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The December Manoeuver question
December 8, 2021
1:40 pm
RetirEd
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Many financial institutions are really slow in registered transfers! Expecially Tangerine - set up the transfer NOW to execute in the last week of December.

If you're withdrawing instead of transferring, you can safely do it near the end of the month. But rolling forward from a January deposit to a December withdrawal is often tough, as you have to spend months at low interest.

Peoples and (I think - awaiting confirmation) Oaken don't charge for a registered transfer.
RetirEd

December 24, 2021
10:05 pm
HermanH
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RetirEd said
Many financial institutions are really slow in registered transfers! Expecially Tangerine - set up the transfer NOW to execute in the last week of December.

Just wanted to remind everyone about the impending deadline. I had two redeemable TFSA GICs. One in a CU and one at BNS. I thought about waiting to move them to cash before transferring them Dec 31, but decided to do it today out of an abundance of caution. It was a good decision.

The CU GIC was done quickly, immediately, and efficiently. No hassles.

The BNS had all kinds of grief. First, had to get wait 45 min. on hold for a specific investment department rep. Thought it was set to be done, but realized that she told me that only the principal was going to be cashed out. Sigh.

Had to call back, wait on hold, again, and get another investment rep. who told me that the previous one forgot to mention that it might take 2-3 days to process and that they might have to send it my home branch for handling. Since they don't work Mon or Tues, that left a pretty small window for the transaction to occur. I was insistent and persistent that the transaction had to occur this calendar year. I finally got her to send it to the attention of a manager to review, with the hopes of it processing this month. Got a return call later in the day to confirm that it had been transferred to my Chq account.

Just a word to the wise: don't wait for the last minute. Any hiccups could trap your funds for an additional year (or cost you the transfer fee.) sf-wink

December 24, 2021
11:28 pm
HermanH
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I've been contemplating over-contributing to my TFSA by one day. My contribution level is maximized and the 2022 contribution allowance is $6000. In order to take advantage of a one-year GIC and have the money ready to transfer at the end of Dec 31, 2022, has anyone thought about the consequences for over-contributing?

If I deposit the 2022 allowance ($6000) into my TFSA on Dec 31, 2021 [over-contribute] and buy a one-year GIC maturing Dec 31, 2022, then the money will be available to move without transfer fees on Dec 31, 2022. I read that the penalty is 1% for over-contributions, but am not quite certain how it is calculated.

Is the 1% on the entire TFSA contribution?
Only on the overage?
How long is penalty period? The one day of over-contribution? The entire month? The entire year?

Has anyone contemplated or encountered this process?
Can anyone lend clarity on the actual penalty (monetary and otherwise)?

December 25, 2021
6:00 am
Bill
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Click on this link, go to "Tax payable on excess TFSA amount", it's all there, including lots of examples.
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4466/tax-free-savings-account-tfsa-guide-individuals.html#P44_1127

(Had the family gang yesterday, pretty quiet, peaceful Christmas morning around here, Merry Christmas all!)

December 25, 2021
7:02 am
Loonie
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Yes, I had experience with this. Due to aggressive sales tactics and financial abuse on the part of RBC, my mother, then 98, ended up with a TFSA over-contribution. To this day, she doesn't know what a TFSA is or its rules. Mum was out of pocket $240.

They will charge you for one month, and only on the 6K.

I can't recommend this though. My sense is that infractions put you on their radar for future scrutiny.

Every year since this happened, mum has been asked for additional documents of one kind or another, although her tax return is extremely simple.

We just resolved their most recent request this past week. They claimed we had not sent in a requested document (although we had) and sent a letter saying she would be reassessed for not sending it
When we phoned about this, the CRA rep said her records did show that we had indeed sent it and she couldn't explain why we'd gotten this letter. She also said that another letter was scheduled to be sent Dec 29 saying that mum owed nothing. She basically said the document didn't really matter. I won't go into all the details.

So, I would ask, do you really want to risk getting in line for this sort of garbage - or maybe worse?

December 25, 2021
7:46 am
AltaRed
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I am with Loonie on this. Play games at one's peril, and for what?

December 25, 2021
10:04 am
2of3aintbad
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Note the Dec 31, 2022 is a Saturday, so anyone contemplating the one year GIC (overcontribution or other) must act earlier.

