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Interac e-transfers
January 14, 2020
6:06 pm
Vatox
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Didn’t see any threads about this. They charge $1.50 to send out.

https://www.wealthonebankofcanada.com/Personal/BecomingAClient/ServiceFees/

January 21, 2020
9:21 pm
toto
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I called wealth one today to ask about tax forms on the 3000.00 they gave me for the promo last year , for the 3 terms I bought.
I was told that promo money is tax free and I won't be getting a tax form on it! Hard to believe .

January 22, 2020
4:17 am
Loonie
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It sure is hard to believe - if non-registered. If it's registered, the FIs just count it as interest earned within the plan.
I don't remember these promotions though. Did we have a thread, or do you have details?

January 22, 2020
7:15 am
Norman1
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Would that be their 0.2%-per-GIC-year cashback promotion mentioned in WealthOne GIC Promo?

January 22, 2020
8:07 am
toto
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Yes I got the .2 percent cash back promo.
I bought 3 gics, they put 3000.00 in my wealth one account .
As I said I called yesterday to check if they would be mailing out a tax slip for the 3000.00 and that's when they said it's tax free.
The csa's are very knowledgeable at wealth one , but there is a possibility he gave me wrong info.

January 22, 2020
8:55 am
Doug
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toto said
Yes I got the .2 percent cash back promo.
I bought 3 gics, they put 3000.00 in my wealth one account .
As I said I called yesterday to check if they would be mailing out a tax slip for the 3000.00 and that's when they said it's tax free.
The csa's are very knowledgeable at wealth one , but there is a possibility he gave me wrong info.  

Were you the one who bought the CDIC limit for each of you, spouse, and joint at Wealth One, toto? If so, yes, I remember you saying their customer service is excellent. As I recall, they were 5-year GICs, but was something like 3.2-3.4% plus the 0.2% bonus.

It's good that 0.2% is counted as a tax-free monetary gift even though applied as a bonus rate. Do they pay it to you when your GICs mature, or in the first year?

Cheers,
Doug

January 22, 2020
9:30 am
gicjunkie
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toto said
Yes I got the .2 percent cash back promo.
I bought 3 gics, they put 3000.00 in my wealth one account .
As I said I called yesterday to check if they would be mailing out a tax slip for the 3000.00 and that's when they said it's tax free.
The csa's are very knowledgeable at wealth one , but there is a possibility he gave me wrong info.  

I can't help but think of the old saying "If it sounds too good to be true, it's not." Quite frankly, the idea of a tax free promo on a GIC sounds (smells?) really fishy. It's really bonus interest. On the other hand, credit card cash rewards in Canada are treated as "discounts" and are therefore not taxed. Maybe this "promo" falls into that category, but I personally find it hard to believe that "promo" interest is not taxable. It's just additional interest. Even if they do not issue a T5 for it, you may be responsible for reporting the income. Ask the CRA or a tax expert.

I have also had personal experience with Wealth One (a while back) and was not impressed with their knowledge and service. Maybe it has changed since then.

January 22, 2020
1:02 pm
toto
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Yes Doug. I'm that person. 3.4 for 5 years. 2 singles and one joint .
They paid the 3000.00 immediately! That's why I can't believe it's tax free

January 22, 2020
3:25 pm
canadian.100
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toto said
Yes Doug. I'm that person. 3.4 for 5 years. 2 singles and one joint .
They paid the 3000.00 immediately! That's why I can't believe it's tax free  

I am sure a number of us have already noticed that WealthOne Bank has sustained considerable cumulative losses (Retained Earnings are negative $36M to end of Nov 2019) and has not yet turned a profit (cumulative loss at end of 3rd quarter 2019 is negative $4,878,000). (Source: OSFI website Financial Info on Banks).
Since WealthOne may not have deducted the "Bonuses Paid" as tax deductible expenses, as they did not need more deductible expenses to avoid income tax (they already were in a big loss position before taxes) - perhaps there may be a provision to pay out the Bonuses as "non taxable to recipients" if WealthOne Bank itself did not deduct these "expenses" for tax purposes. Just a thought.
In any case, more important, I hope WealthOne turns the corner sooner rather than later and turns a profit to reach a stable position. This is one bank that depositors need and depend on CDIC coverage.

January 22, 2020
4:19 pm
Loonie
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I was just reviewing Doug's original post about the promo.
Seems it bear some similarity to Meridian's 1% promo on RSPs/TFSAs, current.
But Meridian has tamed it by limiting the deposit which qualifies. On the other hand, Meridian's offer applies to any term.
Meridian considers this as bonus interest and not as a contribution to the registered plan into which it is deposited up-front. So, on that basis, I would expect WEalthOne to also consider it bonus interest. But it seems toto's investment was non-registered, so the interest would have to show up as such.
Keep an eye on your online CRA profile to see if a tax receipt shows up there. It's still early for many of them to be sent out anyway.
Another possibility: perhaps it will be added to your annual T5s, divided over five years, and thus will start to appear on 2020 T5.

