Personal Finance

Tax time! I'm a public accountant, so ask me, I'll try to respond frequently

  • Last Updated:
  • May 13th, 2018 12:33 pm
Newbie
User avatar
Jul 24, 2015
37 posts
21 upvotes
Maple, ON
How do TFSA accounts which have suffered a loss work?

Say I invested $10,000 in an equity through a TFSA account and the current market value is $7500. Can I "top up" the account, aka add another $2500 in cash to the TFSA account.

How does this impact my contribution room? Ex. Assume I have contributed the yearly maximum every year.

Thanks for your insight!
Deal Addict
Jan 2, 2015
1239 posts
324 upvotes
Toronto, ON
cftw123 wrote:
Dec 10th, 2017 2:44 pm
How do TFSA accounts which have suffered a loss work?
The CRA only cares about what you contribute and withdraw, not how much you made or lost (unless they think you've been daytrading).
Say I invested $10,000 in an equity through a TFSA account and the current market value is $7500. Can I "top up" the account, aka add another $2500 in cash to the TFSA account.
You would not gain any new room. You lose room when you contribute, and you gain room when you withdraw (but the following year).

So in this example, if contributed $10,000, you lose $10,000 of room. You lose $2,500. You ragequit and withdraw $7,500. You only gain 7,500 of room the next year, so you would permanently reduce available room by doing this. You're better off either waiting for the market to go up, or if that won't happen (for instance, you invested in a single stock) then you could sell the equities within the TFSA (so it's now $7,500 in cash but still within a TFSA) and use that cash to buy other equities, still under the TFSA umbrella. These kinds of transfers have no impact on your TFSA room.
Deal Addict
Jun 12, 2015
1988 posts
591 upvotes
Ontario
cftw123 wrote:
Dec 10th, 2017 2:44 pm
How do TFSA accounts which have suffered a loss work?

Say I invested $10,000 in an equity through a TFSA account and the current market value is $7500. Can I "top up" the account, aka add another $2500 in cash to the TFSA account.

How does this impact my contribution room? Ex. Assume I have contributed the yearly maximum every year.

Thanks for your insight!
You can't top it off. You also can't claim any capital loss since it is tax free. If you contribute more you will go over your limit. If you cash out your loss, you essentially lost that tsfa room.
Newbie
Oct 23, 2006
57 posts
1 upvote
atomiton wrote:
Dec 10th, 2017 4:51 am
That’s the idea yes.
I guess it wasnt clear to whom the question was addressed.

The question is to the accountant who will be able to confirm that RRSP contributions lower family income with respect to Quebec child support and Quebec child care expenses.

(I independently confirmed that contributions will lower family income with respect to the CCTB)

Thanks
Deal Addict
User avatar
Dec 14, 2007
2784 posts
1229 upvotes
cftw123 wrote:
Dec 10th, 2017 2:44 pm
How do TFSA accounts which have suffered a loss work?

Say I invested $10,000 in an equity through a TFSA account and the current market value is $7500. Can I "top up" the account, aka add another $2500 in cash to the TFSA account.

How does this impact my contribution room? Ex. Assume I have contributed the yearly maximum every year.

Thanks for your insight!
in short, they behave the same way as when you experience a gain.

TFSA limit changes are ONLY triggered when depositing/withdrawing or on January 1... the value of the things in the account doesn't matter.

If you have $10,000 in there with $45,000 of room and the investments go down in value to $7,500... you still have $45,000 of room.
If the investments go up to $15,000, you still have $45,000 of room.

It's like a magical bucket that can get shallower or deeper while maintaining the same level and room on top.

Once you withdraw money, you solidify that loss or gain. So, if you withdrew $7,500, emptying the bucket, you'd be left with $45,000 of room... and next January $7,500 (from your withdrawal) and $5,500 (for 2018) would be added to the bucket. In the end, you'd have less total contribution room than others who started with the same contribution room.

