Closing a TFSA

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
mbert
Posts: 15
Joined: Thu Mar 08, 2018 10:05 pm

Closing a TFSA

Post by mbert » Mon Apr 30, 2018 10:16 pm

Are there any considerations that need to be taken into account when closing a TFSA in Canada as a dual citizen residing in the US? The TFSA account is with a brokerage and contains various ETFs. I would like to close this account and transfer the securities into a US based margin account but am wondering if there are things I should be aware of before proceeding with this. Any advice is much appreciated.

nelsona
Posts: 15897
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Tue May 01, 2018 9:07 am

Well, for the year you still have it, you are still on the hook for trust and PFIC reporting. Some ETFs may not be transferable, particularly if they are not traded on US markets (this would be by the brokerages rules, not any regulation).

From a Cdn point of view there is nothing special to do.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

curiousCase2018
Posts: 4
Joined: Sun Apr 08, 2018 7:35 pm

Post by curiousCase2018 » Sun May 06, 2018 9:39 pm

Is this true for a TFSA GIC account in Canada? I am resident in US and have TFSA GIC account where the institution allows me to pull money before the maturity date and close the TFSA account. I filled up trust documents (3520) for it for 2017 taxes, would I still do it for 2018 taxes submittals next year?

nelsona
Posts: 15897
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Mon May 07, 2018 11:30 am

If your TFSA is a trust, and it was still in existence in 2018, then you must still file 3520, etc and report any income.

If you closed it before 1/1/2018, then there is nothing to do for 2018.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

steinandpartners
Posts: 8
Joined: Tue Sep 25, 2018 2:56 am
Location: Plot 72, Road 11 Block D, Banani Dhaka 1213
Contact:

Re: Closing a TFSA

Post by steinandpartners » Tue Sep 25, 2018 3:33 am

Indeed, the U.S. does not consider a TFSA to be any special type of account for tax sheltering purposes, so from their perspective, it’s a regular investment account and the income earned would be investment income which, as a U.S. citizen, you must report to the IRS on your U.S. tax return. However, the precise nature of further reporting is unclear, as the IRS does not appear to have provided any guidance so far.
We are an experienced team of professional consultants, lawyers, accountants, engineers and support staff dedicated to providing a unique experience by working pro-actively with our clients.

curiousCase2018
Posts: 4
Joined: Sun Apr 08, 2018 7:35 pm

Re: Closing a TFSA

Post by curiousCase2018 » Sat Mar 16, 2019 10:02 am

When you say 'investment income' after closing a TFSA GIC account, does that mean the principal + interest or just the interest that is generated by the GIC? For example, if I had 5000$ principal in a TFSA and I decided to close it, and after closing if I am receiving 5050$ (principal = 5k$ + interest = 50$); would I ONLY be reporting 50$ as interest (on form 1040 schB) or would I report $5050 as income and add that to my gross pay (f1040 sch1 box21)? Thank you in advance for clarifying.

Post Reply