hey guys it's adrian here the canadian in a t-shirt and today i'll be breaking down how
to transfer money and investments between your different accounts in questrade i'll provide
a step-by-step walkthrough on how to perform cash and in-kind transfers between your margin tfsa
and rrsp accounts with questrade and i'll give you guys some tips and warnings to avoid any
unnecessary fees and taxes as you guys already know Questrade is my favorite online broker in
canada for many reasons including its low fees its ability to hold both canadian and us dollars and
being able to convert between them almost for free using norbert's gambit and on top of that
questrade makes it really easy to transfer money and stocks between your tfsa rrsp and
margin accounts this is a huge benefit and a lot of brokers either don't allow this or are severely
restricted like wealthsimple if you want to learn all the reasons why i prefer questrade and to get
started investing with them click the pop-up at the top right to watch my step-by-step tutorial on
how to open a questrate account for this video i'm going to assume that you already have a Questrade
account set up first of all why should we even bother transferring between accounts well we do
this to maximize our tax efficiency and minimize our tax bill in canada there are many different
types of investing accounts like the tfsa rrsp or RESP and margin or non-registered account and
each of these have different rules and benefits when it comes to taxes holding an investment in
one type of account over another can save you thousands of dollars a year in taxes so it's so
important to understand how each one of these work and to have an investing strategy for each account
luckily i've already made videos on each of these types of accounts so make sure you check out my
canadian task guide to learn how they work and how to invest in each type of account to minimize your
tax bill and maximize your long-term growth here are some very common examples that can save you a
ton of money let's say that you opened up a TFSA account expecting it to be tax-free but surprise
u.s dividends are not tax-free in the TFSA the dividends from u.s stocks and etfs will be charged
a 15% u.s withholding tax in a tfsa and you can't avoid it those taxes are paid out immediately
when you receive the dividend instead if you held those same u.s dividend stocks in an rrsp those
dividends would be tax-free that's why i always suggest to hold u.s dividends in your rrsp instead
of your tfsa to avoid these u.s taxes i talk about these u.s withholding taxes in greater detail in
my tfsa and rrsp videos so check them out but if you didn't know this rule and you already bought
us dividends in your tfsa what can you do? i get this question all the time but luckily Questrade
allows you to transfer whatever stocks you want from your tfsa into your rrsp you won't be paying
any commission fees or selling them at a loss or anything like that it's just a transfer you'll
still own the exact same shares they'll just be moved from your tfsa into your rrsp and now those
dividends will be totally tax-free but note this will count as a tfsa withdrawal and it will count
as an rrsp contribution so make sure you have available room i'll get back to this point later
in the video here's another example let's say you've maxed out your tfsa but you want to keep
investing you don't want to be sitting with a huge pile of cash just sitting there collecting dust so
you start investing in your margin account there are no limits at all with a margin account you can
put in as much money as you want but any profits you make will be taxed either capital gains or
dividends that's why i always recommend maxing out your tfsa and other tax sheltered accounts before
you start investing heavily in your margin account so you've maxed out your tfsa and you're investing
in your margin account now months go by and january 1st hits it's a new year and so now you've
just gained an additional six thousand dollars of TFSA contribution room ideally you want to max
this out as soon as possible to enjoy tax shelter growth but all your money is already tied up in
stocks in your margin account those stocks are going fine in your margin account but any profits
you make are being taxed and you have six thousand dollars of tax shelter groom just waiting for you
so you can slowly save up money week by week and contribute to your tfsa when you can or you can
transfer six thousand dollars worth of stocks from your margin account into your TFSA right
away and now those stocks will be growing tax free again this will count as a tfsa contribution
and there might be some tax implications if your stocks grew in value i'll get to these warnings
in just a bit but i wanted to highlight these two examples to show you the benefits of transferring
between accounts it's a super useful feature that can save you a lot of time and money i want
to reiterate one thing all the strategies in this video are regarding transfers between accounts but
all within questrade if you're looking to transfer money from your bank or another broker into
questrade i already have a whole video on how to do that and if you don't have a question account
click my referral link in the box below and you'll get $50 in commission free trade rebates for the
first 30 days when you sign up that saves you $50 plus i'll get a small referral bonus as well
so once you're in Questrade you can transfer cash or stocks or etfs between any combination
of accounts but for most canadians these are the transfers that are most useful tfsa to rrsp
to avoid withholding taxes on u.s dividends and margin to tfsa, margin to rrsp and margin to resp
to maximize your tax sheltered growth all the other types of transfers don't provide much
value and some can even cost you a lot of money if you're not careful for all these transfers
you have two options you can either transfer cash or you can transfer shares of a stock or an etf
i'll walk you through both of these at the end of the video but this is an important point
transferring cash is easy if you have a thousand dollars in your margin account you just say i want
to transfer a thousand dollars cash into my TFSA account but when you're transferring stocks you
don't say i want to transfer a thousand dollars worth of stocks stocks change in value every
minute of every day so you can't specify a dollar amount instead you have to specify how many shares
