# Joint or Individual Account?



## vaughn (Mar 29, 2015)

Hello,

My wife and I are trying to decide on whether to open a joint or individual trading accounts. For some background I will note that we both have individual TFSA accounts which are maxed out. I have a DB pension and she has nothing as she is a contractor. The account that we are looking to open will be "non registered" however I don't know if there are advantages (tax or otherwise) which would sway us one way or another. Also when looking at Questrade it seems their non registered accounts automatically have margin, is this wise or is there a non margin account as well?


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## AltaRed (Jun 8, 2009)

Having 2 joint accounts (JTWROS) is a good thing. Put one with your name first and you contribute 100% of the funds and declare 100% of the income on your tax return. Put the other with her name first and she contributes 100% of the funds, etc. It is an easy way to keep track of to whom income is atttibutable too for tac purposes. Just because a name is on a joint account does not mean that the person contributed anything to it.

The advantage of JTWROS accounts is in the event of death, the account rolls over to the surviving spouse.

No idea about Questrade but just don't use any margin and you will never get into trouble.


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## Retiredguy (Jul 24, 2013)

vaughn said:


> Hello,
> 
> My wife and I are trying to decide on whether to open a joint or individual trading accounts. For some background I will note that we both have individual TFSA accounts which are maxed out. I have a DB pension and she has nothing as she is a contractor. The account that we are looking to open will be "non registered" however I don't know if there are advantages (tax or otherwise) which would sway us one way or another. Also when looking at Questrade it seems their non registered accounts automatically have margin, is this wise or is there a non margin account as well?




I agree with AltaRed but would also add to make sure that you have named each other as beneficiaries on your TFSA accounts.


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## 0xCC (Jan 5, 2012)

Also agree that having a joint account is probably better especially if you can each contribute 50/50 to it. If you can't contribute 50/50 or if you will be contributing on something other than a regular basis then the two joint accounts can make sense. Keeping track of the percentage each person has contributed to the account is important for tax purposes as you have to divide any tax owing on income or capital gains based on the percentages each person has contributed.

The JTWROS thing is "Joint Tennants With Right Of Survivorship" which basically means if one of you dies the other one can still access and use the account right away without having to deal with jumping through the hoops required when someone has died.

There has been discussion on this forum recently about Questrade and its lack of cash (no-margin) accounts. The speculation is that Questrade does some behind the scenes stuff with those margin accounts but there really isn't any information anywhere to confirm or deny that speculation.


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## Eclectic12 (Oct 20, 2010)

Retiredguy said:


> I agree with AltaRed but would also add to make sure that you have named each other as beneficiaries on your TFSA accounts.


Where one's province allows it ... I believe one should designate their spouse a "Successor Holder" as well as have an updated will. This will allow everything to pass over to the survivor, tax free.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/dth/sccrhldr-eng.html

A "designated beneficiary" spouse on the other hand is limited by the FMV at death so that any growth while during the windup will be taxable to them, as I understand it.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/dth/srvr-eng.html
http://www.moneysmartsblog.com/esta...ry-successor-holder-tax-free-savings-account/ 
http://www.theglobeandmail.com/glob...ay-tax-on-my-tfsa-after-i-die/article4574575/


Cheers


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## vaughn (Mar 29, 2015)

Excellent information, thank you for your replies!


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## daledegagne (Apr 6, 2015)

Hey Vaughn, 

I have one questions for you and one suggestion.

*Q1. * - You didn't mention anything about RRSP's - In some cases, I'm REALLY NOT a fan of them (such as high income, or the potential that you won't be able to use them up in your retirement) but I'm curious because you didn't mention them, but you did mention TFSA's. If you're going to invest and you have a decent amount of time between now and when you need the money, is it not a decent idea to let your money compound while delaying taxes on it? 

*S1* - Technically, in Canada, every one files their taxes as individuals although married couples have the benefit of sharing certain credits etc (so it may seem that you file jointly). So I would strongly suggest that you just keep it simple. There is no tax advantage that I am aware of for holding a non-registered account jointly. 

Your best bet I believe is to open 2 accounts and keep things clean and easy to understand in terms of contributions and pending taxes. And as has already been mentioned, make the proper plans in the event of unforeseen circumstances (not just death but disabilities as well). I believe that is what AltaRed was saying; 

2 accounts, 1 in your name, one in hers, but JTWROS to avoid red tape.