Of course, the opposite is also true. If you withdrew $15,000 that were due to gains, you'd have $15,000 added next year.
I'd love to write history... in advance.
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Newbie
Mar 29, 2010
19 posts
2 upvotes
Hi,
Recently I rent a condo and rent out full 100% on airbnb. Airbnb charge 3.5% tax on customer (I guess) which I do not receive. Now I want to report my renting from airbnb. Is the tax that airbnb collections affect my return.
is the tax I just need to do : total receipt ( from airbnb) - total expense ( renting cost from owner + sheets+ electricity+ect...) = my total taxable income. If not, please show me how. I do tax by my own.
Jr. Member
Jun 24, 2015
111 posts
15 upvotes
Toronto, ON
I have an insurance called Wealth Advantage from Transamerica which I purchased 10 years ago. I borrowed money out, invested into my business and pay interest once a year to the insurance company. Interest payment used to be tax deductible. Since 2012 or 2013, the insurance company started issuing T5. Got audited for 2014 and 2015 and tax deductible was disqualified. Is it tax deductible or the auditor made a mistake? Shall I file a complaint to review the case again?
Newbie
Jan 17, 2017
27 posts
11 upvotes
Alberta
I filed for divorce this year. My lawyer has given me a timeframe of Feb or March 2018 for everything to be finalized by the courts.
When I file my income tax next year, do I file as a married person or single and/or head of family? Thank you.
Newbie
Dec 29, 2017
1 posts
ilya123 wrote:
Dec 8th, 2017 11:18 am
I am thinking if it's possible to delay a capital gain as follows:

I own bitcoin. I sell some bitcoins on the largest Canadian exchange, known as QuadrigaCX. My "Canadian dollar" balance on QuadrigaCX shows the sale proceeds. I can now either withdraw the funds to my retail Canadian bank account right away (December 2017), or keep the funds on the QuadrigaCX website for some time and withdraw them after January 1st 2018. One would normally assume that the capital gain would have occurred at the time of converting bitcoin into CAD. However, QuadrigaCX terms of service state:

"All account fundings are considered to be purchases of QuadrigaCX Bucks. These are units that are used for the purposes of purchasing Bitcoin or other cryptocurrencies. QuadrigaCX Bucks are NOT Canadian Dollars. Any notation of $, CAD, or USD refers to an equivalent unit in QuadrigaCX Bucks, which exist for the sole purpose of buying and selling Bitcoin and other cryptocurrencies.
QuadrigaCX is NOT a financial institution, bank, credit union, trust, or deposit business. We DO NOT take Deposits. We exist solely for the purposes of buying and selling cryptocurrencies."

Given the above, if I wait to withdraw my CAD-denominated funds (so called QuadrigaCx Bucks) from their website into my Canadian bank account after January 1, 2018 - would that mean that the capital gain was incurred in January at the time of the conversion from Quadriga Bucks into proper canadian dollars, rather than in December?
anyone find an answer to this question?
Deal Addict
Jul 3, 2006
1654 posts
309 upvotes
betbetSHOVE wrote:
Dec 30th, 2017 10:23 am
anyone find an answer to this question?
BITCOIN is not considered capital gains...It is treated as income
Sr. Member
Aug 17, 2006
645 posts
32 upvotes
I withdrew from my TFSA A/C online today so that I could open another TFSA account in 2018 and recontribute the withdrawn amount plus new allowable contribution. But then my bank account shows the today's transaction date as 2nd Jan 2018. I am worried that it will screw up my contribution limit in 2018. Any suggestion?
Newbie
Jan 18, 2017
75 posts
47 upvotes
I'm just thinking out loud here (this is a fantastic grey area), but I would think that Quadriga would effectively be acting as a broker, and therefore all the funds are treated as being held in-trust for the seller, meaning the transaction date will be treated as the sale date (2017 calendar), as opposed to the withdrawal date (2018 calendar.)

I could see CRA taking this approach:

- The disposition of Bitcoin and the "conversion" to Quadriga Bucks treated as two separate transactions: (1) the sale of the Bitcoin (deemed at FMV on date of sale) and (2) an immediate acquisition of Quadriga Bucks, with an ACB of the FMV deemed proceeds.

Meaning that CRA would likely treat the transaction as a disposition, and hit you with the associated tax. (Tax rate will depend on how the OP originally acquired the Bitcoin ie. Mining vs buy.)


betbetSHOVE wrote:
Dec 30th, 2017 10:23 am
anyone find an answer to this question?
______
Canadian & US tax guy
Newbie
Jan 18, 2017
75 posts
47 upvotes
Do you have any case law or CRA Folios on this? All I've generally seen these days is that if it's a heavy mining operation, CRA will consider it business income. But if it's traded (with no heavy day-trading going on) it's treated the same as other securities and investments.
J_u_n_i_o_r_3 wrote:
Dec 30th, 2017 3:00 pm
BITCOIN is not considered capital gains...It is treated as income
______
Canadian & US tax guy

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