you want to transfer so if you want to transfer 10 shares and each share costs a hundred dollars
you're transferring a thousand dollars worth of stocks but you can't control the price
if by the end of the day the stocks have gone up to 110 dollars you're still transferring 10 shares
but now you're transferring $1100 worth of stocks that's why i suggest waiting until the market
closes at 4 pm eastern time before you request a transfer that way the stock price is locked in and
you'll know exactly how much money you're moving over technically when you transfer stocks you
can indicate which share price you want to use to calculate the market value of the transfer you can
either use the highest price of the day the lowest price of the day or the default option the closing
price at the end of the day i always recommend to use the closing price but you do have that choice
and later i'll show you how to make that choice on questrade this matters because it will affect
things like your contribution room as i mentioned in my previous examples if you're transferring
money into a registered account like a TFSA or an rrsp that transfer will be treated the exact same
way as a contribution since you're putting money into the account again cash transfers are simple
if you transfer a thousand dollars into your tfsa that's a one thousand dollar contribution
if you're transferring stocks in your tpsa your contribution will be the market value of those
stocks on the day of the transfer request again i suggest to use the closing price
to calculate this contribution but you can also choose to use the high of the day or the low of
the day i've said this before but when it comes to your TFSA and your rrsp make sure you record every
time you make a contribution or a withdrawal it's your responsibility to know how much contribution
room you have left the cra will only tell you this number once per year the rest of the year it's on
you to keep track of this and make sure you do not exceed your contribution limits you'll be charged
very steep penalties of one percent every month which is huge so when you're transferring wait
until you know the closing price to avoid any surprises and to ensure that you don't exceed your
limit what happens when you're transferring us dollars? The CRA will always look at the canadian
dollar equivalent on the day of the transfer so you can transfer cash as us dollars and you can
transfer shares of u.s stocks and u.s etfs everything is the same except that the cra
will consider the canadian dollar amount of this transfer so be extra careful with your
contribution limits if you only have a thousand dollars worth of TFSA room and you transfer in
a thousand us dollars into your tfsa you've just exceeded your limit since a thousand us dollars
is about $1200 canadian be very careful with this my advice is whenever you're dealing with
a us dollar contribution withdrawal or transfer record these three things the us dollar price the
exchange rate from the bank of canada on that day and the equivalent canadian dollar amount
that way you'll have all your bases covered if an issue ever comes up transferring between accounts
is super easy and Questrade won't charge you any fees but there are a few situations where a
transfer will be taxed a margin account is a non-registered account in questrade so
every time you earn a profit you'll have to pay taxes on that profit so if you collect a dividend
that's taxed and if your stock goes up in value and you sell it for more than you bought it for
you've just made a profit called a capital gain and in a margin account capital gains are taxed
however in a TFSA, RRSP or other tax sheltered account you don't pay taxes on these capital gains
so what happens if i transfer my stocks from my margin account into a tax-free account like a tfsa?
unfortunately you might have to pay some taxes with this transfer if your stocks have increased
in value when you transfer investments from a margin account into a tax sheltered account it's
treated as if you sold those stocks first and then transferred them into the tax-free account and so
on the day of the transfer if your stocks are worth more than you bought it for that transfer
is treated like a sale and so you will have to pay capital gains tax on this profit so let's say you
bought one thousand dollars worth of stocks in your margin account and now months later they're
worth thirteen hundred dollars if you transfer them into your tfsa it will be taxed like a sale
and so you'll have to pay taxes on the three hundred dollars of capital gains the good news
is that now those stocks are inside your TFSA and so for the rest of time you'll never have
to pay any taxes on dividends or capital gains so it's a balancing act in the short term your
tax bill will increase but in the long term all future income from these stocks will be tax free
remember this capital gains tax only applies when you're transferring out of a margin account so
margin to TFSA, margin to rrsp or margin to resp transferring from a TFSA into an rrsp is tax
free since both accounts are already tax sheltered but what if your stocks have gone down in value
you only pay taxes on profits not on losses so if your stocks have gone down in value and you sell
them for a loss you now have a capital loss and you can use this capital loss to reduce your tax
bill by offsetting any capital gains that you made that year but when it comes to transferring at a
loss you don't get this benefit and it does seem a little unfair if you transfer stocks at a profit
it's treated as if you sold them for a profit and so you have to pay taxes on that gain but if you
transfer stocks at a loss there's no tax benefit it's not treated like a capital loss i talk about
this in greater detail in my year-end tax saving tips so make sure you check that out but here is
my rule of thumb when transferring a losing stock from your margin to your TFSA or rrsp account
if this stock is currently down but you intend to hold on to it then do a transfer you won't get to
reduce your taxes but you won't get charged any taxes either and after the transfer those stocks
can now recover and grow tax-free but if you don't intend to keep this losing stock then sell it for
cash and then do a cash transfer into your tfsa or rrsp now you can use that cash to buy a better
stock and since you sold for a loss you can now claim that capital loss to reduce your tax bill
remember at the beginning i said that there are only a few transfers that are actually useful
