Personal Finance

RE: Question about Taxes and savings accounts and TFSA

  • Last Updated:
  • Jun 6th, 2018 9:51 pm
Deal Addict
Dec 25, 2013
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Toronto

RE: Question about Taxes and savings accounts and TFSA

I didn't get any nice offers from Tang this time around it seems. Is it better for me to leave a good chunk of change in a TFSA at 1.6% (tang) or use EQ banks 2.3% (everything being equal i'f rather support EQ but.. I doubt it is..)
12 replies
Deal Fanatic
Apr 5, 2016
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There may be a transfer fee if you move a TFSA from one FI to another negating the extra interest.
Deal Addict
Dec 25, 2013
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bomber17 wrote: There may be a transfer fee if you move a TFSA from one FI to another negating the extra interest.
All financial institutions charge one but all you have to do is move it to your checking account first and then to the other institution. Im more interested is it better to pay taxes on the amount and get 0.7% more interest or use the TFSA and pay no taxes?
Deal Addict
Sep 12, 2012
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Ychanceit wrote: All financial institutions charge one but all you have to do is move it to your checking account first and then to the other institution. Im more interested is it better to pay taxes on the amount and get 0.7% more interest or use the TFSA and pay no taxes?
If you are moving funds from your TFSA to a savings account so you can transfer the funds to another FI and deposit it back into another FI's TFSA all within the same year, you need to make sure you have enough contribution room otherwise you will end up paying taxes on any over contributions. Your contribution room doesn't recalculate until January 1 of the following year.

Also, your question about whether it is better to pay taxes on the extra interest in a non-registered account all depends on your income bracket and the amount you are depositing.
Last edited by hamandcheese on Jun 5th, 2018 11:46 am, edited 1 time in total.
Deal Addict
Dec 25, 2013
1149 posts
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Toronto
hamandcheese wrote: If you are moving funds from your TFSA to a savings account so you can transfer the funds to another FI and deposit it back into another FI's TFSA all within the same year, you need to make sure you have enough contribution room otherwise you will end up paying taxes on any over contributions. Your contribution room doesn't recalculate until January 1 of the following year.
Yes, I know. I've got the contribution room, still not what I was talking about..

For avg income what would be the likely best scenario?
Deal Addict
Mar 3, 2009
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Ottawa, ON
Ychanceit wrote: For avg income what would be the likely best scenario?
There is no such thing as average income.

If you want an answer to this question, you will have to tell people what your expected income is for this year and somebody can run the numbers.
Deal Guru
Aug 5, 2006
10746 posts
7905 upvotes
Global Village
You're better off leaving the $ in TFSA in this case imo but should look into Tangerine TFSA GICs so you can get a better rate.

https://www.tangerine.ca/en/rates/index.html
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Tangerine, Meridian, EQ Bank, Simplii, CIBC Investor's Edge
Deal Addict
Dec 25, 2013
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scoper wrote: You're better off leaving the $ in TFSA in this case imo but should look into Tangerine TFSA GICs so you can get a better rate.

https://www.tangerine.ca/en/rates/index.html

Thanks, this may actually be the best idea for me, like a 1 year GIC. Do you know if I put in in the regular old TFSA now and then want to switch to a TFSA GIC at the same institution how does this effect contribution room, if at all?
Deal Guru
Aug 5, 2006
10746 posts
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Global Village
Ychanceit wrote: Thanks, this may actually be the best idea for me, like a 1 year GIC. Do you know if I put in in the regular old TFSA now and then want to switch to a TFSA GIC at the same institution how does this effect contribution room, if at all?
No effect to TFSA contribution room. Even if you accidentally withdraw from a TFSA you still don't lose the contribution room, wait till Jan 1st of next year and recontribute what you withdrew right back.
All day I dream about sports

Tangerine, Meridian, EQ Bank, Simplii, CIBC Investor's Edge
Deal Addict
Dec 25, 2013
1149 posts
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Toronto
scoper wrote: No effect to TFSA contribution room. Even if you accidentally withdraw from a TFSA you still don't lose the contribution room, wait till Jan 1st of next year and recontribute what you withdrew right back.
so you could put it back in, in the same financial institution in the same year and not be effected?
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Feb 19, 2010
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Ychanceit wrote: so you could put it back in, in the same financial institution in the same year and not be effected?
If you don't actually 'take it out' of the bucket that is the TFSA then there is no 'putting it back in'. IOW, you can change what the money is invested in as long as it is not taken out of the TFSA in the interim.
Deal Expert
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May 8, 2009
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Going to the Moon
Why not go straight to the top and take your TFSA to Steinbach? Thread on Steinbach here. If you don't like their unconventional interest calculations, go with Hubert CU, also in MB. They're both Ontario-friendly. 2.2% or 2.1% interest in TFSA is a better deal than 2.3% in EQ IF you have a big cash float that you must keep liquid and guaranteed to not lose money by year's end.
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