TFSA stock account vs regular stock account

Discussion in 'Canadian Stocks Message Boards' started by Juggernaut14, May 24, 2020.

  1. Juggernaut14

    Juggernaut14 New Member

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    Hello All,

    I am not sure if this is the correct place to post this but I am posting it here because I thought canadian stocks fit the best for this topic. I already have a margin account with questrade however, I am hearing now about how some companies offer tfsa stock accounts.

    I actually have a mutual fund tfsa account but only just heard of a tfsa stock account. I wanted to know if anyone knew the differences between a regular stock account vs a tfsa account. I get that the tfsa account would not be taxed but I am guessing there are other things involved? Also, if you are not getting taxed for the tfsa account on your stocks would it not be advantageous for everyone to just get a tfsa stock account?
     
  2. MTTRADER

    MTTRADER New Member

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    You are right, a tfsa account would not be taxed. Which is the biggest benefit of trading/investing within a tfsa account but you also have to remember you have a limit on how much you can contribute into your tfsa account. You can gain an unlimited amount within your tfsa account but you are limited in how much you deposit into your account.

    This limit increases every year, and any amount you withdraw through out the year will be given back to you the first of the following year. At the same time you must also know if you lose amount within your tfsa account, you will lose it for life. Example: Your total contribution limit is $50 000 that you can put in your tfsa. You deposit $10 000 into your tfsa and invest it all into a stock. The stock drops 50% and the value of your investment is now $5000 and you sell the stock fully. That $5000 is gone forever and your new contribution limit will be $45 000 + whatever amount they increase it by the following years. Not sure if I am explained it clearly, but there are many sites and videos explaining it online.

    If you choose to invest into stocks sold on exchanges in the U.S, even if you use your tfsa, you will be taxed on any dividends that stock gives you. Not on the capital gain, just on the dividend. To avoid this, you can use your RRSP, but remember you are taxed on amounts you withdraw from your RRSP.
     

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