Profits on investments inside a Questrade TFSA (Tax Free Savings Account) are tax free. However, TFSA accounts have a maximum contribution limit amount. Deposits to TFSA above the contribution limit amount are subject to 1% monthly taxes.
Although named Tax Free Savings Account, TFSA can hold several investments such as stocks, bonds, ETFs (Exchange Traded Funds), and mutual funds. Stocks and other assets may lose value. Investment losses on TFSA accounts are not tax deductible.
TFSA can also be used as a regular savings account as a low risk investment. Some Financial Institutions pay interest income on a TFSA Savings account. List of TFSA Savings accounts in Canada will be discussed on the bottom section of this article.
Questrade TFSA Investments
- Stocks
- Bonds
- ETFs
- Options
- Mutual Funds
Both US and Canadian cash and investments can be held inside a Questrade TFSA account. Questrade offers both US and Canadian stocks, bonds, ETFs, options, and mutual funds.
Questrade has a minimum of $5,000 to purchase a bond. Also, international stocks have a high commission fee on Questrade. For this reason, the most common investments on a Questrade TFSA account are individual US and Canadian stocks, ETFs, and mutual funds.
For passive investing, ETFs with multiple stocks or bonds inside it may be an easier way to diversify. S&P 500 ETFs such as SPY, VOO, and VFV tracks the returns of the S&P 500 index. The S&P 500 contains the 500 largest stocks in America.
TFSA Contribution Limit
- Unused contribution limit will be carryforward to future years
- Withdrawals from TFSA accounts are added back to the contribution limit on January 1 of the next calendar year
- New contribution limit amounts are added every year
- Deposits above the contribution limit is subject to 1% monthly tax until withdrawn
TFSA Yearly Contribution Limit
| Year | Contribution Limit |
| 2021 | $ 6,000.00 |
| 2020 | $ 6,000.00 |
| 2019 | $ 6,000.00 |
| 2018 | $ 5,500.00 |
| 2017 | $ 5,500.00 |
| 2016 | $ 5,500.00 |
| 2015 | $ 10,000.00 |
| 2014 | $ 5,500.00 |
| 2013 | $ 5,500.00 |
| 2012 | $ 5,000.00 |
| 2011 | $ 5,000.00 |
| 2010 | $ 5,000.00 |
| 2009 | $ 5,000.00 |
Contribution Limit Example
- Person turned 18 on 2012 and met the TFSA requirements
- Contributed a total of $20,000 ($5,000 every 3 months) and bought some stocks for the first time on 2020
- Sold some stocks and withdraw $4,000 on 2021
The unused limits from 2012 to 2019 will be carryover to 2020 for a total contribution limit of $54,000. With a total deposit of $20,000 on 2020, the remaining unused limit for 2020 will be $34,000.
The new contribution limit amount for 2021 is $6,000. Adding the unused $34,000 limit, the total limit for 2021 will be $40,000.
The contribution limit for 2022 would be the unused limit on 2021 ($34,000) + withdrawals on 2021 ($6,000) + the new contribution limit that will be announced by the CRA for 2022.
Since the total deposits are below the contribution limit, there will be no penalty.
How to Buy Stocks on Questrade TFSA
Here is a video on how to buy and sell stocks on Questrade. The process when buying stocks on Questrade margin account is the same when buying on a Questrade TFSA. Questrade TFSA has no access to margin which means there is no access to borrow additional funds to invest.
Questrade TFSA Fees
| Stocks (Buy or sell) | 1 cent per share (min $4.95, max $9.95) |
| Options (Buy or sell) | $9.95 + $1.00/contract |
| ETF Buy | Free |
| ETF Sell | 1 cent per share (min $4.95, max $9.95) |
| Mutual Fund | $9.95 per trade |
| International Stocks | 1% of trade value (min. $195) |
Questrade have $0 maintenance fees starting around December 2020. Withdrawals through EFT (Electronic Funds Transfer) to a bank account have $0 fees on Questrade.
Buying 200 shares of any stock will have a commission fee of around $4.95. At 1 cent per share, 200 shares will result to a $2 fee, but the minimum $4.95 fee will apply.
In summary, Questrade TFSA charges around $5 for most stock (buy or sell) trades which is cheaper than most big banks which charges around $9.95 per trade. Similarly, Questrade TFSA charges around $5 when selling ETFs and free ETF buys. Questrade TFSA have $0 inactivity fees for all amounts.
Commission fees for US trades will be in US dollars while CAD trades will have a commission fee on Canadian dollars for both Questrade and the big banks in Canada.
Is Questrade TFSA taxable?
Generally, gains from stocks on a Questrade TFSA are not taxable, and investment losses are not tax deductible. Deposits above the contribution limit to TFSA accounts are subject to 1% monthly tax. Dividends from Canadian stocks are tax free on Questrade TFSA while US dividends may be subject to 15% withholding taxes.
Requirements to open a TFSA
- Valid SIN number
- At least 18 years old
- Resident of Canada
Non-residents can also open a TFSA account, but contributions are subject to 1% monthly tax for non-residents. (Source)
Some provinces like British Colombia have an age of majority of 19 years old. Although you have to be 19 years old to open a Wealthsimple TFSA account on some provinces, the amount of contribution limit starts when you turn 18 and met the requirements.
How Much can I Contribute to a Questrade TFSA?
The amount of contribution limit to a Questrade TFSA depends for every individual. The maximum contribution for 2020 and 2021 is $6,000 each, and the unused limit on past years can be used in the future. Investing $500 a month to a certain ETF or stocks on Questrade TFSA will result to maximizing the $6,000 limit.
Are Investments Safe with Questrade?
IIROC (Investment Industry Regulatory Organization of Canada) is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada to protect investors. (iiroc.ca)
CIPF (Canadian Investor Protection Fund) protects investor assets. In case of bankruptcy of a CIPF member firm, up to $1 million (combined investments on TFSA, margin, and cash accounts) is CIPF insured. (cipf.ca for more details)
Questrade Inc. are both CIPF and IIROC member firm. In addittion, Questrade states that they have purchased a private insurance to insure up to $10 million for every client.
The big banks such as TD Secuties Inc, RBC Direct Investing Inc., and BMO InvestorsLine are also CIPF members and regulated by the IIROC.
These can be confirmed by visiting the member list pages on both IIROC and CIPF.
Is Multiple TFSA accounts possible?
Multiple TFSA accounts with several platforms are possible as long as the total contributions (deposits) are below the contribution limit. Investing platforms that are either CIPF or CDIC (Canada Deposit Insurance Corporation) member may give some insurance if an investing platform go bankupt.