Answers Archive

Re: Contributing between RRSP and TFSA?

Hello. I would recommend you max out your TFSA first, because all the earnings and growth are tax-free. RRSP’s are tax-deferred. One thing to consider is your investment savings rate, and allocation. If you plan to save aggressively, the 19k TFSA room will be used up and future savings will default to RRSP. In this … Continue reading

Re: Renting to family

I will begin by saying that if you have rental income, by law it must be declared. As far as saving on taxes, the first issue is that the principal portion of the mortgage payment is not deductible. Only the interest portion is. The second is that any rental losses from renting a property to … Continue reading

Re: Borrowing to invest?

Hello. $80 per month for 10 years is $9600 in interest losses, and around $8k after the tax break. After your capital gains tax, you will basically have broken even on this 10-year investment. The investments have returned 4.5% over the last 10 years, and you have paid around 4% interest. Because of this, I … Continue reading

Re: Can I open multiple TFSA’s?

You can have as many TFSA’s as you like, but their contribution limit is shared. To do what you are describing without over contributing, you would have to make a transfer from one account to another. Contact tangerine (the receiving brokerage), and they will have the transfer forms. I would keep your e-series TFSA, as … Continue reading

Re: What is the best option for obtaining a new mortgage?

Hello, Number two is the cleaner option overall. Option one might get you better results in a hot market, as you are buying with all cash. Also, with option one you can get everything lined up in advance. I would prefer number two, but one might be more pragmatic. You could also split the difference, … Continue reading

Re: Emergency fund in TFSA?

Hello, I do not believe you should keep your emergency fund in your TFSA. The whole point of the TFSA is that you do not pay capital gains tax on investments; you should not have your emergency fund invested. All it is doing is taking up contribution room in your TFSA, room that could be … Continue reading

Do I declare money recieved as rent from a relative?

Hello, According to the CRA website, there are drawbacks to renting to a relative. If you a renting below market value, you do not report this amount in your income. Therefore, you cannot claim expenses. This is considered cost sharing, and is ineligible for rental losses. If you are renting at fair market value, you … Continue reading

Re: Going back to school?

Hello, Tuition fees are not deductible. They give rise to a tax credit, and must be used to the maximum extent possible against earned income. For example, you may not choose to defer claiming tuition until a later year. Ordinarily, you would only be able to claim fully deductible childcare expense against the lower earning … Continue reading

Re: Should I Cash out My RRSP’s?

Hello, First, you make want to speak to a realtor. It is often simpler to find out while the house is not selling, rather than take the drastic step of liquidating your RRSP. If you do withdraw from your RRSP, the money will get added to your regular income. You will lose your RRSP contribution … Continue reading

Re: Moving Money into Canada?

Hello, There are no restrictions on the amount of money you can bring into Canada, but any amount of $10,000 or more must be reported to the government. The easiest way to do this is through a wire transfer from a Panamanian bank, or a Canadian subsidiary in Panama. They would then transfer the money … Continue reading

Re: Tax implications for a Canadian Citizen returning home from the U.S.

Hello, As a general rule, surrendering your green card during the year means you stop being a resident alien on December 31. If you can show that your tax home is in another country, then your residency will stop the day you surrender your card. Do make sure you end it, though. Simply being outside … Continue reading

Re: Do I lose TFSA room if my trading account loses money?

Hello. If you liquidate the account and cash out, that lost money will come out of the future contribution room. If the account grows, the gains are yours. But, if the account shrinks the losses are also yours. I wouldn’t suggest cashing out if you are using the account for trading. You could sell the … Continue reading

Re: Are dividends from exchange-traded funds eligible for credit?

Hello, If an ETF holds only eligible Canadian dividend paying companies, it is eligible for the dividend tax credit. However, XIC is not one of them. If your ETF is held in a RRSP or TFSA, it is not eligible for the credit. Tax slips are not issued for registered holdings. ETF’s are mutual funds, … Continue reading

Re: Determining the stock dividends amount from a trust

Hi Henry, The amount of dividends to be declared is dependent on a few things. You must take into consideration the amount of available dividend refund sought to be recovered by the corporation in a given year and the tax position of yourself for that same year. The trustee may also look at the amount … Continue reading

Re: Tax returns on a donation left in a will

Hi Paulina, Gifts that are made in a will can be claimed as long as they are charitable, ecological, or cultural gifts. Seeing as this was a charitable donation, it can be claimed. Gifts of this nature are deemed to have been made immediately before the death. This means that the amount can be claimed … Continue reading

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