July 30, 2009
On questtrade, they offer a tax free trading account (TFTA). Its like a tax free savings account (TFSA) but you can trade equities with it.
What I want to do is setup a TFSA at say ING or some online bank, deposit $5000 in there and link that account to a TFTA at Questtrade.
I want to then move some portion of my money in the TFSA into TFTA to invest in equities. When I've made my profit, I want to cash out and move it back to the TFSA. I want to do this many times in one year.
Is this OK under the TFSA rules or will I be peanalised/fined?
I've read that I can "transfer" TFSA from one institution to another and I can have more than one TFSA. What exactly is involved in this transfer? Can I just do it as easily as I move money from say a PC Financial savings account to an ICICI savings account? Or do I have to fill a bunch of forms and other stuff which makes it impractical.
Again I want to be able to move the money easily back and forth between the TFSA and TFTA without incurring a penalty and without having to fill a bunch of transfer forms. Is this possible. I called the CRA but they are clueless. They did not even know what a TFTA is.
If anyone knows for CERTAIN (please don't throw in your 2 cents if you don't), please put in your reply. Thanks!
There is no such thing as a "tax free trading account" as far as the government is concerned. If Questrade is offering something by that name, it is really just a TFSA. Equities can be traded in a TFSA (along with just about anything else you can trade in an RRSP account).TFSAs can be transferred between institutions, but most charge a "transfer-out" fee to do this (ING is an exception). You fill out a form at the institution you want to send the money to, and they forward the form to the institution you want to move the money from. If you've ever transferred RRSPs between institutions, it works exactly the same way.Your problem is that Questrade almost certainly charges a transfer-out fee, and that fee will probably wipe out any gains you make (particularly if you do many transfers as you suggest). You'll have to check out their website to find out what the fee is, but I can tell you that at RBC Direct, it's $135. I'm not sure what you're hoping to gain from this, but if it's just capital preservation you're after, just stick any gains in a low-MER money market fund inside the TFSA (where the money will continue to grow tax free).
July 30, 2009
Thank you very much for the reply Scone.
That clears things up for me.
The money market fund idea is a good one. I wanted some place to park the funds earning interest while I figured out what stock to stick it in next.
I also wanted someone to be able to easily access my TFTA funds if i died unexpectedly. Hence I wondered if they could just transfer the amount to ING where they can access it easily. But apparently moving any money between TFTA/TFSAs sound like a hassel and a needless expense.
I think I'll just stick to investing in a regular TFSA at ING and do my equity trading outside of it to avoid the hassels of getting my money out of an online brokerage.