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## 0xCC (Jan 5, 2012)

daledegagne said:


> *Q1. * - You didn't mention anything about RRSP's - In some cases, I'm REALLY NOT a fan of them (such as high income, or the potential that you won't be able to use them up in your retirement) but I'm curious because you didn't mention them, but you did mention TFSA's. If you're going to invest and you have a decent amount of time between now and when you need the money, is it not a decent idea to let your money compound while delaying taxes on it?


vaughn mentions that he has a DB pension, that could take up the vast majority of his RSP contribution room. It might make sense for his wife to have an RSP depending on current income level and expected income level in retirement.



daledegagne said:


> *S1* - Technically, in Canada, every one files their taxes as individuals although married couples have the benefit of sharing certain credits etc (so it may seem that you file jointly). So I would strongly suggest that you just keep it simple. [B}There is no tax advantage that I am aware of for holding a registered account jointly. [/B]


It isn't possible to hold a registered account jointly, registered accounts are individual accounts.


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## Retired Peasant (Apr 22, 2013)

The only thought I wanted to add was what is the nature of her contract work? If she is open to any liability or possibility of being sued by a client, then joint accounts could be up for grabs.


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## daledegagne (Apr 6, 2015)

0xCC said:


> vaughn mentions that he has a DB pension, that could take up the vast majority of his RSP contribution room. It might make sense for his wife to have an RSP depending on current income level and expected income level in retirement.


Yes. This is why I was asking.




> It isn't possible to hold a registered account jointly, registered accounts are individual accounts.


Thank you for catching my typo - I meant non-registered. Edited.


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## vaughn (Mar 29, 2015)

Thanks for all the feedback!

daledegagne - I believe all of my RRSP room is used up by my DB pension so that is not an option for me. As for my wife she is a computer programmer by trade and is only working for one client (where she used to be an employee). There is no guarantee of future work for her since she only has one client. My thinking now is that she should probably have an RRSP account before a non registered one since she could draw from it if she is no longer working and either pay no tax or less tax on withdrawal.


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## CalgaryPotato (Mar 7, 2015)

vaughn said:


> Thanks for all the feedback!
> 
> daledegagne - I believe all of my RRSP room is used up by my DB pension so that is not an option for me. As for my wife she is a computer programmer by trade and is only working for one client (where she used to be an employee). There is no guarantee of future work for her since she only has one client. My thinking now is that she should probably have an RRSP account before a non registered one since she could draw from it if she is no longer working and either pay no tax or less tax on withdrawal.


Just remember you can't get RRSP room back. So if she is consistently putting money in for a year while she's working and then drawing for 2 months while looking for her next contract, she'll end up with a very low RRSP over time. That said, if you have a good DB plan (if it fills every bit of your contribution room that is amazing) and you use TFSA's on top of that you'll probably be fine.

Also when you say she'll pay no tax you are assuming that she's going to be our of work for a full calendar year. That isn't a typical scenario.


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## daledegagne (Apr 6, 2015)

vaughn said:


> Thanks for all the feedback!
> 
> daledegagne - I believe all of my RRSP room is used up by my DB pension so that is not an option for me. As for my wife she is a computer programmer by trade and is only working for one client (where she used to be an employee). There is no guarantee of future work for her since she only has one client. My thinking now is that she should probably have an RRSP account before a non registered one since she could draw from it if she is no longer working and either pay no tax or less tax on withdrawal.


I think you're bang on there. As a general rule Registered Acct's > Non Registered. 

If I can throw my personal 2 cents in - I would even say that Paying Off Debts > Non Registered Accounts for the most part (depends on how conservative you are). 

Example: Your mortgage is 4%.
You expect 6% ROI in your non-registered.
That 6% is taxed at 33% (for easy figures) so you're left with 4% after tax. 
From an efficiency stand point, these two choices are equal - but if you pay off your mortgage, then you have one less liability, and you also have freed up what you were paying on your mortgage (which includes the Principal, not just the interest). When planning for the future, reducing liabilities is a key component that sometimes gets overlooked.


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## My Own Advisor (Sep 24, 2012)

Curious....why not 2 individual accounts? Keep things simple from a tax perspective?

I suspect in another 20 years or so, if the $10k contribution room for the TFSA holds up, there might not be much a need for taxable accounts.


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## daledegagne (Apr 6, 2015)

My Own Advisor said:


> I suspect in another 20 years or so, if the $10k contribution room for the TFSA holds up, there might not be much a need for taxable accounts.


This would be excellent. 

@My Own Advisor - Are you recommending people wait until the fall, go ahead and start contributing, or something more creative (like banking it and waiting to be sure)?


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