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I have recently maxed out my TFSA with $31000. Now, whenever I buy a stock I pay $10 in brokerage fees and that comes out of my $31000. Does the $10 count towards my TFSA limit? I'm assuming it does, but those little amounts add up to something substantial and I would like to add that back into my TFSA if possible. Thank you for your help.
 

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... Now, whenever I buy a stock I pay $10 in brokerage fees and that comes out of my $31000.
Does the $10 count towards my TFSA limit?
I'm assuming it does, but those little amounts add up to something substantial and I would like to add that back into my TFSA if possible...
No ... what reduces the TFSA contribution limit is *contributions*.

The $10 commission to buy the stock is a cost that will reduce the value in the account (assuming the stock price stays flat & no dividends are paid) but does not change the available TFSA contribution room.

For example, say I maxed out my TFSA contribution room by putting in $31K (i.e. was over 19 in 2009 and been a Canadian resident with a SIN card ) in cash. My TFSA contribution room is now $0 as I have contributed the full $31K. Then I buy $10K of a stock with a $10 commission. The TFSA now has $10K of stock A and $20,990 cash so that the total value is now $30,990. My TFSA contribution room is still $0.

Now say six months later in the same calendar year, stock A is trading so that it's worth $12K. The TFSA value is $12K + $30,990 for a total of $31,900. My TFSA contribution room is still $0.


The key to keeping commission costs low is to trade less often or to pick investments that have a cheaper or $0 commission.


Cheers
 

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Or pay the commission from outside the account. TDDI allows you to pay commissions on trades in an RRSP from outside the RRSP, so I assume (perhaps incorrectly?) that you can do the same with the TFSA? I'll have to check that out.
Can you send a link for this?

I can only recall a reference to those who hadn't built up enough value to waive the annual fee being allowed to pay that fee from outside the RRSP.


Cheers
 

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I don't either ... but it is an option that is offered.


Cheers
Many years ago, the RRSP administration fee was tax deductible when paid outside the RRSP, so many companies kept the option available for clients, even though it is not deductible anymore.

Also, back when a person was allowed an RRSP over contribution amount of $8,000, the advisor/managed money people got it into their head that everyone should use this over contribution amount for the tax deferral benefits, even though they could not deduct it in their taxes. I think the plan was to deduct it in the last year you worked.

In any event, in order to sell it to their clients, they also suggested a person pay the RRSP fee outside their RRSPs, in order to maximize the amount of money that was inside their RRSPs and deferring taxes. It all went along with the over contribution strategy.

As soon as the government reduced the over contribution allowance to $2,000 and consequently reduced the fees generated by the investment community by 75%, it all of a sudden became more of a nuisance then a retirement strategy. Funny how that works.
 

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Many years ago, the RRSP administration fee was tax deductible when paid outside the RRSP, so many companies kept the option available for clients, even though it is not deductible anymore.

Also, back when a person was allowed an RRSP over contribution amount of $8,000, the advisor/managed money people got it into their head that everyone should use this over contribution amount for the tax deferral benefits, even though they could not deduct it in their taxes. I think the plan was to deduct it in the last year you worked.

In any event, in order to sell it to their clients, they also suggested a person pay the RRSP fee outside their RRSPs, in order to maximize the amount of money that was inside their RRSPs and deferring taxes. It all went along with the over contribution strategy.
Wow! Thanks for the walk down memory lane.
Don't recall the RRSP fee tax deductablitlity. Must have been before my time.
The $8k overcontribution limit made a lot of sense. Especially before TFSAs. That overcontribution would be deducted eventually.
 

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The $8k overcontribution limit made a lot of sense. Especially before TFSAs. That overcontribution would be deducted eventually.
It wasn't the dumbest strategy out there but the problem was, the government put it in place to deal with the inevitable small mistakes people will make when contributing to their RRSPs. They did not enact it so that a few wealthy people who can stroke a cheque for $8,000 like they change the channel on their TV remote controls, can derive a new benefit.

So, due to the abuse that was taking place, the government reduced it to $2,000.
 

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Many years ago, the RRSP administration fee was tax deductible when paid outside the RRSP, so many companies kept the option available for clients, even though it is not deductible anymore ...
Kudos to the good memory ... I had completely forgotten about writing off that fee ... mind you, if memory serves, I believe that between transferred pension money plus what I'd put in through the bank "no fee" RRSP - I was only subject to the $100 fee for something like two years.


.... So, due to the abuse that was taking place, the government reduced it to $2,000.
Funny how that happens ... :rolleyes2:

I suspect the $2K is a far more reasonable buffer for honest mistakes.


Cheers
 
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