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TFSA USD Withdrawal 2020, redeposit in 2021 CAD

  • Last Updated:
  • Feb 8th, 2021 12:25 pm
[OP]
Sr. Member
Aug 31, 2001
524 posts
56 upvotes

TFSA USD Withdrawal 2020, redeposit in 2021 CAD

1) If i withdrew from TFSA in USD in 2020 , how do I calculate contribution room, I assume it has to do with BoC Exchange Rate as of the date of withdrawal.

2) But, in order to avoid getting dinged for overcontribution due to miscalculations, does the myCRA have records of the withdrawal and record of what CAD amount that represents to calculate the 2021 CAD equivalent recontributing room amount??
13 replies
Deal Addict
Jan 6, 2015
1028 posts
308 upvotes
you probably cannot find exactly number, you can calculate numbers first, and deposit a little less than you result, I think CRA website will provide information after their calculation done around March.
Deal Addict
Apr 13, 2006
4309 posts
406 upvotes
Sedul wrote: 1) If i withdrew from TFSA in USD in 2020 , how do I calculate contribution room, I assume it has to do with BoC Exchange Rate as of the date of withdrawal.

2) But, in order to avoid getting dinged for overcontribution due to miscalculations, does the myCRA have records of the withdrawal and record of what CAD amount that represents to calculate the 2021 CAD equivalent recontributing room amount??
I would double check the accuracy of this interpretation but I think using this guide will help (under the "Foreign funds" section). Change "contribute" to "withdrawal":
https://www.canada.ca/en/revenue-agency ... 3021_26419
Foreign funds
You can contribute foreign funds to a TFSA. However, your issuer will convert the funds to Canadian dollars (using the exchange rate on the date of the transaction), when reporting this information to us. The total amount of your contribution, in Canadian dollars, cannot be more than your TFSA contribution room.

If dividend income from a foreign country is paid to a TFSA, the dividend income could be subject to foreign withholding tax.
In other words... in my honest opinion, you should contact "your issuer" (e.g. broker) to determine what rate they used to convert when reporting to CRA instead of guessing the BoC rate the day of.
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Dec 12, 2009
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OP, you are allowed to use the exact exchange rate that was used in your conversion. You just need to keep paperwork to prove it if asked by the CRA in the future. Typically, the annual average exchange rate for the year is used. In USD accounts, the annual tax filing package will include an annual average exchange rate. This number is provided for ease of calculation instead of using a different number for each transaction. I would suggest if you want to stay under the radar, use the annual average. Maybe it is could be favorable for you.

https://www.bankofcanada.ca/rates/excha ... nge-rates/
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[OP]
Sr. Member
Aug 31, 2001
524 posts
56 upvotes
Hi, Thank you all.

Note, Upon Withdrawal, I withdrew the USD amount to a USD account and there was no conversion upon withdrawal - so there is no issuer/broker rate that was used. However, Based on my understanding I would need to calculate the amount of Canadian equivalent contribution room using the rate applicable on the day of withdrawal (and/or possibly the Annual Exchange Rate)

I plan to redeposit the Canadian equivalent back into the TFSA this year, and to be safe, I was cautioned to leave some wiggle room in the calculation. I am also to check myCRA or with CRA on what was recorded as the TFSA Withdrawal amount as CAD equivalent

I use IBKR, and they do not allow USD deposits into TFSA / RRSP. Only CAD.
Deal Addict
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Dec 16, 2015
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Technoking
Sedul wrote: Hi, Thank you all.

Note, Upon Withdrawal, I withdrew the USD amount to a USD account and there was no conversion upon withdrawal - so there is no issuer/broker rate that was used. However, Based on my understanding I would need to calculate the amount of Canadian equivalent contribution room using the rate applicable on the day of withdrawal (and/or possibly the Annual Exchange Rate)

I plan to redeposit the Canadian equivalent back into the TFSA this year, and to be safe, I was cautioned to leave some wiggle room in the calculation. I am also to check myCRA or with CRA on what was recorded as the TFSA Withdrawal amount as CAD equivalent

I use IBKR, and they do not allow USD deposits into TFSA / RRSP. Only CAD.
My ibkr tfsa is usd...
To the moon
Jr. Member
Jan 21, 2012
139 posts
113 upvotes
VANCOUVER
Does your broker show you the CAD equivalent anywhere? NBDB has a section for registered accounts where you can see the CAD equivalent amounts for any USD contributions once they are made, which ultimately gets reported to CRA.

