# TFSA Rules



## NicW11 (Mar 3, 2012)

I asked my RBC Financial Advisor, and she couldn't give me a definative answer...Let's just assume this is Year One for simplicity.

I invest 5000.00, my investment in that SAME year goes up to 6000.00, I withdraw 1000.00 in that same year. The following year, can I invest 5000.00 (new room) or 6000.00 (new room plus 1000.00 withdrawl last year)?


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## doctrine (Sep 30, 2011)

The answer is your can invest your new room plus withdrawls of the previous year. Although now your new room is up to $5,500 a year. Anyone withdrawing $1,000 from their TFSA now will be able to contribute up to $6,500 as of 1 Jan 2014 - $1,000 from withdrawls in 2013 plus $5,500 in new 2014 contribution room.


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## jamesbe (May 8, 2010)

Fire your advisor if they don't know this.


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## NicW11 (Mar 3, 2012)

^No kidding. She kept saying "as it's been explained to me..."

This is why I feel pretty confident I can manage my own investments equally as good, and most likely better. In the process of moving everything from MF to DIY.


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## Koala (Jan 27, 2012)

RBC has been horrible to me when it comes to answering any questions about TFSAs. The branch manager actually told me when he came in there was very poor knowledge. I wonder if you're at the same branch.


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## webber22 (Mar 6, 2011)

I heard that the 2014 contribution room is only $5000. The $5500 this year was to make up for several years of inflation.


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## NicW11 (Mar 3, 2012)

Koala - I'm in Red Deer, and use the downtown branch, you?


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## Koala (Jan 27, 2012)

Nope, I'm in Edmonton. Maybe it's a widespread issue.


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## gibor365 (Apr 1, 2011)

Almost all advisors I talked to in TD or CIBC (in person or via phone) have no idea what they are talking about... it's very difficult to find anyone who can answer any questions..
regarding TFSA it's even worse, I asked several questions TD reps, they told me to contact CRA, CRA send me to some other govermnet organization who sent me back to TD.... "fool circle"


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## thenegotiator (May 23, 2012)

it is all here.
it is not a mystery. it is not a secret .
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html
the government created the rules and they have to be followed.
u want to put 1 million bux u will pay the penalty according to their rules.
do not be surprised to be under their microscope if u do that though


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## NicW11 (Mar 3, 2012)

So another question...I'm sure I understand but I want to make sure
My TFSA is my Questrade account. Selling equities is not a withdrawl as long as the money sits as a cash position in my QT account, correct? Only if I actually takie funds out of Questrade?


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## thenegotiator (May 23, 2012)

NicW11 said:


> So another question...I'm sure I understand but I want to make sure
> My TFSA is my Questrade account. Selling equities is not a withdrawl as long as the money sits as a cash position in my QT account, correct? Only if I actually takie funds out of Questrade?


yes.
it can be cash.etfs . whatever.
u take money out u can only recontribute in the following year the amount u took out.
i only take my profits out.
unless u want to pay a penalty.


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## NicW11 (Mar 3, 2012)

Ok thats what I thought. So, another scenerio...
Year One I contribute 5000.00, it expands to 6000.00 and I withdraw 1000.00 (assume I sold only the profit portion of the equity and withdrew that). Then my investment falls in value to 3000.00, and for some silly reason, I sell and withdraw the funds.
Year Two - do I have 11,000 in room or 10,000?


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## Koala (Jan 27, 2012)

Neither, you have $9000 (or $9500, depending on the years being discussed).
$1000 withdrawal + $3000 withdrawal + year two contribution

If your investments drop in value and you withdraw them you have decreased the overall amount you can have in your TFSA.


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## doctrine (Sep 30, 2011)

> I heard that the 2014 contribution room is only $5000. The $5500 this year was to make up for several years of inflation.


No, it's going to be $5500 moving forward. The original $5000 limit is indexed to CPI. Whenever it reaches a $500 increment, the TFSA limit is increased. So, probably in another 4-5 years, the limit will go up to $6000. 

For anyone, I suggest reviewing the CRA website on TFSAs for your questions. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html. For example, the rules on contribution limits are here. http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html


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## Toronto.gal (Jan 8, 2010)

NicW11 said:


> 1. No kidding. She kept saying "as it's been explained to me..."
> 2.This is why I feel pretty confident I can manage my own investments equally as good, and most likely better. In the process of moving everything from MF to DIY.


*1. *You don't need a FA to provide basic answers that you should be able to know & find out on your own, and how you'll learn best btw! 

*2.* How can you feel confident in managing your own investments, when you're not able to find the answers to such basic questions without first going to an advisor, and then coming to a forum for same?

I don't mean to be rude, just trying to tell you that you need to take responsibility for your own learning!

The CRA website has a lot of information, and so does below site, which I have posted here at least a dozen times:
http://www.taxtips.ca/tfsa.htm

I make a point of verifying all with CRA; I once listened to the bank and found out later that they were wrong, but guess what, YOU are responsible for any mistakes; CRA will come after you, not after the bank, or whoever else may have misinformed you.


