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Is it ok to reinvest your TFSA again into a TFSA GIC after it matures?
May 24, 2021
2:55 am
Hmm
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I don't want to get penalized by CRA. My TFSA GIC just matured, and it's back into my TFSA savings account. I am maxed out with my TFSAs.

Can I still reinvest my TFSA into a TFSA GIC (again) including interest earned without penalty?

May 24, 2021
4:12 am
topgun
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Yes. Why not?

You deposited the maximum money to your TFSA. You have not removed the money from a TFSA. I am doing that as well. At maturity the interest and principle is paid to TFSA savings account. I have a choice what I do with the funds.

Have a Great Day

May 24, 2021
8:06 am
PubMob
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As long as it remains registered you can:
Leave in TFSA savings
Buy another GIC term of any length of time offered
Or transfer to a TFSA Account at another FI*

*Some transfer out free and some have a fee to transfer out. And some transfer “in” FIs may cover all, part or none of the transfer out fee. And some may cover the transfer out fee only once in a life time.

Keep in mind that not all FIs have a TFSA saving account.

May 24, 2021
8:09 am
cristunity
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Hmm said
I don't want to get penalized by CRA. My TFSA GIC just matured, and it's back into my TFSA savings account. I am maxed out with my TFSAs.

Can I still reinvest my TFSA into a TFSA GIC (again) including interest earned without penalty?  

Yup, as Top Gun said this is fine. You can confirm this for yourself by looking for the TFSA contract number (you should see it on your online banking).

When you move funds from your TFSA Savings to a TFSA GIC, you are not making a new contribution to that contract. You are just moving funds within that contract.

It would be different if you pulled funds out of that contract (I don't mean transfer them to a TFSA elsewhere, I mean cash out). In that case, you would have to wait until Jan 1 of the following year to put them back.

But within a contract you can move funds around from one investment type to another -- it all stays in the same bucket.

May 24, 2021
8:27 am
Dean
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The TFSA Program is the 'Simplest' government savings incentive program going in Canada right now. Yet for some unknown reason, it's the 'Most' misunderstood.

Go Figure ❗

    Dean

sf-cool " Live Long And Prosper " sf-cool

May 24, 2021
10:31 am
HermanH
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Dean said The TFSA Program is the 'Simplest' government savings incentive program going in Canada right now. Yet for some unknown reason, it's the 'Most'

    Dean

 

I respectfully disagree. While TFSA is one of the simplest, there are enough rules that do not appear to users as logical.

For example, why can't someone just take $1000 out of their CIBC TFSA account and add $1000 to their EQ TFSA account? Instead, a formal transfer request is required that takes up to 8 weeks to transpire.

I know the reason is that the government must have a record of the transaction in their books. But, if it all works out in the wash, why not just have the government compare their own books at the end of the year and just reconcile it amongst themselves without needing to hassle the depositor?

May 24, 2021
4:27 pm
Bill
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".....why not just have the government compare their own books at the end of the year and just reconcile it amongst themselves........" Huh??

May 24, 2021
4:37 pm
HermanH
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The given explanation for the 8 weeks required to transfer a TFSA between banks is that there is a process (mostly manual) between the banks. Also, because the accounts are registered, copies must be submitted to the CRA. The CRA tracks the maximum contribution levels allowed.

So, if you take $100 out of your TD TFSA and deposit $100 into your CIBC TFSA, the net change to your maximum TFSA contribution level is zero. However, if you do this while you are currently at maximum contribution levels, you will be penalized for over-contributing. The CRA somehow knows you made the $100 deposit into your CIBC TFSA, but does not acknowledge your withdrawal of $100 from the TD TFSA (at least until the end of the calendar year.)

My postulation is that since the CRA receives copies of all transactions for registered accounts, it should be easy for them to reconcile any mid-year deposits or withdrawals. Currently, I think it is done at the end of the calendar year. This is why any withdrawals from TFSA accounts cannot be re-deposited until the next calendar year.

May 24, 2021
6:38 pm
Bill
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I don't think so, I think the reason is that the TFSA was designed for long-term savings, so the rule per the legislation from day one was that any amounts withdrawn cannot be put back in to a TFSA until the following year. If you want to do short-term ins and outs they didn't want the registered account to be used for that, that creates a ton of "paperwork" for fi's and CRA, use your regular bank accounts for short-term savings, is the theory.

May 24, 2021
8:44 pm
Norman1
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CRA can request all the transactions of a TFSA from an issuer. But, direct transfers between TFSA's are not routinely reported to CRA.

This is from the CRA's FAQ for TFSA plan administrators:

C) Transfers between institutions

2. If an individual client wishes to transfer funds from a TFSA at one institution to a TFSA at another institution, how is this reported?

Direct transfers between individual's TFSAs do not get reported - either as contributions or withdrawals.

May 25, 2021
1:42 am
Hmm
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Thanks to everyone who replied. I agreed a TFSA isn't simple. That's quite subjective. Some may view running 20k a day is simple. I think a TFSA is more similar in complexity to an RRSP. It's straightforward to purchase but you need to be on top of the rules and your limits.

