# Question re RRSP and non-registered



## 1.5M (Apr 21, 2012)

Is it legal to take opposite positions in RRSP and a non-registered account? For example: a short position in non-registered account and a long position in the same instrument in RRSP.


----------



## andrewf (Mar 1, 2010)

If they aren't the exact same security/underlying, you should be fine.

You could be long SPY in your RRSP and short VTI in a margin account with no problems, for instance.

It would be helpful if you were more specific about what you had in mind.


----------



## 1.5M (Apr 21, 2012)

The objective is to withdraw from RRSP and pay capital gains tax instead of income tax. One way to do it would be to incur losses in RRSP and corresponding gains in non-reg. Obviously the objective is to do it by exploiting a loophole, not by breaking the law.
So actually I meant the exact same security, one that is almost guaranteed to drop in a reasonable amount of time (like VXX). 
According to your answer, one could do it with two ETFs for the exact same product, but from two different providers (i.e. VXX and VIXY, different securities, lol).


----------



## andrewf (Mar 1, 2010)

I think you would be okay with VXX and VIXY. Though they track similar indices, VXX is an ETN (essentially a Credit Suisse bond) while VIXY in an ETF (holding fully collateralized VIX futures contracts). I think you'd have enough grounds to argue they are not effectively the same security (unlike two funds that track a cap weighted S&P500 index), which can get you into trouble with CRA.

The only trick is cost of borrowing VIXY/VXX to short. This seems a bit baroque, but perhaps it is worth the effort.


----------



## GoldStone (Mar 6, 2011)

andrewf said:


> (unlike two funds that track a cap weighted S&P500 index), which can get you into trouble with CRA.


What trouble? Can you provide a reference?


----------



## GoldStone (Mar 6, 2011)

I think this whole discussion is moot. The gain from a short sale is NOT a capital gain. It's a regular income. There is no loophole.

http://www.cra-arc.gc.ca/E/pub/tp/it479r/it479r-e.html



> 18. The gain or loss on the "short sale" of shares is considered to be on income account.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> I think this whole discussion is moot. The gain from a short sale is NOT a capital gain. It's a regular income. There is no loophole.
> http://www.cra-arc.gc.ca/E/pub/tp/it479r/it479r-e.html


(a) that makes absolutely no sense. If one buys an inverse ETF (like SH) then is considered capital gains, but if one directly shorts the ETF (SPY) is income? It looks like no one is updating these obsolete rules ("DATE: February 29, *1984*", lol). 
So the loophole is still there: go long the inverse ETF.

(b) This rule looks to me that it opens a big loophole for avoiding income tax: short XIV (ETF for inverse short term VIX futures) in non-reg and go long XIV (or something identical from a different provider) in TFSA. The non-reg loss would reduce other income (like salary income or RRSP withdrawals) while tfsa will grow tax free. XIV was +150% in 2012. Am I missing something?


----------



## GoldStone (Mar 6, 2011)

*Income Tax and Short Selling Stocks*
http://blog.taxresource.ca/expense-paid-on-dividends-of-short-sale/



> Making Money With Short Sales
> 
> If you sell a borrowed stock and the price of that stock falls, then you can buy back the stock for less than you paid for it and return it to the broker.
> 
> *However, the gain, which is the difference between what you sold it for and what you repurchased it at is NOT a capital gain but is taxed just like regular income.*


The author is a CGA/CFP who specializes in tax planning.


----------



## GoldStone (Mar 6, 2011)

1.5M said:


> (a) that makes absolutely no sense. If one buys an inverse ETF (like SH) then is considered capital gains, but if one directly shorts the ETF (SPY) is income? It looks like no one is updating these obsolete rules ("DATE: February 29, *1984*", lol).


You can lol all you want but that interpretation bulletin is still very much in force. Look for IT479R in this list:

http://www.cra-arc.gc.ca/menu/ITSC_450-eng.html




1.5M said:


> (b) This rule looks to me that it opens a big loophole for avoiding income tax: short XIV (ETF for inverse short term VIX futures) in non-reg and go long XIV (or something identical from a different provider) in TFSA. The non-reg loss would reduce other income (like salary income or RRSP withdrawals) while tfsa will grow tax free. XIV was +150% in 2012. Am I missing something?


You can't deduct investment losses (recorded on an income account) from other types of income.

