CIBC Global Asset Management
After 10 years of outperforming stocks, bonds aren’t a sleepy and boring asset class. You only need to look at what happened to bonds during the credit crisis. Patrick O’Toole, portfolio manager for CIBC Global Asset Management, writes.more…
TAX FREE SAVINGS ACCOUNT SECTION
9/3/2010 12:21:44 PM
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Q – If I have my TFSA account in a GIC, say for one year, and I remove my money within eight months instead of the end of the year, do I lose any of the interest or do I pay any fine? – George N.
Q – How are interest income, dividend income, capital gains, and capital losses handled within a Tax-Free Savings Account? Are capital losses within the TFSA handled exactly like RRSPs? – Paul W.
Q – I am wondering how to go about putting stocks I already own into my TFSA. Are they deemed to be sold on the day I transfer them into the TFSA, and do I then have to pay capital gains on them, or can they just be swapped into the TFSA? – Leonard B., Alberta
Q – I have read your book, The Ultimate TFSA Guide. I am not clear on one item. I understand that if you withdraw an amount of money from a TFSA, it can be deposited back into the account on Jan. 1 of the following year. However, if you originally deposited $5,000 and it grew to $5,500 and you withdrew that amount, can you deposit $5,500 plus the next year’s contribution limit (i.e., $5,000) on Jan. 1 of the following year? Hence, whatever amount you take out, can you put back the exact same amount into the TFSA account no matter how much it had originally grown? – Sandy K.
Q – My grandson opened a TFSA at Scotiabank. They put him into the Scotia Partners Balanced Income & Growth Portfolio. I have a feeling that he may be paying multiple layers of management fees on this one. Would he not be better off having the underlying index funds? What do you think? This is the first time he has invested and would love your input. – Iris W.
Q – I read your article on the TFSA mess. I concur with your recommendation: “Change the rules. To avoid confusion in the future, scrap the rule that defers new contribution room on withdrawals to the next calendar year. Allow money taken out to be redeposited at any time. Surely the computers can cope with that.”
Q – My wife died, and her TFSA had to be collapsed. TD charged the following fees: Deregistration $5.65; administration $125; GST $6.25. Is this the norm? Thank you. – John M., Ontario
Q – In February 2009, I contributed $5,000 in Royal Bank shares to each of our TFSA accounts as well as buying some Manulife shares in our non-registered accounts outside of our TFSA. As you can appreciate, we got lucky with the RBC shares, which are now worth around $9,000, whereas we were not so lucky with the Manulife shares, which have dropped in value by around 50%. I am comfortable with both holdings, but I am assuming that the Royal Bank shares have less capital gains potential in 2010 (given their stellar rise in 2009) whereas the Manulife shares have considerably more upside.
Q – I recently read an article by Talbot Boggs of The Canadian Press, regarding a test conducted by Mackenzie Investments on how knowledgeable Canadians were about TFSAs. In one paragraph, he states that only 22% knew that it is possible to have more than one TFSA account. Is this possible?
Q – My friend told me that he withdrew money from his TFSA after less than a year. He said he was charged a penalty. I thought there was no penalty for a withdrawal from a TFSA, unless you take money early from a GIC. – George N.
Q – My full service broker wants 1% to hold mutual funds in a TFSA. A discount brokerage firm may be an option, but is there any other way to keep fees down in a TSFA that holds mutual funds? – John M.
Q – I have been reading your book entitled Tax-Free Savings Accounts, and you mentioned on page 77 that attribution rules for spouses do not apply to the TFSA. If I was to gift money to my parents (I am over 18), and they contribute this amount to their TFSAs for various investments (while I am designated as the beneficiary on their accounts), would attribution rules apply? Do you foresee any issues in doing this (the goal is for me to use their TFSAs, since my parents are not using them)?
Q – My wife invested $5,000 in a TFSA in 2009. Through good stock prices and distributions, the $5,000 grew to $11,000 in one year. In February 2010, she sold that stock and used the $11,000 to purchase another stock in the same transaction to achieve higher distributions. The question is: has she violated the rules? – Gordon G., Amherst, Nova Scotia
Q – If I put $5,000 into my TFSA in my first year, and in late December during that year, I take out $2,000, may I put $7,000 into my TFSA the second year? And if “Yes” is the answer, may this be generalized? For example, if after five years of putting in $5,000 per year in my TFSA with no withdrawals until December of the fifth year, I pull out $25,000 plus gains of, say, $2,000 in the December of the fifth year, am I allowed to put in $27,000 + $5,000 in the sixth year? – Roy V.
Q – I read that the federal government has introduced amendments to change some of the rules for Tax-Free Savings Accounts. Generally, what is the purpose of the amendments? Will they improve the TFSA program? – D.M.
Canadian home prices continue to soar. The median price hit $340,920 in March 2010, up dramatically from $289,881 a year ago. Naturally, that has prospective first-time owners once again wondering how they are ever going to come up with a 25%, or even a 10%, down payment, let alone afford the whole house.
Q – I am opening up a Tax-Free Savings Account (TFSA) and want to make the best use of it. My advisor suggests putting a safe guaranteed investment certificate (GIC) in it as they have the most benefit from a tax point of view. However, I feel that it would take a long time to make any money at today’s rates. Would it not be better to take a chance and put it in stock? Where else can you get the opportunity to really grow your TFSA tax free? – Jim S.
Q – I've finally convinced my two daughters (22 and 25 years of age) to open TFSA investment accounts. Are they allowed to invest $10,000 (including the missed 2009 contribution) or just $5,000 for the 2010 year? – John A.