For example, a financial institution mistakenly created a a TFSA GIC for me when it should've been a regular GIC. I didn't pay close attention. The info didn't appear on my CRA profile until the following year. I then over contributed.

And you can withdraw at the end of the year from your TFSA and buy a new TFSA for the same amount at another institution in the beginning of the next year. I was told I could do this when I wasn't happy with interest rate at one bank. If I transferred versus withdrew it I would get charged a transfer fee from my old new bank.

May 25, 2021
8:41 am
Norman1
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It is expected that TFSA transactions not show up at CRA until next year.

Unless the TFSA issuer is discontinuing its TFSA business, it has until end of February the following year to file the TFSA returns for the year.

Along with openings, closing, contributions, and withdrawals, CRA receives the year end fair market value of the TFSA. So, CRA can see signs if someone tries to run a trading business in their TFSA.

May 25, 2021
8:53 am
Dean
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Bill said

I don't think so, I think the reason is that the TFSA was designed for long-term savings, so the rule per the legislation from day one was that any amounts withdrawn cannot be put back in to a TFSA until the following year. If you want to do short-term ins and outs they didn't want the registered account to be used for that, that creates a ton of "paperwork" for fi's and CRA, use your regular bank accounts for short-term savings, is the theory.  

    That ⬆

If they didn't have that simple rule in place for TFSA's, it would create an unmanageable accounting Nightmare ❗

In spite of what some think, the rules for TFSA's are simple and straightforward. Those who choose not to follow them, eventually get caught and fined.

      Dean

sf-cool " Live Long And Prosper " sf-cool

May 25, 2021
10:55 am
smayer97
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Hmm said
... you can withdraw at the end of the year from your TFSA and buy a new TFSA for the same amount at another institution in the beginning of the next year. I was told I could do this when I wasn't happy with interest rate at one bank. If I transferred versus withdrew it I would get charged a transfer fee from my old new bank.  

The main drawback with this approach to withdraw and re-deposit is that you lose the compounding effect on the gains once you use up all your contribution room because you are not able to re-deposit above the limit. So this has to be weighed against the transfer fee and potential gains lost during the time to transfer, which in some cases can be many weeks.

May 25, 2021
11:01 am
PubMob
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But you can park upon maturity of a TFSA in the TFSA Savings account and then move out in Dec and do a deposit in Jan of the next year in your preferred FI.

Pros:
You can do the move to the preferred FI, fee free.
You will continue to gain interest in TFSA savings and in the non registered savings account.

Cons:
Loss of higher interest rate vs transfer fee
Will preferred FI still have the better rate in Jan

May 25, 2021
12:18 pm
Norman1
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One needs to plan ahead and ensure there is the option to park the maturing TFSA GIC into a TFSA savings account.

Oaken, for example, does not have a TFSA savings account. As well, their shorter 30-day GIC is not available to registered accounts.

May 25, 2021
12:25 pm
PubMob
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Norman1 said
One needs to plan ahead and ensure there is the option to park the maturing TFSA GIC into a TFSA savings account.

Oaken, for example, does not have a TFSA savings account. As well, their shorter 30-day GIC is not available to registered accounts.  

My example would only work from a TFSA GIC going into the TFSA savings at the SAME FI. From the TFSA savings in Dec 2021 you would move $6020.19 to your preferred Non Registered Savings account and from there in Jan 2022 you would move to your preferred FI for the TFSA in the amount of $6020.19.
The previous example given only works at an FI with both TFSA GIC's and Savings account.

And in your quote.....you don't have to use this process at Oaken because they transfer out FREE and often before the maturity date with no loss of principal or interest.

May 25, 2021
12:53 pm
Bill
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Trying to move registered investments of any kind from institution to institution, rate-shopping and hopping savings accounts and gics, and on a continual/prolonged basis, will inevitably take up time and produce some hiccups (unexpected fees, money tied up during transfer, etc) along the way, imo.

May 25, 2021
3:09 pm
Dean
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Norman1 said

. . .

Oaken, for example, does not have a TFSA savings account . . . 

To add to that , Oaken doesn't have 'Any' registered savings accounts❗ And for the life of me, I can't figure out Why.

I've contacted Oaken about this a few times now, but they always avoid answering the question, by replying with a useless PR spiel.

Does anyone know why Oaken has chosen Not to have registered savings accounts ❓

    Dean

sf-cool " Live Long And Prosper " sf-cool

May 25, 2021
3:36 pm
AltaRed
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I am guessing after HCG's near death experience in 2017 when there was a run on deposits necessitating an expensive Buffett bail out, HISA liabilities are being 'managed'. Once one has bled from all orifices, no one wants to bleed that way again. Clearly HCG's HISA rates post-crisis have not been nearly as attractive relative to their GICs as it was pre-crisis.

As all of you that chase rates on a daily basis know, HISA money is not sticky.

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