But, here's something I missed:

You can file form T123 to make capital gain election. Once you made the election, you can treat short sale gains/losses as capital gains/losses.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> *Income Tax and Short Selling Stocks*
> http://blog.taxresource.ca/expense-paid-on-dividends-of-short-sale/
> The author is a CGA/CFP who specializes in tax planning.


I'm not arguing that the rule is not there. I am only saying that it does not make any sense in 2013 and it does not prevent the loophole.

To further clarify why it does not make any sense: 
- I could buy an inverse ETF with an identical profile as the short sale of the original ETF
or
- I could buy a put and sell a call at the same ATM strike (synthetic short)
Both these trades are taxed as capital gains and produce the same outcome as the short sale.


----------



## andrewf (Mar 1, 2010)

I may be mistaken. That rule applies in the US. It may be that CRA tried that interpretation (two S&P 500 index funds are effectively identical), but perhaps the SC struck that down.


----------



## GoldStone (Mar 6, 2011)

Okay, what I wrote in my previous message is not quite correct.

I think you have two options:

1. You can make the election to report your investment gains as business income. The election is permanent; you can't revoke it. All types of gains will be treated as income. In this case, you can deduct your investment losses from other types of income.

or

2. You can make the election to report on a capital account. In this case, you cannot deduct the investment losses from other types of income.

I'm not a tax expert so you better verify this.


----------



## 1.5M (Apr 21, 2012)

Thinking more about it, the synthetic short should be a better tax solution. I don't see them arguing that the synthetic short (which are 2 option trades) and the long equity position are opposite. Also the margin req. should be lower for the synthetic short.

Also, the long position in the inverse ETF could be used in a TFSA/RRSP combo, to withdraw money from RRSP tax-free.


----------



## GoldStone (Mar 6, 2011)

CRA can challenge any trade, no matter how you structure it, if the only goal of the trade is to reduce RRSP withdrawal taxes. They will argue it should be reported as income rather than cap gains.

You better talk to a tax professional before you try anything.


----------



## james4beach (Nov 15, 2012)

I don't think this is a good idea. As someone who does a lot of short selling, I can tell you that accountants and the CRA themselves are both pretty muddy on how to treat short sales. I've had different tax/accounting professionals tell me conflicting things.

Given that it's already a tricky area, I wouldn't complicate it further by mixing up short selling with a technique that's clearly intended to avoid paying taxes. That's my opinion any way

Short selling aside, a colleague and I did once discuss a similar idea using offsetting options positions. It seemed like a bad idea, according to the accountant.


----------



## GoldStone (Mar 6, 2011)

*Anti-avoidance rules for RRSPs and RRIFs*
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ntvdnc/menu-eng.html

*Tax payable on an advantage*
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ntvdnc/vntg-eng.html

*Definition of Advantage*
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/glssry-eng.html#advantage


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> *Anti-avoidance rules for RRSPs and RRIFs*
> http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ntvdnc/menu-eng.html
> 
> *Tax payable on an advantage*
> ...


Although these rules are written in hardly intelligible lawyer/accountant language, I don't see them addressing the loopholes mentioned here. 

And I think any tax code that requires a lawyer or accountant or a few weeks of study to understand should be changed.
A tax code should not be muddy, or be interpreted in different ways by different lawyers. Unfortunately it seems that our tax code is big pile of crap and they keep adding to it instead of simplifying it.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> CRA can challenge any trade, no matter how you structure it, if the only goal of the trade is to reduce RRSP withdrawal taxes. They will argue it should be reported as income rather than cap gains.
> 
> You better talk to a tax professional before you try anything.


Ok, assuming they take their time to go through tens of trades in a margin account and match that against tens of trades in RRSP and cross compare with tens of trades in TFSA to detect the loopholes, then what's the worst it can happen? They'd tell you to report a capital gain as income? Is that it? Who's paying the thousands of agents to go through all peoples' trades to detect a couple of potential loopholes? And I doubt they can actually detect some of the loopholes.


----------



## GoldStone (Mar 6, 2011)

1.5M said:


> what's the worst it can happen?


Fine and jail for tax evasion.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> Fine and jail for tax evasion.


Really, reporting a trade as capital gain when they think it should be income, is tax evasion?