for most canadians tfsa to rrsp makes sense to avoid withholding taxes on u.s dividends
and transferring from your margin account to your TFSA rrsp or resp allows you to maximize
your tax shelter growth those are great but what you don't want to do is any kind of transfer
out of your rrsp please avoid this if you transfer out of an rrsp it's considered an rrsp withdrawal
which should only be done when you're retired i've already made a whole video on how rrsp withdrawals
work but here's the short version if you transfer out of your rrsp whatever amount you transferred
that withdrawal will be fully taxed as regular income and if you're in a high tax bracket you're
looking at a 40% tax bill and a big part of these taxes will be paid out immediately at the time of
the transfer or withdrawal these are called rrsp withholding taxes which could be an immediate tax
of up to 30 percent which you have to pay right away worst of all when you withdraw out of your
rrsp that contribution room is gone forever you're never getting it back with the TFSA when you
withdraw one thousand dollars next year you regain that one thousand dollars worth of contribution
room but with rrsp withdrawals that contribution room is gone forever so please don't make this
mistake and accidentally transfer out of your rrsp transferring from your tfsa into your rrsp
makes sense if you have us dividends but the reverse will not help you and it will cost you
a lot of money so please keep that in mind so those are all the rules and benefits of
transferring between accounts in questrade now let's see how you actually do it so i've logged
into Questrade this is the main home page and you can see here that i have three Questrade accounts
a tfsa an rrsp and a margin account but for this tutorial i'm only going to be transferring between
my margin account and my tfsa so to perform a transfer go to the request tab and you'll see two
options transfer funds is for transferring cash between accounts and transfer investments is for
transferring stocks and etfs but we'll start with transfer funds and this is very self-explanatory
here is where you submit a new transfer request and here you can see a history of past requests
you can see that two days ago i did a cash transfer of two dollars from my margin account
into my tps account and within one to two business days the cash was transferred but we'll start a
new request together and we'll do a cash transfer from my margin account into my tpsa account again
this is very simple so from we select my margin account and two we select my TFSA account now
we specify the amount of cash to transfer so i'm going to transfer three dollars and for currency
i'm going to choose canadian before i hit submit i need to record this as a TFSA contribution this
is so important it is my responsibility to know how much tfsa contribution room i have
at any moment i'm just going to make a text file recording that i made a TFSA contribution
on this date and the contribution was three dollars so we click submit we confirm the
details so i'm transferring three dollars from my margin account into my tfsa account click confirm
okay so the request has been received and i can check the status by going to the request history
and here you can see the new cash transfer being processed and if i want to cancel this transfer
i can click this icon right here okay so that's how you do a cash transfer now let's do a stock
transfer so we go to requests and we select transfer investments this page is very similar
and we do the same thing we start off by saying which account we're transferring from so we're
moving from our margin account and we're moving to our tfsa account now we don't set a dollar amount
we specify which stocks to transfer and how many shares to transfer so we click the symbol field
and it'll bring down a drop down list where we can search through all of our available stocks
and etfs in that account i'm going to search for xei it's a canadian dividend etf and i'll transfer
over one share before i submit it's important to know the closing price of the stock since i need
to know how much contribution room i'm going to be using for this transfer so let's look up the
share price so we click on trade and we look up xei.to so you can see here the stock price and
since i waited until the markets closed at 4 pm eastern time this is the closing price i recommend
waiting and using this closing price because now there's no surprises the stock price is
not going to change until the next business day so let's make a note of this xei closing price $23.26
so let's go back to my accounts and transfer request remember i'm transferring one share of
XEI from my margin account into my tfsa and i have the closing price of $23.26 so my TFSA contribution
is going to be exactly that so let's record it so we click submit now we confirm the details
so the request has been received i can go to request history to check the status of
the transfer and in one or two business days the transfer will be complete as before i can
cancel this transfer but what i do want to show you guys is the add comment feature this is how
you specify what share price to use when you calculate the market value of the transfer so
we click add comment and so we can choose we can use the high of day price or the low of day price
but we're going to use the closing price of $23.26 we click add comment and now we know exactly how
much of a TFSA contribution we're making and that's it now i just have to wait one or two
business days and that etf will show up in my tfsa account so there you have it that's how you
transfer cash and investments between different accounts in questrade make sure you check out my
other Questrade tutorials for a step-by-step guide on how to actually buy stocks how to invest in
the us market how to open an account and how to transfer from your bank into questrade again if
you want to get started with questrade click my referral link in the box below and you'll get $50
in commission free trade rebates for the first 30 days when you sign up that basically means that
your first 10 stock trades will be commission free that saves you $50 plus i'll get a small referral
bonus as well thanks for watching guys and be sure to like comment and subscribe if you found
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thanks everyone and i'll see you guys on the next episode of the canadian in a t-shirt bye guys