December 25, 2021
10:19 am
Norman1
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It is 1% per month tax on TFSA overcontributions.

The reference that Bill mentioned says "If, at any time in a month, you have an excess TFSA amount, you are liable to a tax of 1% on your highest excess TFSA amount in that month. …"

Form RC243 and RC243 Schedule A are what one needs to file to report and pay the tax.

December 25, 2021
11:15 am
HermanH
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2of3aintbad said
Note the Dec 31, 2022 is a Saturday, so anyone contemplating the one year GIC (overcontribution or other) must act earlier.  

I did notice that it fell on a Saturday. The CU said that I could still move money out of my TFSA on that day and it would still be considered before the end of the year. I *think* that WealthOne also said the same, but I asked awhile ago and my memory might fail me.

Thanks for all the advice.

December 25, 2021
1:19 pm
mechone
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Pulled 50,000 out of tfsa Alterna on the 23rd was in RBC next day, then withdrew the last 36,000 out of Alterna on the 24th in the morning ,was in RBC at 4pm.
Enough of them their rates use to be okay sometimes the best , now one of the lowest . Motive seems to be going the same way ,their savay savings is now crap. Opened TFSA with EQ and high interest with Canadian Tire hopefully rates increase come January.
Wishing everyone a Merry XMas and hopefully an interest raising New Year

December 31, 2021
9:53 am
frugal lady
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Update to my post 1: Successful online withdrawal (transfer) of EQ TFSA to EQ Savings account. Instant and no problems or staff interaction required. sf-smile

December 31, 2021
11:02 am
HermanH
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Same with Wealth One.sf-smile

January 4, 2022
6:16 am
Pronounced Zed
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Question to frugal lady and HermanH. Were you able to make a "clean" withdrawl, i.e. is the TFSA account actually zero?

I noticed with my EQ TFSA (which I left alone) December's interest was paid on Jan 1st. So that interest now belongs to 2022.

January 4, 2022
6:21 am
Bill
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That'll happen everywhere, Pronounced Zed, unless there's an fi somewhere that credits the monthly interest on Dec 31. You can leave it there, or take it out and recontribute in 2023.

January 4, 2022
10:35 am
HermanH
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Could not make a 'clean' withdrawal; a couple of residual pennies appeared on Jan 1 sf-frown

January 4, 2022
11:30 am
frugal lady
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It was zero when I withdrew. However interest posted after withdrew dated Jan 1st.
But with EQ the Dec 31 bank statement balance includes the December interest earned and posted Jan 1.
Guess one would have to withdraw all on November 30 so there would be no December interest earned.

January 4, 2022
6:02 pm
Bill
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Yes, withdraw everything on Nov 30, then remove Nov interest on Dec 1 and you're done. The November-December Manoeuvre.

January 14, 2022
12:40 am
HermanH
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Loonie said
Yes, I had experience with this. Due to aggressive sales tactics and financial abuse on the part of RBC, my mother, then 98, ended up with a TFSA over-contribution. To this day, she doesn't know what a TFSA is or its rules. Mum was out of pocket $240.

They will charge you for one month, and only on the 6K.

Sigh, I accidentally over-contributed to my EQ TFSA. I selected the wrong account to receive the transfer and it went to TFSA and has sat there for a week before I noticed my error.

Going to contact EQ Bank tomorrow and see if they can do anything administratively to cancel the transfer and the $3 interest it has generated in the week. With luck, they could just nullify the transfer, leave a note about the error and that will be the end of it. Anyone got any better suggestions?

I was going to just take the money out, but feared that this would worsen the problem and constitute a withdrawal or some other problem.

Yes, I know that I am an ass. sf-cry

January 14, 2022
5:57 am
Bill
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I agree, better not to withdraw until you know it can't be "reversed" by EQ. If they can't and you withdraw asap then there will be little CRA effect and, in fact, you can probably successfully appeal it to CRA (when they assess you any penalty later) showing it was a mistake that was rectified asap.

January 14, 2022
6:23 am
Loonie
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Sorry to hear about this, Herman. It could happen to anyone.
Let us know how you make out.

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