Here's an example for 2012:
- in TFSA: buy 3000 XIV in Jan (pay $7/unit), sell in Dec (get $18) -> profit $33000, withdraw $15600
- in RRSP: buy 650 VXX in Jan (pay $32/unit), sell in Dec (get $32/4 = $8/unit, there was a split) -> loss $15600

So with these two trades, one would have effectively withdrawn $15600 tax-free from RRSP and also made a nice tax-free profit in TFSA.
Now, could you please explain to me why this is tax evasion according to our tax code?
Also, considering that both trades are legal, could you please explain what should legally be reported as income according to our tax code?


----------



## Charlie (May 20, 2011)

If you're shorting a security you own in your RRSP (and somehow using that as collateral), I think your risk might be income inclusion of the full amount 'borrowed.' Though I admit I don't really understand the scheme here -- why would you be long in a security that was sure to go down?

I also don't know how they would detect this?? But that's usually a lousy reason to go ahead with a plan.


----------



## GoldStone (Mar 6, 2011)

1.5M said:


> Really, reporting a trade as capital gain when they think it should be income, is tax evasion?


You asked what's the worst that can happen. I gave you an answer.

Will it happen to you? That's a different question.


----------



## andrewf (Mar 1, 2010)

I think using long VXX and long XIV is fine. They aren't perfect hedges. I tend to agree, though, that if you believe XIV is highly likely to rise, and VXX highly likely to fall, why not skip the long VXX part? Is it just that you want to hedge against disaster?


----------



## 1.5M (Apr 21, 2012)

andrewf said:


> I think using long VXX and long XIV is fine. They aren't perfect hedges. I tend to agree, though, that if you believe XIV is highly likely to rise, and VXX highly likely to fall, why not skip the long VXX part? Is it just that you want to hedge against disaster?


The objective was to transfer from RRSP to TFSA/withdraw.
VXX is almost guaranteed to drop in a certain period of time. The period of time, though, is an unknown. It can dramatically increase over shorter periods of time. So if you're unlucky and it increases, you won't actually lose real money in XIV (as you have a hedge in RRSP) and be able to reliably wait it out. The problem here is indeed how good the inverse correlation is.


----------



## 1.5M (Apr 21, 2012)

GoldStone said:


> You asked what's the worst that can happen. I gave you an answer.
> 
> Will it happen to you? That's a different question.


Actually, if it's illegal and I knew it's illegal, I won't do it at all. I am looking for loopholes and trying to decide if there are any.
The argument is if it's illegal or not and it seems it's difficult to agree on what's legal and what's not as the tax code is a mess.


----------



## 1.5M (Apr 21, 2012)

Charlie said:


> If you're shorting a security you own in your RRSP (and somehow using that as collateral), I think your risk might be income inclusion of the full amount 'borrowed.' Though I admit I don't really understand the scheme here -- why would you be long in a security that was sure to go down?
> 
> I also don't know how they would detect this?? But that's usually a lousy reason to go ahead with a plan.


The idea is to own two inversely correlated securities in RRSP and TFSA with the one in RRSP having a high probability of quickly going down. The money will effectively be moving from RRSP to TFSA, tax-free (there still would be a small chance that the money would move in the opposite direction, at least for short periods).
It does not have to involve any actual shorting, only inverse correlation and quick price movements.


----------



## Charlie (May 20, 2011)

I can't imagine CRA having a problem with that. And I don't see it as a loophole...you're betting probabilities which should (in theory) be priced into the securities.


----------



## andrewf (Mar 1, 2010)

If CRA challenged these transactions you might very well be able to sucessfully fight it in court. But there is no guarantee that CRA won't challenge it.


----------



## Charlie (May 20, 2011)

I don't see what they could challenge. He's buying two securities with inverse correlations. Each is eligible and neither is dependent on the other. There's no rule against purposely being prepared to lose money in your RRSP as a sort of hedge against another trade...there's no inappropriate withdrawal from the RRSP here.


----------



## HaroldCrump (Jun 10, 2009)

1.5M said:


> The idea is to own two inversely correlated securities in RRSP and TFSA with the one in RRSP having a high probability of quickly going down. The money will effectively be moving from RRSP to TFSA, tax-free (there still would be a small chance that the money would move in the opposite direction, at least for short periods).


But why keep the side that's more likely to go down inside the RRSP, instead of a non-registered account?
You are simply killing your RRSP room by doing this.
Might as well keep it un-registered, which will have the additional benefit of being able to write off the losses against other gains.


