Personal Finance

TFSA GIC maturity payout question

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  • Apr 4th, 2020 5:52 pm
[OP]
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Oct 23, 2003
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TFSA GIC maturity payout question

Had a TFSA pay out (both the initial deposit + the interest at maturity) into a generic savings account at Tangerine, in mid Jan. 2020.

All of last year, this TFSA was maxed out (prior to it being in GIC). The CRA has my bank's T5 statement, so it should have all the info 2019.

Now I logged into myCRA to check out the 2020 related stuff and notice that my TFSA limit is all of that 2019 account (which was maxed out) + the usual $6000 for 2020.

When the TFSA GIC matured and spit out all the cash into the generic savings account, it did not count as a normal withdrawal? Does this mean for 2020, the CRA info is correct in saying that my TFSA allowance is my lifetime maximum (thus far) ?

Would a GIC payout event (of original deposit + interest) fall under this TFSA definition of a "specified distribution"?
https://www.canada.ca/en/revenue-agency ... cfddstrbtn
9 replies
Sr. Member
Jul 15, 2003
731 posts
280 upvotes
GTA, Ontario
Buggy166 wrote: Had a TFSA pay out (both the initial deposit + the interest at maturity) into a generic savings account at Tangerine, in mid Jan. 2020.

All of last year, this TFSA was maxed out (prior to it being in GIC). The CRA has my bank's T5 statement, so it should have all the info 2019.

Now I logged into myCRA to check out the 2020 related stuff and notice that my TFSA limit is all of that 2019 account (which was maxed out) + the usual $6000 for 2020.

When the TFSA GIC matured and spit out all the cash into the generic savings account, it did not count as a normal withdrawal? Does this mean for 2020, the CRA info is correct in saying that my TFSA allowance is my lifetime maximum (thus far) ?

Would a GIC payout event (of original deposit + interest) fall under this TFSA definition of a "specified distribution"?
https://www.canada.ca/en/revenue-agency ... cfddstrbtn
Correct, it doesn't count as a withdrawal. What happens is that your TFSA GIC goes into a TFSA savings account, it never leaves your TFSA bucket. It works exactly like when you transfer from one TFSA product to another TFSA product, it acts like that was no withdrawal.

I've been doing this a little while now with Tangerine (should be the same with any other institution).

1) I purchase a TFSA GIC from my TFSA Savings Account and set it to payout back into the TFSA Savings Account once it matures.
2) I review what the best for me looking TFSA GIC is, and I fund that with my TFSA Savings Account.
3) Rinse and repeat based on my situation

All these transactions will have no impact on my contribution room since it does not count as a withdrawal.
[OP]
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Oct 23, 2003
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Dymis wrote: Correct, it doesn't count as a withdrawal. What happens is that your TFSA GIC goes into a TFSA savings account, it never leaves your TFSA bucket. It works exactly like when you transfer from one TFSA product to another TFSA product, it acts like that was no withdrawal.

I've been doing this a little while now with Tangerine (should be the same with any other institution).

1) I purchase a TFSA GIC from my TFSA Savings Account and set it to payout back into the TFSA Savings Account once it matures.
2) I review what the best for me looking TFSA GIC is, and I fund that with my TFSA Savings Account.
3) Rinse and repeat based on my situation

All these transactions will have no impact on my contribution room since it does not count as a withdrawal.
yes, but, in my case, it spit out all the TFSA + interest money, into a generic savings account (not tfsa). Thats why I dont know what exactly happened. My regular savings account that had a few grand in it, all of a sudden had all my cash there (including the TFSA amount).

It did not do this:

TFSA -> TFSA GIC -> matured ->back to normal TFSA account

It did this:

TFSA -> TFSA GIC -> matured -> all to regular savings account

And my TFSA contribution limit, as per CRA, doesnt seem to show that it has grown (with the additional matured interest)..."my CRA" for 2020 shows like i have 100% of the contribution room from inception until now...like the TFSA was completely empty.
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Jan 31, 2006
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Buggy166 wrote: yes, but, in my case, it spit out all the TFSA + interest money, into a generic savings account (not tfsa). Thats why I dont know what exactly happened. My regular savings account that had a few grand in it, all of a sudden had all my cash there (including the TFSA amount).