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## uptoolate (Oct 9, 2011)

I think people should be encouraged to ask questions. The OP didn't say that they hadn't gone to the CRA site to look up the answer and whether they had or hadn't, if there were a forum where helpful and non-threatening people resided who could help answer such questions, or reinforce that answers found from other sources were correct, or give a little nudge in the right direction then I think that would be great. 

The TFSA guidelines were laid out on the CRA website from the outset but that didn't prevent thousands (tens of thousands?) of Canadians from messing up in the first year or two. Certainly one has to take responsibility and do their due diligence but it is nice to have a place full of relatively friendly and non-threatening people to bounce things off. There are many, many things that I don't know or think I know but have not directly experienced but that some here do know or have experienced. I enjoy coming here to pick things up or have my curiosity piqued. The road to knowledge starts with questions.


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## Koala (Jan 27, 2012)

I agree uptoolate. There's also no better motivator for me to look something up than being told my initial thought was wrong. :chuncky:


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## Toronto.gal (Jan 8, 2010)

Koala said:


> If your investments drop in value and you withdraw them you have decreased the overall amount you can have in your TFSA.


Indeed, and the reason for that, is because capital losses are not tax-deductible.

Remember:

- profits/dividends [from eligible investments], accumulate totally tax-free;
- however, dividends are not eligible for the dividend tax-credit that is allowed under non.reg. accounts, because the TFSA account is already tax-free;
- capital losses are not tax-deductible for reasons mentioned above; 
- withdrawals are not taxable.

*up2late:* you are right, I'm very threatening on this forum [even when u did not say that directly], but you are the friendly/helpful one with all the answers. :rolleyes2:

*Edit:* I checked the thread, and I see that your comment directed at me had been your only contribution/help here.

I encourage questions & learning btw, but not hand-holding!


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## uptoolate (Oct 9, 2011)

Not at all TG. In fact, I know that I don't have the answers. That's why I come here and go to other sites and sources for insights and ideas. And generally, I do think that you are incredibly helpful and non-threatening. I thought your post could have been taken the wrong way and although I am sure that you would not have meant it to be taken that way it could have been. I certainly didn't mean to say that you were anything but helpful on the forum. Such is the medium.


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## Toronto.gal (Jan 8, 2010)

I told the OP that my intention had *not* been to be rude, rather to be helpful with my comments [not threatening like you were suggesting I was in a diplomatic way]. This is no JK forum after all. 

A DIY investor should be encouraged to learn on their own, and not to run to various sites for the most basic of questions. 

When I joined this site, I knew far less than I do today, but I always tried to find the answers on my own first, and did more reading here [& elsewhere] than asking, that's how you learn!


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## CanadianCapitalist (Mar 31, 2009)

doctrine said:


> No, it's going to be $5500 moving forward. The original $5000 limit is indexed to CPI. Whenever it reaches a $500 increment, the TFSA limit is increased. So, probably in another 4-5 years, the limit will go up to $6000.


The new TFSA contribution room is $5,500 going forward. Slight correction on how the limit is incremented though. It is not incremented when the limit reaches $500, rather it is rounded to the nearest $500. If inflation stays low, it might take quite a while for the limit to cross $5,750 at which point, the limit will be raised to $6,000. Details here:

http://www.fin.gc.ca/n12/data/12-151_1-eng.asp


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## thenegotiator (May 23, 2012)

Toronto.gal said:


> I told the OP that my intention had *not* been to be rude, rather to be helpful with my comments [not threatening like you were suggesting I was in a diplomatic way]. This is no JK forum after all.
> 
> A DIY investor should be encouraged to learn on their own, and not to run to various sites for the most basic of questions.
> 
> When I joined this site, I knew far less than I do today, but I always tried to find the answers on my own first, and did more reading here [& elsewhere] than asking, that's how you learn!



i cannot believe that this thread turned into bickering.
i posted the site for the OP.
I answered some questions.
above CC is answering questions.
what is this?
do we need to change diapers also.
incredible.
and on top u get criticized?
unbelievable


do i need to get more into the big loophole that the CRA has left also?
i did hint about it.
anyway.... like i said before ... there is always someone SENSITIVE.
we have to stop with this sensitivity people.
u are not gambling .
u are using ur money to try and make money.
lets be real here.


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## DavidJD (Sep 27, 2009)

I have to admit that it is a bit annoying this many years in asking the same questions over and over again about TFSAs. There is a finite amount of information to understand (and accept!) and then proceed with using them.

Mine broke $48K today. Why are people just getting this basics sorted out now? Get going and make some cash. Which should be enough motivation to self educate.

Granted this forum is a good place to begin that research but asking the most basic questions without looking around a bit is getting pretty common for TFSAs.


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## MrMatt (Dec 21, 2011)

Your "advisor" is likely just a mutual fund salesman, which is why they don't know much other stuff.
Some are just not that bright. Conversely I've found some excellent, intelligent capable staff in banks, but I think you need to evaluate them on a case by case basis.