----------



## 1.5M (Apr 21, 2012)

HaroldCrump said:


> But why keep the side that's more likely to go down inside the RRSP, instead of a non-registered account?
> You are simply killing your RRSP room by doing this.
> Might as well keep it un-registered, which will have the additional benefit of being able to write off the losses against other gains.


I've assumed that the money is already in RRSP and in TFSA, and one wants to start moving money out of RRSP in a tax optimized way.


----------



## james4beach (Nov 15, 2012)

1.5M said:


> The idea is to own two inversely correlated securities in RRSP and TFSA with the one in RRSP having a high probability of quickly going down. The money will effectively be moving from RRSP to TFSA, tax-free (there still would be a small chance that the money would move in the opposite direction, at least for short periods).


If you can find a security like that with such predictable behaviour, so predictable that you can use it like a pipe to move money ...

then why not just open a big one-sided speculative position on the security and just use it to make pure PROFIT? (Forget about the other side of the trade)

Leaving aside tax rules, I suspect this won't work like you intend


----------



## 1.5M (Apr 21, 2012)

james4beach said:


> If you can find a security like that with such predictable behaviour, so predictable that you can use it like a pipe to move money ...
> 
> then why not just open a big one-sided speculative position on the security and just use it to make pure PROFIT? (Forget about the other side of the trade)


Because we are talking about high probability, not certainty. Actually all the trades I'm opening (or strategies) have a high probability to be profitable, otherwise I would just be gambling.
In the particular case of VIX, it is very predictable, it always reverses to the mean. The timeline is not predictable.


----------



## Lephturn (Aug 31, 2009)

Bill Luby writes some great stuff about VIX and VIX products like VXX.
http://seekingalpha.com/article/1145691-vxx-vxz-celebrate-4th-birthday

Two things to remember:

#1 Every major market crash in my lifetime has started while volatility was low - both implied and realized.
#2 Beware of too short term a view of what the mean is. What we have now SEEMS low, but with a longer view it becomes clear that vol could go lower and stay lower for a long time.

Basically in most of these structured ETPs there are things like roll risk built in - the roll risk and the term structure of VIX futures basically ensures they go down over the longer term.


----------



## jcgd (Oct 30, 2011)

I may be completely misunderstanding what the idea is but this is my 5 second take away.

1.5 Mil wants to go long an index in his rrsp that he would go short in another account. If things go as planned the rrsp will lose value at the same rate the other account gains value on the short. Effectly the wealth moves from the rrsp to the other account.

To me and my understanding of the Definitions for RRSPs, this might be considered an advantage. And if it was, I THINK the advantage would be taxed at 100%, effectively putting you back in the same place as if you just withdrew the funds from the RRSP.

Even if you can do this, you risk transferring the wealth the wrong way don't you?


----------



## james4beach (Nov 15, 2012)

I see what you're getting at, and yes there's still a gamble in there - so it's not a direct transfer. Interesting. And like you said if you guess wrong, the money moves in the "wrong" direction. Make sure you do plenty of dry runs with real market quotes before you actually try doing this.

One big danger I see is that these vehicles are ETNs which are essentially unsecured debt notes. To accomplish your transfer, you're lending the money to Barclays without collateral.

*If Barclays fails during the progress of your maneuver, you will lose all the money from both accounts*. This has happened with other ETNs whose sponsoring investment banks collapsed (e.g. Lehman).


----------



## sharbit (Apr 26, 2012)

I've thought about this transaction too. There's something in the tax code known as GAAR (General Anti-Avoidance Rule) that this trasaction going eather way might rub up against. The basic idea being if a transaction or series of transactions exists soley for the benifit of tax avoidance it can be challenged. It's kind of a catch all if you try to "hack" the tax code. It's not an absolute in that you'll be challenged but a risk.

http://www.pacific-first.com/phsp/gaar.php


----------



## andrewf (Mar 1, 2010)

Not all are ETNs. There are ETF analogues, namely VIXY (for VXX) and SVXY (for XIV). These are like other futures ETFs.


----------



## james4beach (Nov 15, 2012)

From what I recall, the ETNs track very well (because they're ethereal anyway) but the ETF ones based on futures or something will "leak" away price changes. That is I think if you hold them long enough, there's tracking error.

The GAAR is a very good point and my gut instinct would be to not try any strategy that's purely meant for tax avoidance


----------



## 1.5M (Apr 21, 2012)

jcgd said:


> I may be completely misunderstanding what the idea is but this is my 5 second take away.
> 
> 1.5 Mil wants to go long an index in his rrsp that he would go short in another account. If things go as planned the rrsp will lose value at the same rate the other account gains value on the short. Effectly the wealth moves from the rrsp to the other account.
> 
> ...


