
Member
Members
Forum Posts: 2310
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

The ordinary direct transfer out is not reported by the issuer. But, the closing of the TFSA account is! sf-laugh Perhaps the transfer fee should be called an account closing fee.

The TFSA issuer is watching for and reporting unqualified investments. This is from Non-qualified investments in the TFSA guide for issuers:

The TFSA issuer has to report details of the non-qualified investment on the TFSA annual information return. …

Responsibility for compliance with the qualified investment rules generally lies with TFSA issuers. In this regard, TFSA issuers must take reasonable care to ensure that TFSAs do not hold non-qualified investments.

The TFSA issuer reports the year-end fair market value of the TFSA as part of the "identification data". I think CRA can compare that to the contribution and withdrawal history to detect outsized investment gains from running a stock trading business in the TFSA.

December 10, 2018
1:14 pm
Londonguy
Member
Members
Forum Posts: 213
Member Since:
May 27, 2016
sp_UserOfflineSmall Offline

For those who would like to keep on top of this issue who might not know where to start, if you go into "My Account" on the CRA site and follow the links to TFSA and then TFSA transactions, you can pull up a display of all of your contributions and withdrawals since TFSAs were invented as reported to CRA by all of your FIs. You can then print that info either to PDF or hard copy as a record of your history to compare to your own records and smoke out any discrepancies

December 10, 2018
1:58 pm
Alexandre
Member
Members
Forum Posts: 93
Member Since:
November 8, 2018
sp_UserOfflineSmall Offline

Just remember: TFSA contribution info on CRA site is notoriously behind what you've actually contributed, sometimes for more than 1/2 year.

December 11, 2018
8:08 am
Londonguy
Member
Members
Forum Posts: 213
Member Since:
May 27, 2016
sp_UserOfflineSmall Offline

Alexandre said
Just remember: TFSA contribution info on CRA site is notoriously behind what you've actually contributed, sometimes for more than 1/2 year.  

True story, and even worse in my own case -- I recently rediscovered a small redeposit from Jan 18, 2018 that as of this morning still does not appear on my CRA record almost 11 months later.

Unfortunately I didn't catch that it was missing from the CRA record and I took their figure as correct when I topped up my accounts a few weeks ago, so for now I'm technically offside and subject to the penalty until my new $6K 2019 eligibility kicks in and clears up the problem.

The penalty will only be about $105-110 but I'm glad I caught it, because now I know I need to leave a few bucks loose in the account and not have everything in GICs -- having to try to bust a GIC just to pay off a small penalty would really blow

December 11, 2018
8:14 am
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

Londonguy said

... I recently rediscovered a small redeposit from Jan 18, 2018 that as of this morning still does not appear on my CRA record almost 11 months later.
  

AND it won't show until the FIs 2018 filing deadline in 2019 . the onus has always been on the individual with respect to withdrawals and deposits.

December 11, 2018
8:18 am
Norman1
Member
Members
Forum Posts: 2310
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Londonguy said

The penalty will only be about $11-12 but I'm glad I caught it, because now I know I need to leave a few bucks loose in the account and not have everything in GICs -- having to try to bust a GIC just to pay off a small penalty would really blow  

There's no need to do that. The 1% per month penalty on TFSA overcontributions is not charged against the TFSA accounts. The penalty is charged separately.

One needs to send CRA a completed Form RC243 (TFSA Return) with a cheque for the penalty by June 30.

December 11, 2018
8:55 am
Londonguy
Member
Members
Forum Posts: 213
Member Since:
May 27, 2016
sp_UserOfflineSmall Offline

Thanks for the link to the form -- $5,307 overcontributed for two months of being offside @ 1% = $106.14 out the window + don't do that again

December 11, 2018
9:43 am
Vatox
Member
Members
Forum Posts: 439
Member Since:
October 29, 2017
sp_UserOfflineSmall Offline

Having some TFSA cash readily accessible is prudent. If you make a contribution mistake early in the year, you can withdraw it and save some of the penalty. Unfortunately, they charge you for each month based on any day of over contribution in a given month, so taking the money out in December won't help.

Sorry for your loss.

