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OK I'm learning a lot about taking TFSA's beyond simple cash. I have two questions:

1. Understanding the effect of DRIP, focus on the R portion.

Does CRA consider automatic re-investments of dividends/returns in a TFSA as NEW contributions or as sheltered growth? From what I've read, this point is not clear. The answer makes a huge difference.

Anyone here have a DRIP setup in their TFSA investment?

2. Withdrawals. There are two opinions I've read out there. I searched CRA's site and couldn't find the correct answer to know which of the opinions is correct.

Scenario: TFSA $ of $10K grows to $21K and I withdraw the $21K today. I already know I cannot put the withdrawn amount back into the TFSA until 1-1-11.

Q. when 1-1-11 is reached, does this full $21K count as eligible re-contribution room or is it only the original $10K which is eligible to be recontributed to TFSA at that point?

If yes to #2 it would seem then that the future contribution room available to TFSA holders is very much subject to individual "inflation" (bad choice of term I know) based on growth. With the passage of time, the "inflationary" contribution room available to some people could end up being formidable. Any thoughts on this? I bet the gov't of the future will notice this and want to close the loophole (if my thoughts are correct)...the amount of sheltered savings could cost the gov't $$$, in their view.
 

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the-royal-mail said:
Does CRA consider automatic re-investments of dividends/returns in a TFSA as NEW contributions
NO.

Anyone here have a DRIP setup in their TFSA investment?
I only DRIP inside registered accounts.

does this full $21K count as eligible re-contribution room
YES

I bet the gov't of the future will notice this and want to close the loophole
There is no loophole ... if someone invests so successfully that they double their money in under 2 years, then they’ll have a bigger TFSA than someone who used it as a daily-interest savings account ... which is as it should be, no?
 

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...the amount of sheltered savings could cost the gov't $$$, in their view.
Technically the creation of the TFSA is costing the gov't money. Otherwise all of that investment $ would be taxable.

I wouldn't be surprised if at some point they cap the amount that you are able to contribute.
 

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I have my TFSA maxed and I DRIP it with a Monthly Income Fund.

I couldn't be happier.

DRIPs are key.
 

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Related to the OP's number 2 question, the gov't believes making too much money in your TFSA in a short time can potentially be a loophole so there may be tax penalties.
More than that, once the govt. figures out the tax revenue it is losing from seniors who have fat TFSAs and collecting full OAS or even GIS, they'll have to step in and impose some restrictions.
Hopefully, that time is distant in the future and in the meantime, keep building the TFSA.
 

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More than that, once the govt. figures out the tax revenue it is losing from seniors who have fat TFSAs and collecting full OAS or even GIS, they'll have to step in and impose some restrictions.
Hopefully, that time is distant in the future and in the meantime, keep building the TFSA.

I doubt it. Gov't already got their money on the buck going into the TFSA. Plus, having rich seniors in 20-30 years times means disposable income which means retail taxes (all those Buicks).
 

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OK so has anyone here tried to cash in their ETFs or other investments at Questrade and move/transfer the $ out of there to another bank or brokerage? Were there fees? How onerous was this process? Could it all be done online?
Yes, I have.

You don't need to sell the investments - just "transfer in kind".

You need to set up an account at the new brokerage, then fill out a transfer form. They will contact Questrade about the actual transfer.

Yes, of course there are fees - look them on Questrade's website - probably $125/account or so.

Ask your new brokerage if they will cover the Questrade transfer fees.

I think the transfer can be done online, but the account setup (if there is one) will probably require some docs to be mailed.
 

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OK so has anyone here tried to cash in their ETFs or other investments at Questrade and move/transfer the $ out of there to another bank or brokerage? Were there fees? How onerous was this process? Could it all be done online?
I transferred my account out of Questrade a few years back. You can find the transfer fees from the fee schedule on Questrade's website. IIRC, it was on par with the big banks ($125 to $150). I moved the account to Waterhouse after getting TDW to refund the transfer fee.

I don't recall how long it took but it wasn't out of the ordinary (2 weeks or so). I don't think you can get a transfer done online. You need to sign the transfer form and submit it to the receiving institution (the latest account statement from Questrade will smooth the transfer). They'll take it from there.
 

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There was a long, long thread about Questrade at the MS forum, where many of us used to hang out before CMF was created.
I'm sure you've probably come across that already in your google searches.
Anyhow, the long and short of it was that the hassle is simply not worth the $4 you will save on commissions and the trailer fee refund (if you even receive it at all).
Then Questrade went through a year or so of PR and damage control to change their image.
Based on what I'm reading/hearing recently, there's been a marginal improvement, but still not worth the hassle.
 

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I've never had any problems with them and I know a number of other investors who are also happy with them.

I'm not saying their perfect, but I think they are a good deal. I really think that people with less than $100k who pay $29 commissions at the big banks are making a mistake.

Regardless, make up your mind and make it happen with whatever brokerage you decide.
 

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I'm new at this so I dunno, but would you loose out on the ability to claim capitol losses inside a TFSA? why would the government have such a program at a time when they need revenue so bad? It seems like government is betting on a huge fast crash
 

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Discussion Starter #18
clark:

>I'm new at this so I dunno, but would you loose out on the ability to claim capitol losses inside a TFSA?

Yes you would lose that ability. Capital gains are also not taxable. Two-way street.

>why would the government have such a program at a time when they need revenue so bad?

The TFSA was introduced in 2008-09 when times were good and before the sky fell. Around the same time the GST was lowered to 6% and then 5% as part of the Conservative govenment's plan to allow citizens to keep more of their own money, in their own pockets.

>It seems like government is betting on a huge fast crash

Are there any typos here? Please rewrite.
 

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oh sorry
is the government expecting a big crash?
people with only a little money to invest would put money into TFSA before a non-registered account. And if there was a crash those people wouldn't be able to claim losses.
but I think I answered my own question. I just did some looking around and I guess you can't claim a loss unless you have a gain. therefore the TFSA is not a government conspiracy to make tax money on peoples losses :D
 

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I'm pretty sure the government was aware that there was an aging population about to retire and not enough money to support them long before the sky fell
 
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