RE:RE:RE:RE:Dividend discussion
Allinontheturn1 wrote: Hey Moheljfox
What do you mean TFSA Myth ?
Under the TFSA rules there is an extreamly flimsy statement about: the account does not support short term investing transactions and that those that are deemed short term trades within the account risk running afoul of Revenue Canada and those transactions deemed to be short term trading will be taxed as buisness income by the CRA. Most institutions and websites that discuss the TFSA will reference a similar worded message.
The vague wording of the statement is pretty open ended and likely cannot stand up to challenge as you can deposit and withdraw cash as a short term transaction so there is no difference to what it's use is within the account(You only loose contribution room until the end of the calendar year). Also try and find out what the definition of 'short term trade' or even 'day trade', both are rather vague gerenalized statements, we understand the intention of the wordings of both but there is no real set timelines on either.
Investopedia:
Day Trade : A day trader often closes all trades before the end of the trading day, so as not to hold open positions overnight. (Keyword: "often" not "always", that's rather open ended for legal purposes)
Short Term Trade : A short-term trade can last for as little as a few minutes to as long as several days. (Keyword: "several" How many days is several? In most investor speak "short term" is less than a year, but that is still not a clear rule.)
How can the CRA define and enforce rules that don't have clearly defined wording in general, let alone the CRA not defining these things themselves? When this account was developed it would not have taken much to add a paragraph defining thier official interpretation of a 'short term' trade that is illegal within the account, but they declined to do that. I've searched it out several times and came up empty, if anyone is aware that they have defined it clearly, please point it out.
Also as far as I'm aware, unless your accounts are frozen and investigated the CRA has no access to what is held in your TFSA, only the record of withdrawals and deposits, which if done incorrectly could cause a flag raised for investigation. But no records of income are acknowledged or tracked to my knowledge and your tax time paperwork only makes reference to 'contribution limit' similar to your RRSP, that said my TFSA limits on all my tax documents every are extreamly wrong as they don't seem to get updated information that often.
Theoretically, if you raise no flags or are apart or have any financial transgressions for your accounts to be investigated on, CRA has no information on what you are doing with the money once it's in the account, therefor it's pretty much the 'Wild West' if you want it to be, I've done short term trades the past 3-4 years in the account, not a huge amount to press my luck tho, couple day trades, one that was 45 min, several that lasted less than a week, a few less than a month and some less than a quarter, but I've had 0 issues. I don't know many people personally that invest with thier TFSA, but I've never heard of a case of the issue coming up, although, I would not be surprised if there are cases out there brought upon from when the CRA has investigated someone for over limit contributions, tax fraud/evasion, bankruptcy proceedings, financial theft, child support hearings or similar issues, but as I said I've never seen it come up.