It did not do this:

TFSA -> TFSA GIC -> matured ->back to normal TFSA account

It did this:

TFSA -> TFSA GIC -> matured -> all to regular savings account

And my TFSA contribution limit, as per CRA, doesnt seem to show that it has grown (with the additional matured interest)..."my CRA" for 2020 shows like i have 100% of the contribution room from inception until now...like the TFSA was completely empty.
From my understanding, the capital goes back to your regular tfsa account and the interest goes to your non-register saving/chequing account. Then why the 2020 TfSA contribution room, did not shows as $6000 + interest from the GIC payout. Am I right?
[OP]
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Oct 23, 2003
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cgtlky wrote: From my understanding, the capital goes back to your regular tfsa account and the interest goes to your non-register saving/chequing account. Then why the 2020 TfSA contribution room, did not shows as $6000 + interest from the GIC payout. Am I right?
thats the part where it makes me pause.

Imagine this:

$50k in TFSA -> put in GIC until maturity

$20k in normal savings account

Time passes.

TFSA GIC matures.

TFSA GIC interest gets dumped into the 20k normal savings account.

At the same time, TFSA GIC also gets dumped into the 20k normal savings account. (where the interest was also dumped).

That...to me...might look like a withdrawal...but myCRA doesnt list it as such.

This happened mid-January, and there's a 0% chance that CRA received my documents on January 1st...so I'm guessing the TFSA account update they received is well past that "deposit" in mid January, so they should be aware of the transaction already.

Thats where I'm a bit...is myCRA for real or no? The time of the deposit + the potential time they got my banks' info (later on after january) says they are aware of that move...so it should be fine...but rather be safe than sorry.

I really dont want to think of the damage of re-contributing 100% of my lifetime TFSA back in a year where my max was only $6000. lol
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Mar 3, 2018
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If this happened in January 2020 CRA won't have a record of it until early 2021. That is when Tangerine reports there 2020 TFSA transactions to CRA. It will be up to you to track you TFSA limit on an ongoing basis. Don't rely on CRA information as being current.
[OP]
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Oct 23, 2003
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DaveTheDude wrote: If this happened in January 2020 CRA won't have a record of it until early 2021. That is when Tangerine reports there 2020 TFSA transactions to CRA. It will be up to you to track you TFSA limit on an ongoing basis. Don't rely on CRA information as being current.
True, but for 2019 my TFSA was maxed out and CRA says it was completely empty and i could contribute to it the full lifetime amount in 2020...which also makes no sense.
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Mar 8, 2013
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Buggy166 wrote: True, but for 2019 my TFSA was maxed out and CRA says it was completely empty and i could contribute to it the full lifetime amount in 2020...which also makes no sense.
There are two different issues here, and one is clouding the other. I doubt very much that "specified distribution" is at play here. That likely has to do with complicated strategies such as manipulation of stock prices, etc. when transferring to or from a TFSA.

Assume for the moment, that the CRA contribution limit for 2020 is wrong, for whatever reason. Your GIC that matured in January paid principal and interest into a savings account. If that was a TFSA savings account, then that does not affect your contribution limit. If on the other hand, as you say, it was paid into a non-TFSA savings account, then you have generated contribution room but you cannot use that until January 2021. My Account on CRA will not reflect that contribution room until March 2021. So regardless of why the CRA contribution limit for 2020 is wrong, you should assume that the contribution room for the principal and interest from the matured GIC is not available until 2021. I have a TFSA with Tangerine and it is surprising to me that Tangerine would allow you to specify a non-TFSA Savings account as a maturity option. When I tried this just know (changing the maturity option), I could specify only the TFSA account. If it is advantageous, you could try to convince them that it was their mistake and you wanted the funds in your TFSA savings account, which is one of the two reasonable defaults (the other being reinvest for the same term in a TFSA). Good luck with convincing them.

As for the other issue about your contribution limit, if you go to My Account on CRA, do you see the expected slips for TFSA for 2019? In my experience, Tangerine is the first institution to post.
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Feb 19, 2010
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Why has nobody asked why the matured GIC and interest was moved outside the TFSA? That doesn't seem normal and should have been addressed with the financial institution to be corrected at the time, no?
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Jul 15, 2003
731 posts
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GTA, Ontario
Conquistador wrote: Why has nobody asked why the matured GIC and interest was moved outside the TFSA? That doesn't seem normal and should have been addressed with the financial institution to be corrected at the time, no?
I think it's assumed that it would go back into a TFSA Saving Account. Something must have happened with the OP because I tried just now with Tangerine and the only option for "Select the Account to Deposit Your Payout Into" is my existing TFSA Saving Account or "Open a New Tax-Free Savings Account".

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