I wouldn't be inclined to call CRA about it. First, their answers are no more reliable than the ones given by the banks. Second, you might just open a can of worms that will be even worse to deal with.

I would ask for written, signed, clarification as to how this money is to be taxed because you can be sure it will be, one way or another; or at the very least a written signed explanation of why it is not taxable.
You could also ask your accountant, if you have one. They may have seen this kind of issue before.

January 22, 2020
6:28 pm
toto
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Thanks for the feedback. Good idea to check my CRA account.

January 22, 2020
6:39 pm
Norman1
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The 0.2%-per-year cashback may not be taxable. But, that doesn't mean it doesn't have any tax consequences.

No T5 slip is issued maybe because the cashback isn't interest. Instead, it is a partial return of the original principal or a return of capital.

So, there is an immediate reduction in the cost of the GIC from the cashback. On maturity, there would be a corresponding capital gain when the GIC is redeemed.

It looks similar to buying a five-year bond for 99% of face value and having it redeemed for 100% of face value at maturity.

January 22, 2020
10:42 pm
Loonie
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I find it hard to believe a bank would set up a GIC in such a way that the customer would acquire a capital gain.
It certainly wouldn't be what the customer thought they had signed up for and it would create a lot of confusion and resultant phone calls.

January 23, 2020
5:42 am
Norman1
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Usually, a bonus on a GIC is in the form of extra interest. When a deposit broker reduces his or her commission, it is reflected as a higher rate on the purchased GIC and not a cashback to the client.

However, a return of capital followed by a capital gain is actually preferable because only half of the gain is taxable.

The cashback does not look like a gift. It does not meet the third requirement of a gift discussed in this previous post.

January 24, 2020
3:43 pm
Loonie
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To me, it's not a question of what is preferable. If that were the issue, one would expect the FI in question to advertise this as a benefit.

It's a matter of confusion. Creating a capital gain creates confusion for a GIC investor and creates more confusion in preparing one's tax return. It's not in the best interests of the FI to create such confusion.

January 24, 2020
4:15 pm
canadian.100
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Cash back earned on credit cards (and bonuses to enrol for a certain credit card) are not taxable so there may be a case for this type of non taxable "cash back bonus" on purchasing a GIC.

I certainly do not see a valid argument which would support the bonus on the purchase of a GIC as being a "capital gain".

January 24, 2020
5:04 pm
Norman1
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It is not the cashback or the return of capital distribution that is taxable. It is the resulting reduction in the cost of the item that might become a capital gain later when the item is sold or redeemed.

Those commission rebates work that way. Discount brokerage offers to rebate my next ten $9.99 trades. The $9.99 is charged on each trade. Later, the $9.99 is rebated. I need adjust the cost of the shares bought or reduce expenses on the shares sold by the amount of the rebate.

Are you really willing to go to Tax Court and say, with a straight face, that the 5-year $100,000 GIC, that gave a $1,000 cashback, actually cost $100,000 (not $99,000) and had no capital gain when it was redeemed at maturity for $100,000?

January 25, 2020
7:43 am
canadian.100
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Norman1 said

Are you really willing to go to Tax Court and say, with a straight face, that the 5-year $100,000 GIC, that gave a $1,000 cashback, actually cost $100,000 (not $99,000) and had no capital gain when it was redeemed at maturity for $100,000?  

Not an issue for me as I did not buy $300,000 of GICs at WealthOne Bank under the "bonus promo" and receive $3000 in "cash back". However, it would be interesting to know how Toto resolves this after consulting with WealthOne / with CRA and/or with his tax preparer /accountant.

I have had gains on Govt and Corp Bonds over the years and these gains were treated sometimes as capital gains and other times as interest (by my broker) depending on the circumstances of the specific bond.

Seems to me WealthOne should be able to provide some direction on this.

January 25, 2020
12:12 pm
Norman1
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Yes, Wealth One Bank should be able to provide direction about the cashback.

However, it looks like they misinterpreted

  1. the cashback being not taxable when received and
  2. no T5 slip is issued for the cashback

as also meaning the cashback has no tax consequences.

The rules for bonds are complex. But, they do define what portion of the total purchase or sale price is for accrued interest and for the bond itself.

January 25, 2020
6:24 pm
Loonie
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It's hard to imagine a bank, with its army of accountants and lawyers, would be so stupid as to think in the way Norman just suggested. but I guess it's possible.
Looks like a duck, walks like a duck, but apparently it must be a cow. A cash cow?

Does anyone know if this sort of thing would be picked up on a financial audit of the bank? - items in wrong columns or something like that?

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