TFSA woes

[JordanAndrew]

Originally posted by Seanith


Fuck i'm glad i just found this thread today. I was treating my TFSA like a savings account, and i'd remove $1000 and replace it a few days later. Looks like i'm $700 over, so i guess 2 months of 1% and i'll owe $14 or so. Could be worse!

When you signed up with your TFSA, didn't they tell you exactly how it works? I know when I signed up for mine they made me go make an appointment first to see an advisor to properly explain the way it works.


It just amazes me how many people don't know how this works. It's fairly simple for the most part.

[Seanith]

I was unemployed for the majority of 2009 so opening a TFSA account then wasn't something I had to even dream about. I only started one this year. I guess I didn't learn about it like everyone else did.

[rizfarmer]

I work at a FI, you'd be surprised to how many "financial advisors" that sell this product do not actually understand it themselves

[Bisklimpkit]

Keep in mind that any gains you make on your over-contributions is taxed at a rate of 100%, as well.

[dawerks]

Thank you Mr. Harper. The one good thing you did, was mis represented to the public.

[Team_Mclaren]

Originally posted by Bisklimpkit


If you had already used $5000 in contribution room, you would be capable next year of adding an additional $10,000 to bring you to the $15,000 limit. Whether you make or lose money within the account has no bearing on the contribution limit. The only time the limit is affected is when you either deposit or withdraw money into/from the account.

If you are making a loss on your investment, you cannot "replace" it. Say you total contribution is 10k for 09/10 and your final balance is 9k because you made a loss, your contribution for next year is ONLY next year's contirbution limit, not 5k plus whatever you lost (1k). You cannot generate any additional contribution room if your investment loses money.

[Seanith]

Ok I mentioned above that I over contributed $700. I'm not sure if it was covered already, but if i just take out that $700 I'm over, will I be able to avoid the 1% per month penalty or is it damage done?

[derpderp]

I don't understand what is suppose to be so complicated about a TFSA, it is an account you can use to make investments on the open market, the profits are tax free, you're only allowed to contributed a MAXMIUM of $5000 a year so withdrawing money is a no-no if you really want this type of account to work for you because you can’t re-contribute the funds.

This is basically all the lady at the bank told me when I went in to open it, seemed simple.

Although I know spending money on big ticket items and such is always nice especially if you still have discipline to return the money right away but I fail to see the point in having a saving account if you’re treating it that way, just open a damn unsecure line of credit for $5000.00 if you want access to money for big purchases you’re making then paying off in the next few weeks.

[B20EF]

Confusion was when they introduced this the government expained it quite poorly. Most people at first thought it was a $5000 balance that was tax-free.
After thinking about it for a few minutes you should see that would not make sense. You could essentially filter all your money through the one account to make it tax-free. Oh wouldn't that be sweet.

[davidI]

Originally posted by B20EF
Confusion was when they introduced this the government expained it quite poorly. Most people at first thought it was a $5000 balance that was tax-free.
After thinking about it for a few minutes you should see that would not make sense. You could essentially filter all your money through the one account to make it tax-free. Oh wouldn't that be sweet.

Umm, it's not an RRSP. What you put into a TFSA is all after-tax income. It's the capital gains / interest / dividends accrued that are tax free.

[Bisklimpkit]

Originally posted by derpderp
I don't understand what is suppose to be so complicated about a TFSA, it is an account you can use to make investments on the open market, the profits are tax free, you're only allowed to contributed a MAXMIUM of $5000 a year so withdrawing money is a no-no if you really want this type of account to work for you because you can’t re-contribute the funds.

Actually, you can recontribute the funds, only you won't be able to do it until the following year. For example, if I withdraw $4000 from my TFSA this year, I will be able to contribute $9000 next year.

[rizfarmer]

Originally posted by dawerks
Thank you Mr. Harper. The one good thing you did, was far too complicated for me to understand.

fixed that for you

[KRZY403]

Originally posted by Seanith
Ok I mentioned above that I over contributed $700. I'm not sure if it was covered already, but if i just take out that $700 I'm over, will I be able to avoid the 1% per month penalty or is it damage done?

Damage is already done. I was over as well and I took it out. Called and talked to someone over at CRA already.

[skandalouz_08]

Here's a good article that I found in the National Post and have on my blog:

http://beyondadvising.blogspot.com/2...ther-name.html

[kenny]

For everyone that is confused about TFSA and your deposit limits, etc etc. Create an account on the CRA website. It will tell you what your remaining deposit amount is for the current year.