Lurk on the forums here and see if you can search and find the information presented, then start asking yourself questions and look for the answer.
Over time you'll get better at finding the answers to your own questions, BTW don't take forum advice too seriously, go check it yourself, the posts which link to the authoritative source are generally quite reliable.


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## Toronto.gal (Jan 8, 2010)

MrMatt said:


> BTW don't take forum advice too seriously, *go check it yourself*...


+1.


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## Cal (Jun 17, 2009)

Unfortunately many bank reps have not been adequately educated. This leads to alot of the confusion surrounding these investment vehicles.


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## MrMatt (Dec 21, 2011)

Now if someone could explain the various RESP plans options and stuff that would be great.

They confuse the hell out of me, what's an individual plan vs family plan, why do they even have them different.

RRSP and TFSA seem so much simpler.


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## NicW11 (Mar 3, 2012)

No, I do not need my diaper changed, or my hand held. Those are unnecessary and insulting comments. Anonymity doesn’t give you the right to be rude.

The intention of my thread was clear in the title; if anyone feels it’s redundant, why did you waste your time reading and commenting.

The person who gets paid to handle my investments couldn’t answer my question in a clear manner; I don’t think I was out of line asking it here – it is a forum after all. I‘m a new investor hoping to bounce a few questions/thoughts off of those whom I admire and respect for their experience and knowledge. What a boring forum this would be if no junior investors ever posted questions. What would there be to talk about.

I did check the CRA website first, and I did not find specific information about contribution room as it relates to a capital gain or loss (not tax implications…contribution room), thus the reason for the question here.

I’ve gained a lot of knowledge in the last year coming to this forum, as well as reading investment books, watching bnn, etc. A year ago I didn’t know a PE Ratio from my behind. In a couple of years, I hope to be knowledgeable and educated in the World of Investing, and able share my knowledge with those who are green just as I am right now; even when they ask redundant questions.


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## uptoolate (Oct 9, 2011)

+1

Even what seem to be the simplest questions can lead to the most profound insights. There are so many knowledgeable people here and so much knowledge is shared. I have given my 2 cents and that is that people should be encouraged to ask the questions that they feel they need help with even if they have been addressed in earlier threads. Investing is a very fluid subject. I do not claim any great level of sophistication and frankly much of the discussion on some threads is over my head but I often find it interesting and informative. I hope that people feel safe to ask questions and continue to get responses in the helpful spirit that is generally found on CMF.


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## thenegotiator (May 23, 2012)

NicW11 said:


> No, I do not need my diaper changed, or my hand held. Those are unnecessary and insulting comments. Anonymity doesn’t give you the right to be rude.
> 
> The intention of my thread was clear in the title; if anyone feels it’s redundant, why did you waste your time reading and commenting.
> 
> ...


well.
i was the first one to provide u the link to the CRA.
the rules are clear.
the loophole is known.
what else then.
do not worry .
i change my diapers some times on a bad trade because i sshit myself in the pants on risky trades.
it is a forum .yes.
CRA link is there.
u read u understand and u have to be old enogh to traderight?
.
sensitivity is not in my vocabulary though.
sometimes i even piss my pants man when i hit certain buy buttons.
if u felt insulted then i cannot do anything about it.
the help was there in front of ya.
u think that traders or even investors make no istakes?
if u went to a financial advisor and he cannot give u the most basic principles of a tfsa then u should ask urself if he completed high school for crying outloud.
either way .
GL in ur trades.
i will leave it here.


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## Eclectic12 (Oct 20, 2010)

NicW11 said:


> No, I do not need my diaper changed, or my hand held. Those are unnecessary and insulting comments. Anonymity doesn’t give you the right to be rude...


Agreed ... though looking at the flip side, at least the comments seemed to asking the general "why is this happening? what's confusing?" as opposed to some other message boards where I've seen comments open with "Is the poster brain-dead that they can't understand something so simple?". 

*Edit:* I hadn't seen the latest post when I wrote this.

It may have helped to comment that you'd searched CRA's site and wanted to check ... I was thinking this might be the case as your wording is different than some of the other people who clearly have not visited the CRA web site.




NicW11 said:


> ... The person who gets paid to handle my investments couldn’t answer my question in a clear manner; I don’t think I was out of line asking it here – it is a forum after all...


That's pretty sad ... this is rather basic info that is relatively easy to find for someone who is being paid to work in the financial field.




NicW11 said:


> ... I did check the CRA website first, and I did not find specific information about contribution room as it relates to a capital gain or loss (not tax implications…contribution room), thus the reason for the question here ...


I think the issue with CRA's web site is that they think the reader will know that "income earned" includes all sources of income such as interest, dividends, return of capital and capital gains. The way they worded it is:


> All income earned and withdrawals from a TFSA are generally tax-free.


http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html


This link is a bit better as it refers to "investment income:
http://www.tfsa.gc.ca/


The wiki article is much better as it says:


> In essence, the account-holder can withdraw any amount out of the account, free from capital gains and/or withdrawal taxes.


Some of the financial institutions clearly explain the benefits:
http://www.cooperators.ca/en/Answer-Centre/tell-me-more-about-investing/what-is-an-tfsa.aspx


Cheers


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