December 11, 2018
10:17 am
Londonguy
Member
Members
Forum Posts: 213
Member Since:
May 27, 2016
sp_UserOfflineSmall Offline

Vatox said
Having some TFSA cash readily accessible is prudent. If you make a contribution mistake early in the year, you can withdraw it and save some of the penalty. Unfortunately, they charge you for each month based on any day of over contribution in a given month, so taking the money out in December won't help.

Sorry for your loss.  

The good news is that I didn't go over until the end of November, so the penalty will only apply to the 2 months (Nov & Dec) I was offside, and only on the small transfer amount that I missed. I have since built myself an idiotproofing spreadsheet to eliminate any recurrences -- it cost me just a bit over $100 to produce LOL

December 13, 2018
6:00 am
Bruford
Member
Members
Forum Posts: 39
Member Since:
August 10, 2018
sp_UserOfflineSmall Offline

Anyone have inside on best GIC rates inside a TFSA?

December 13, 2018
6:19 am
Londonguy
Member
Members
Forum Posts: 213
Member Since:
May 27, 2016
sp_UserOfflineSmall Offline

Bruford said
Anyone have inside on best GIC rates inside a TFSA?  

That covers too much term ground over too many FIs for me, but on a firsthand basis I can tell you as a benchmark that both Tang and Simplii are currently paying 3.10% on a 1-year, and Ideal Savings is paying 3.25% on their 150-day deal. I'm not impressed by anybody's GIC rates for terms longer than that because of how the yield curve is currently flattened

December 13, 2018
6:22 am
Norman1
Member
Members
Forum Posts: 2310
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

Londonguy said

The good news is that I didn't go over until the end of November, so the penalty will only apply to the 2 months (Nov & Dec) I was offside, and only on the small transfer amount that I missed. I have since built myself an idiotproofing spreadsheet to eliminate any recurrences -- it cost me just a bit over $100 to produce LOL  

There is a possibility to get a waiver on the 1% tax. This is on the back of the RC243 form:

Waiver of TFSA taxes

We may waive or cancel all or part of the taxes if we determine it is fair to do so after reviewing all factors, including whether:

• the tax arose because of a reasonable error
• the extent to which the transaction or series of transactions that gave rise to the tax also gave rise to another tax under the Income Tax Act
• the extent to which payments have been made from the person's TFSA

To consider your request, we need a letter that explains why the tax liability arose, and why it would be fair to cancel or waive all or part of the tax.

According to MoneySense article Apply for waiver of TFSA over-contribution penalties, there is a good chance CRA will waive the penalty, under 207.06(1) of the Income Tax Act, if one withdraws the excess contributions as soon as possible:

Waiver of tax payable

207.06 (1) If an individual would otherwise be liable to pay a tax under this Part because of section 207.02 or 207.03, the Minister may waive or cancel all or part of the liability if

(a) the individual establishes to the satisfaction of the Minister that the liability arose as a consequence of a reasonable error; and

(b) one or more distributions are made without delay under a TFSA of which the individual is the holder, the total amount of which is not less than the total of

(i) the amount in respect of which the individual would otherwise be liable to pay the tax, and

(ii) income (including a capital gain) that is reasonably attributable, directly or indirectly, to the amount described in subparagraph (i).

December 13, 2018
6:58 am
Londonguy
Member
Members
Forum Posts: 213
Member Since:
May 27, 2016
sp_UserOfflineSmall Offline

Thanks Norman, I read that stuff too. In my particular situation, other than for purposes of trying to dress up the optics a bit, there is no point in my withdrawing the overcontribution now because the problem self-corrects as of January 1, 2019 anyway, and under the TFSA rules I am still on the hook for a December penalty whether I pull it back out now or not.

After reading several other articles on this subject, I am left with the impression that requesting forgiveness may have been a worthwhile strategy when TFSAs were still relatively new and people were understandably confused about the rules, but 10 years later that excuse doesn't fly as well with CRA. I may yet change my mind, but for the small amount of money involved, right now I'm inclined to just own my mistake and pay the penalty.

No permission to create posts

Please write your comments in the forum.