In short term, yes. In the long term it's mostly a time cost (loss in profit due to having money in this instead of other investments). In the long term, VXX goes down and the inverse of it up, due to a skew in short term VIX futures. Should be executed when VIX is high, above 25. 

Also, after further consideration, the idea is to go long in both accounts different instruments that are inversely correlated (in RRSP/TFSA) or use a long and a synthetic short, 2 options (in RRSP/non-reg). I don't see how they can consider that as GARR (unless there is a rule that you can't hold inversely correlated instruments in your accounts and they analyze the correlation of your trades). To me, the Smith Maneuver looks like a loophole that is easier to prevent than this would be.


----------



## 1.5M (Apr 21, 2012)

james4beach said:


> *If Barclays fails during the progress of your maneuver, you will lose all the money from both accounts*. This has happened with other ETNs whose sponsoring investment banks collapsed (e.g. Lehman).


I wouldn't need to put too much money in this at a time anyway (probably at most 5% of my holdings would be in this). Usually, there is no need to draw down RRSP all at once.
Anyway, if Barclays goes down we'll all have bigger problems than this. After Lehman went down, SP500 dropped something like 50% in 3 months.


----------



## 1.5M (Apr 21, 2012)

Lephturn said:


> Bill Luby writes some great stuff about VIX and VIX products like VXX.
> http://seekingalpha.com/article/1145691-vxx-vxz-celebrate-4th-birthday
> 
> Two things to remember:
> ...


Yes, that's the basic idea of using VXX for this, it predictably goes down over the long term.


----------



## sharbit (Apr 26, 2012)

1.5M said:


> I don't see how they can consider that as GARR


Would you still do the transaction if there was no net tax benefit? (Would you ever hold both securities in the same taxable account?) If the answer is no then "GAAR risk" applies.


----------



## 1.5M (Apr 21, 2012)

sharbit said:


> Would you still do the transaction if there was no net tax benefit? (Would you ever hold both securities in the same taxable account?) If the answer is no then "GAAR risk" applies.


Ok, then please help me with this example for a potential trade in 2012 with inversely correlated instruments:
- in TFSA: buy 3000 XIV in Jan (pay $7/unit), sell in Dec (get $18) -> profit $33000, withdraw $15600
- in RRSP: buy 650 VXX in Jan (pay $32/unit), sell in Dec (get $32/4 = $8/unit, there was a split) -> loss $15600

Both these trades are legal. I don't know if I'm doing them only for tax benefits as obviously they are not in perfect correlation. What should I report as income so that CRA would be happy:
- the capital gain in TFSA? Is that even possible? 
- the withdrawal from TFSA? Is that even possible? 
- what if I don't withdraw anything in 2012 from TFSA and I withdraw $20000 from TFSA 5 years later?


----------



## 1.5M (Apr 21, 2012)

sharbit said:


> Would you still do the transaction if there was no net tax benefit? (Would you ever hold both securities in the same taxable account?) If the answer is no then "GAAR risk" applies.


What if I buy puts in RRSP as protection for a long position in the same security that I'm holding in a non-reg account or TFSA? Is that GARR? 
-> There is a tax benefit (as the puts have good chance to expire worthless most time and so my RRSP gets slowly depleted, so I'll never pay any taxes for it). 
-> On other hand, I'd still do the trade without the tax benefit and I'd hold it in the same account as the long position.


----------



## sharbit (Apr 26, 2012)

1.5M said:


> -> On other hand, I'd still do the trade without the tax benefit and I'd hold it in the same account as the long position.


Then you're fine.

With the TFSA/RRSP case, if it's purely a tax saving transaction I don't even think its likely you'll get caught unless you do it a large scale, but from an academic perspective this is what laws are in place for CRA to get their pound of flesh back if you do get caught. I'm also not an accountant so I'm not sure how often people are pursued on this stuff, if at all.


----------



## Lephturn (Aug 31, 2009)

1.5M said:


> What if I buy puts in RRSP as protection for a long position in the same security that I'm holding in a non-reg account or TFSA? Is that GARR?
> -> There is a tax benefit (as the puts have good chance to expire worthless most time and so my RRSP gets slowly depleted, so I'll never pay any taxes for it).
> -> On other hand, I'd still do the trade without the tax benefit and I'd hold it in the same account as the long position.