The issue is that I believe they are going to have to report to CRA in Canadian dollars, and my concern if you calculate it using the BoC rates no matter how technically correct it might not line up with what your broker Happens to reports which may create a huge hassle if it results in the CRA’s system automatically detecting an overage.
[OP]
Sr. Member
Aug 31, 2001
524 posts
56 upvotes
Hello,

Well they do have a current conversion amount based on the rate applicable the day I had transferred in (Note, I transferred this in from Questrade in early 2020). This is specifically NBDB.

And they should have some sort of exchange rate as of the day I withdrew the amount.

My understanding is that it would be as of the day of withdrawal no? That would only make sense to determine the amount of recontribution room.

I'll e-mail NBDB to see if they know the procedure and rule as well as the CRA - (myCRA is down - my understanding the reporting of the amount is done a bit later in March so it won't show up there - so maybe i'll check with NBDB as well)
lc39nav wrote: Does your broker show you the CAD equivalent anywhere? NBDB has a section for registered accounts where you can see the CAD equivalent amounts for any USD contributions once they are made, which ultimately gets reported to CRA.

The issue is that I believe they are going to have to report to CRA in Canadian dollars, and my concern if you calculate it using the BoC rates no matter how technically correct it might not line up with what your broker Happens to reports which may create a huge hassle if it results in the CRA’s system automatically detecting an overage.
Jr. Member
Jan 21, 2012
139 posts
113 upvotes
VANCOUVER
Sedul wrote: Hello,

Well they do have a current conversion amount based on the rate applicable the day I had transferred in (Note, I transferred this in from Questrade in early 2020). This is specifically NBDB.

And they should have some sort of exchange rate as of the day I withdrew the amount.

My understanding is that it would be as of the day of withdrawal no? That would only make sense to determine the amount of recontribution room.

I'll e-mail NBDB to see if they know the procedure and rule as well as the CRA - (myCRA is down - my understanding the reporting of the amount is done a bit later in March so it won't show up there - so maybe i'll check with NBDB as well)
I wasn’t thinking about withdrawals, my bad. I’ve never done a withdrawal so I’m not sure where and how that’s shown if at all. I think it is a good idea to ask them how they are calculating the CAD equivalent and what they are going to report to CRA, if they can answer that. I think this is the only way you’re going to get comfort.

Logically it should be based on the withdrawal date, but then sometimes there is a processing delay and the funds don’t actually show as transferred out until the next day or later after you’ve requested and I’m not confident with which date’s FX rate they would use for reporting. I also don’t know that they actually use Bank of Canada rates for this purpose. This is why I would caution around trying to calculate it yourself even if you are doing it in a technically correct way that is consistent with the Income Tax Act. Because ultimately CRA may rely on whatever they are told by the financial institutions.
[OP]
Sr. Member
Aug 31, 2001
524 posts
56 upvotes
Redsanta wrote: My ibkr tfsa is usd...
IBKR TFSA only allows for CAD Deposits the last time I had checked. Unless, you do a position transfer from another institution or convert the amount within IBKR TFSA
[OP]
Sr. Member
Aug 31, 2001
524 posts
56 upvotes
Yep, withdrawal to redeposit. I couldn't find a concrete example or indication on the government / CRA websites - so I figured I'd ask. So far the anecdotes / advice has been that it makes sense it would be the Canadian Equivalent amount of the USD amount deregistered/withdrawn from the TFSA.

Yeah, since it's a small amount, I can convert with a less favorable rate to have more room to prevent over re-contribution.

Thanks, I'll check with the brokerages and CRA if possible.
Member
May 14, 2012
277 posts
171 upvotes
Vancouver
I've never done a withdrawal but I've made USD contribution to my TFSA account at RBCDI many times. RBC always calculates the CAD equivalent amount (which I can see along with the exchange rate online) and reports it to CRA. I believe they use their own rates, not BoC's.
Deal Fanatic
May 5, 2008
5563 posts
2240 upvotes
Winnipeg
When do the banks report the 2020 TFSA contributions?
Deal Addict
Jan 6, 2015
1028 posts
308 upvotes
airmail wrote: When do the banks report the 2020 TFSA contributions?
I feel by the end of Feb, RRSP as well. :rolleyes:

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