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Does TFSA interest count as a contribution?
December 12, 2022
3:52 am
mechone
Ontario
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Question if you have a TFSA GIC that pays monthly interest into a TFSA savings account ,Im guessing that it doesn't count as over contributions ?

December 12, 2022
4:06 am
bhuc
Toronto
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As long as the money is not deregistered and then redeposited.
And as always the amount does not exceed your TFSA yearly contribution limit.
Interest earned within a "TFSA" is never taxable.
Unless you're running it like a business in which case the CRA will take notice.
Hope this helps.

December 12, 2022
4:15 am
RetirEd
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Interest earned in a tax-free or other registered instrument can safely accumulate in that instrument tax-free, without decreasing remaining deposit limits. That's why most of us have registered asset totals far in excess of our contributions.
RetirEd

RetirEd

December 12, 2022
4:57 am
Norman1
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Realized investment gains inside a TFSA are not contributions. When withdrawn, such gains will increase one's TFSA contribution limit the following year, even if the amount is larger than the total of one's TFSA dollar limits of previous years.

We looked into this earlier.

December 12, 2022
5:52 am
Bill
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Direct transfer from one TFSA account (GIC) to another TFSA account (savings) affects nothing, can be ignored, as bhuc indicates.

December 12, 2022
6:39 am
savemoresaveoften
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Any return earn from money that is already in the TFSA account does not affect your contribution limit at all. Also any amount that you withdraw is tax free, that exact amount that you withdraw gets add back to your life time contribution limit. So if you withdraw $50k this year, you can contribute $50k back without issue in any future years. Make sure its NOT the same calendar year you do the withdrawal, thats the only rule.

December 12, 2022
6:46 am
hwyc
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mechone said
Question if you have a TFSA GIC that pays monthly interest into a TFSA savings account ,Im guessing that it doesn't count as over contributions ?  

I am trying to identify FIs with that monthly paid interest option for TFSA GICs. Tell me I am not looking for an unicorn, or a white rhino.

December 13, 2022
7:56 am
bhuc
Toronto
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hwyc said

I am trying to identify FIs with that monthly paid interest option for TFSA GICs. Tell me I am not looking for an unicorn, or a white rhino.  

I called Motive inquiring about this exact scenario, and the answer is yes they will pay monthly but only to a TFSA savings account.
Now the kicker, you must call to have the monthy interest deregistered !

December 13, 2022
8:45 am
hwyc
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bhuc said

I called Motive inquiring about this exact scenario, and the answer is yes they will pay monthly but only to a TFSA savings account.
Now the kicker, you must call to have the monthy interest deregistered !  

... I wish this is written somewhere on their site. Words here are kinda you said, they said.

December 13, 2022
2:06 pm
bhuc
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hwyc said

... I wish this is written somewhere on their site. Words here are kinda you said, they said.  

So, to clarify you must call in to request a monthly interest payment after setting up the GIC. This can only be done by a CSR.
What "Words here are kinda ... " are you refering to ?

December 13, 2022
2:27 pm
hwyc
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@bhuc I've made an email inquiry once in 2020 September. The written reply was no such option. I will certainly try again in 2023 when there's room.

Until then, I'll take your word with a grain of salt but mean no offense

December 13, 2022
6:02 pm
bhuc
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I currently have a 3 year non registered gic with Motive that pays monthly.
And was assured by a CSR that the TFSA gic is also available with a monthly payment option.
The caveat is you must be over 57 to qualify.

December 13, 2022
9:22 pm
Norman1
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Earlier, we found that Motive offers to pay GIC interest monthly for those over age 57 only for non-registered GIC's.

December 14, 2022
4:49 am
bhuc
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Norman1 said
Earlier, we found that Motive offers to pay GIC interest monthly for those over age 57 only for non-registered GIC's.  

According to the CSR I spoke to, a monthly payment option is available for a TFSA GIC .
The term must be greater than 1 year and one must be 57 or older.
Monthly payment will be made into a TFSA savings account from which the GIC was funded and one must call a CSR to have interest payments / principal deregistered.

December 14, 2022
6:15 am
Norman1
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Motive should update their Motive TFSA GIC page to reflect that.

I agree with hwyc about all this hearsay from the CSR's. Some people called and were told no, monthly interest payouts were not offered. Others called and were told yes, monthly interest payouts were available.

December 27, 2022
12:22 pm
butterflycharm
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Here are three scenarios that will encompass all questions regarding this I think.

1- Contribute and take out on Dec 31 by cash and you will have all that amount available for re-deposit on Jan 1 of next year. Even if it is bigger than your initial contribution. So contribute $1 and make $0.50 interest on it and you withdraw $1.5 on Dec 31 and then you can deposit back $1.5 on Jan 1 without any problems.

2- Contribute into a TFSA trading account for amount of $1 and trade that really well and make it $1,000,000.00 and withdraw $1,000,000.00 on Dec 31 in cash and you will be able to deposit again $1,000,000.00 on Jan 1st + whatever else the gov allows for next year which is ~$6000.00 so you can deposit $1,006,000.00.

3- If TFSA is transferred between banks using proper TFSA transfer it doesn't affect anything so don't think about it at all and just go ahead and read #1 and #2 again about your other questions.

December 27, 2022
12:34 pm
Bill
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2023 TFSA annual limit is $6500.

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