Bananabrainz wrote:
Hey all, hope everyone's doing well. Still lurking around here...I see things are alive again. Gonna call TD tmrw and b#it&_ at them about them vibe shares....Also see how to go about making the CVHIF tradeable. Seems some have had luck. Also, noticed that my TFSA/RRSP positions got liquidated at IB....are they allowed to do that.?! Why didn't they covert to CVHIF like my TD account? Thoughts?
Some brokerages will liquidate a holding in a registered plan if it becomes a "non-qualified investment".
The Income Tax Act (Canada) determines whether or not a security is a “qualified investment.” When you hold non-qualified investments in a registered plan like an RRSP, RRIF or TFSA, the Canada Revenue Agency (CRA) may impose penalties on the annuitant or holder of the plan.
In general, a security that trades only on OTC markets is a non-qualified investment, but if it also trades on a DSE, it may be considered qualified. For example, if a stock trades over-the-counter in the U.S. but also trades on a DSE in Europe, it may qualify to be held in a registered plan.
Many Canadian investors find themselves owning a non-qualified investment when buying investments that trade on Over-the-Counter (OTC) markets (as opposed to stock exchanges), or when a security is delisted from Designated Stock Exchange (DSE), as determined by the Department of Finance Canada. This is the case with shares of CVHIF.
If you hold non-qualified investments in a registered plan, there may be penalties and tax reporting requirements for the annuitant or holder of the plan. Normally the brokerage (eg. TD Direct Investing) will noitify you to remove a non-qualified investment from your registered plan. Options to do this are:
- Sell the security by placing a sell order.
- Withdraw and transfer the security in-kind to a non-registered account. Withholding taxes may apply.
- If the security is worthless, request to have it removed from your registered plan (if applicable).
- Swap (exchange) the security for the equivalent fair market value in cash from a non-registered plan.