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Discussion Starter #1 (Edited)
If I withdrew my entire $5000 contribution (plus the interest it has earned) on December 31, 2009 can I then create a new TFSA account (with another company) on Januaray 1, 2010, deposit my 2009 contribution room of $5000, plus include my 2010 contribution room?

If so, is there special paper work needed to be filed come tax time? Do I have to wait a certain period until I am allowed to re-invest the 2009 amount once 2010 rolls around?

In essence, I want to get rid of my existing TFSA with PC financial, open a new TFSA with qtrade.ca, and begin a buying and holding ETF's once year.

Thanks!
 

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You can transfer TFSA-to-TFSA without impacting your contribution room.
Just like RRSP.
Most brokerages allow that, I believe (mine does - E*Trade).
 

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Discussion Starter #4
The transfer fee is what I would like to avoid. So, by withdrawing the money in 2009 and putting it into another account in 2010 will not be an issue?
 

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Yes, you can do that.
Don't wait until 31st Dec. - what if your withdrawal is not effective as of that date.
Do it a few days before.
During holiday season banks are slow to process requests anyway.
 

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i'm not at all sure he can do that. Think a problem could arise when taxpayer tries to "deposit [his] 2009 contribution room of $5000" to the new tfsa account at the 2nd institution, as well as depositing his 2010 contribution. Perhaps it will be impossible for the 2009 documentation to travel from lst institution to 2nd institution since they will have no link if a taxpayer carries out the transfer himself, by liquidating & closing the 1st account.

if i were planning to move my tfsa i'd ask the cra for their rules. Many taxpayers are planning to switch their tfsas to a low-fee or no-fee institution, so the cra must have developed a detailed protocol by now.

one can assume that a tfsa transfer directly from institution to institution will successfully transfer the replacement room, although there could be a transfer fee. So a worst case scenario would be that the taxpayer will have to pay the transfer fee if the 2nd institution will not reimburse this charge; or alternately he could liquidate on his own and forego replacing the 2009 contribution completely.
 

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I will be doing the same. I got the idea from a blog post by Canadian Capitalist, so I thought it would be fine. I did not think it would be an issue, because the CRA allows you to have TSFAs at more than one institution. I suppose there could be a rule that contribution room due to withdrawals can only be re-deposited in the same account the funds were originally withdrawn from. I haven't seen that anywhere.

To be safe I will withdraw the money in late 2009, leave it in regular taxable savings at PC, and not transfer it at another institution until this is cleared up. I'd rather leave the money at PC than pay their $50 fee. I only will if I have to, as I'm quite fed up with them and I'm moving all my banking elsewhere.
 

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don't believe the cra would ever have any "rule that contribution room due to withdrawals can only be re-deposited in the same account" etc etc. What i do believe is that cra relies on the institutions to do the bookkeeping for all registered accounts. Cra does not do this bookkeeping. That's why a number of institutions charge a fee.

in the theoretical case we are discussing, taxpayer opts out of the bookkeeping system by liquidating on his own, then walks his cash over to another institution. So far, looking good. But who's going to maintain the the continuity of bookkeeping that will satisfy the cra. What incentive would 1st institution have to forward 2009 records to any other institution when customer collapsed his account & disappeared without paying a transfer fee.

one could check this out with the cra. Also the 2nd or intaking institution.
 

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From the CRA www.cra-arc.gc.ca/E/pub/tg/rc4466/rc4466-08e.pdf :

TFSA contribution room
The TFSA contribution room is made up of:
■ your annual TFSA dollar limit ($5,000 per year plus indexation, if applicable);
■ any unused TFSA contribution room* in the previous year; and
■ any withdrawals made from the TFSA in the previous year, excluding qualifying transfers*.
Based on information provided by the issuers, the Canada Revenue Agency (CRA) will determine
the TFSA contribution room for each eligible individual. Your annual contribution room will be
indicated on your notice of assessment.


So the issuers report to the CRA your contributions, your withdrawals and your transfers. The CRA does the math.

It seems clear that to transfer TSFA funds it is best to withdraw the money and re-deposit it, if there's a transfer fee but no withdrawal fee. That is what I will do.
 

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Thanks for the info.

I will also be leaving PC Financial.
Got into their TFSA in Jan because I didnt know much about it and seemed like a good idea. However 0.75% interest isnt exactly what I had in mind.

Will be withdrawing my money in mid december and making the switch...to E or Q trade (need to do more homework).

Was going to go with CIBC as I have other accounts with them, but their investors edge program is terrible if you do < 50 trades / year.

Cheers
 
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