RBC-DI won't let me do this - and I suspect other brokerages would be similar. They will not allow me to buy puts unless I own the underlying. Maybe it's just RBC-DI... I'm about to do some trades at Questrade so I'll see if they'll let me buy puts alone. It might just be RBC-DI since they won't even let me run a collar in a registered account.


----------



## Lephturn (Aug 31, 2009)

james4beach said:


> From what I recall, the ETNs track very well (because they're ethereal anyway) but the ETF ones based on futures or something will "leak" away price changes. That is I think if you hold them long enough, there's tracking error.


For any ETP based on a futures contract we must always understand the normal term structure of the futures contracts. VIX futures are normally in contango - that means longer term futures contracts are priced higher than near term contracts. Since the value of the ETP must be rolled from one contract month to another continuously they are normally selling a lower priced contract and buying a higher priced one leading to steady losses. BUT - you need to be aware of this term structure and watch it. VIX futures sometimes flip from contango to backwardization - meaning the near term contracts get priced higher than the longer term and that same process reverses. Now backwardization doesn't usually last very long in VIX, but you do need to be aware of that term structure when using these products - especially when you are about to open or close a position.

Unfortunately for registered accounts we can't go short because you would be better off to always be short the inverse direction ETN. So to go long, short the short product, and to go short, short the long one!


----------



## andrewf (Mar 1, 2010)

Lephturn said:


> RBC-DI won't let me do this - and I suspect other brokerages would be similar. They will not allow me to buy puts unless I own the underlying. Maybe it's just RBC-DI... I'm about to do some trades at Questrade so I'll see if they'll let me buy puts alone. It might just be RBC-DI since they won't even let me run a collar in a registered account.


Questrade definitely allows this, including in RRSP and TFSA. I'm the proud owner of VXX and UVXY puts.



Lephturn said:


> Unfortunately for registered accounts we can't go short because you would be better off to always be short the inverse direction ETN. So to go long, short the short product, and to go short, short the long one!


I don't know if it's always better to be short versus other methods. I don't like the unlimited risk of short positions. For instance, short VXX is pretty appealing, except that its index has a habit of periodically quadrupling trough-to-peak. Despite the high premiums, I think at least some puts are priced attractively to avoid this risk.


----------



## Lephturn (Aug 31, 2009)

Overall in the long term always short would take advantage of that constant decay. I would definitely buy some units for insurance on the upside though - so some far OTM calls that are cheap but will explode when one of those 3 standard deviation events hits.


----------



## andrewf (Mar 1, 2010)

Also, shorting is not permitted in registered accounts. I might consider it when I have a large unregistered portfolio (a -5% allocation to VXX).


----------



## Jungle (Feb 17, 2010)

I see how you could funnel money form your rsp to your tfsa and withdraw tax free. The cra does not require you to report your losses or gains in these accounts so how would they would even know?


----------



## HaroldCrump (Jun 10, 2009)

If we assume that it is not possible for anyone to predict the direction of a security with any degree of accuracy, the reverse might happen i.e. the TFSA side might go down and the RRSP side might go up.
Then, all of a sudden, you have a much bigger problem than you started with.
Your very own version of the _London Whale Trade_

On the other hand, if it is possible to predict the up/down movements of these two securities in question, skip the RRSP side entirely, buy the leg going up inside the TFSA and ride it to _Infinity and Beyond_.


----------



## humble_pie (Jun 7, 2009)

one wonders why 1.5M has duplicated his original question ?

he keeps asking how to collapse the rrsp, how to inflate the tfsa at the same time, is this legal. The issue has been discussed to death.

it would be foolish to imagine that the tax authorities will allow schemes to proliferate that will deprive them of their fabulous, unbelievable, juicy, 45-year-long, gazillion $$ harvest of rrsp tax dollars as these mature & convert to taxable rrifs.

they - the tax authorities - are premier grand cru classé vintners who have been waiting all these decades for this giant crop of slow-growing heritage rrsp grapes to reach their full splendour. Does anyone believe they will allow the village rabble to break into the locked chateau gates & steal all the precious fruit. Better think again. It took the tax authorities only a few weeks in 2009 to find out who was gaming the brand-new tfsas. As i recall, by april or may 2009 they had shut all the primary loopholes ...


----------

