Unclear on withdrawal rules | Page 2 | Tax Free Savings Accounts | Discussion forum

You got an "official interpretation" from CRA? How did you do that? I can't even get a live body to answer the phone over there, let alone get someone to give me an "official interpretation" on something.

Michael said:

snork said:

If you wanted to transfer to another bank to get a higher rate and avoid paying the transfer fee ($50 for some banks), could you withdraw the amount (5000)on Dec 31, and deposit it on Jan 1 of next year in the other bank? Too bad I just thought of this now.

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I think you can, snork. Unless CRA stipulates that the contribution room created by withdrawals is strictly tied to a particular account (but would they do that?), you can withdraw the full amount from one account and deposit it into another next year without penalty. However, you lose the benefit of "transfer in kind". e.g., if you sell a mutual fund or a stock at the end of 2009 in one account only to buy it back the next year, you may have to wait for a "downturn" to do so or you'll lose way more than the transfer fee.

Are you sure this is true? My understanding is that once you withdraw from a TFSA (as opposed to transfer to another TFSA and pay a rip off $125 fee), your gains become taxable. You can only redeposit those funds + 5000 next year into a TFSA. If you put it in this year, you will get penalised at the rate of 1% per month.

Why do the fools in government make what should be something simple so complicated. And why do I have to pay a 125 dollar rip off fee to the financial 'industry' which is nothing more than a middle man industry sucking money out of my earnings.

65

i'm kidding. you need to be 18 to have a tfsa.

For those of you still debating this issue, I too invested $5000 in a TFSA last year, made $25 of interest, and withdrew the total $5025.
I recently received my notice of assessment from the CRA stating my TFSA contribution room for 2010 to be $10025.
Can't get more clear or official information than that.

I am looking for a short term stock account. Can I put my $10,000 (from 2009 and 2010) into a TFSA and invest in some stocks....only to (in say 3 months) pull it all out? Is there a penalty for this?
Thx.

its already 2010, so have anyone of you guys totally withdraw
all of your TFSA you invested in 2008 or 2009? by saying
totally withdraw, im talking about you taking all the money
and going home with the money in your wallet. if you withdraw it and transfer
it into another account that would not count as totally withdraw
because you again bank it. im talking about the "cash is in your hands" thing.
did your bank charge you at all? if yes how much?
i know, the CRA websites says, "no fees will be charge, etc." but hey
let us talk about what is the real story that happened okay? we dont talk theories or assumptions here. just pure real life experience from the bank itself.

that's because my plan this 2010 is to invest $1000 in a TFSA,
then add $50/month then at the end of one year, i will withdraw it all and buy something like new computer or new bed or use it as tuition fee, etc. i will not
continue TFSA-ing anymore. okay, maybe leave $1 but really, what happened when
you withdraw all of it??? was a fee deducted? that could be trouble you know. imagine earning $20 interest income for a year then bank charge $100 for closing, then that TFSA is actually a dead meat.

Oh WOW... the gov't must be laughing all the way to the bank. I just got a statement for my Tax-Free Savings Account for 2009. I was not aware that any amounts withdrawn from the account were not subtracted from the available contribution room in the current year. I have been transferring funds back and forth from this account all year long, just as i did with my regular savings account.

The statement shows total contributions of $19,945, and total withdrawls of $17,512. So, even though i was never near the $5000 contribution limit, i am now being taxed on a total of $16,331 for the year!! The total interest i actually earned on the account was about $23, but now i am obligated to pay some $163 in taxes back to the gov't!

I think i'll just stick with the regular savings account from now on. I'd rather pay tax on the $23

I was dinged for just $50, but it's still completely unreasonable!

There are major discussions about this to be found at http://blog.taxresource.ca/tfs.....ributions/ and http://blog.taxresource.ca/let.....penalties/

Post your story! Hopefully enough of us will cause a stir and the government will rethink their penalty rules!

well, i hate to play devil's advocate here, but the rules have always been pretty clear (at least to me). you can contribute up to $5000 per year, indexed to inflation (not much inflation these days), and you have to wait until january 1 of the following year to re-contribute any withdrawals. i think the reason this is so is because if everyone were allowed to contribute and withdraw at will, it would be a nightmare for the gov't to administer as some people can generate thousands of transactions per year.