Overview
Linking your self-directed investing Tax-Free Savings Account (TFSA) to your margin account lets you use assets in your TFSA as collateral to increase your buying power. This means you can borrow more in your margin account without taking assets out of your TFSA or affecting its tax advantages.
Eligibility
You can link individual self-directed investing TFSA accounts to your margin account.
You don't need to have money in your margin account to use boost your buying power with your TFSA. If your margin account has a $0 balance, your buying power will be based entirely on the eligible assets in your linked TFSA. This allows you to use margin without first transferring assets to your margin account.
Considerations and risks
Consider the following before you link your TFSA to your margin account:
- We can use your TFSA to cover margin debts: If you owe money on your margin account, we have the right to use assets in your TFSA to resolve that debt.
- Your TFSA becomes collateral: By linking your accounts, you're using your TFSA as security for any money you borrow on margin. This gives us legal rights to your TFSA if you can't pay back what you owe.
- We could sell your TFSA investments: In some situations, we may need to liquidate securities in your TFSA to meet your margin obligations.
How to link your TFSA to your margin account
Follow these steps to link your eligible TFSA account to your margin account:
- Log in to your Wealthsimple profile
- Select your non-registered margin account
- Select the Link your TFSA to gain buying power card
- Read the margin account linking disclosure
- Check the box to confirm you have read and understood the disclosure
- Tap Link account
How margin calculations work
When your TFSA is linked, we calculate your overall margin buying power using the value of eligible assets in your TFSA and your margin account. This increases your buying power and the loan value available to you.
You can unlink your TFSA at any time, as long as it doesn't cause your margin account to become under-margined. If unlinking would result in insufficient margin, you'll need to deposit more funds or reduce your margin positions before you can unlink the TFSA.
Limitations
You can only link a self-directed investing TFSA to your non-registered margin account. You can't link managed investing or portfolio TFSAs.
Frequently asked questions
Will linking my TFSA to my margin account affect my TFSA contribution room?
No. Linking your TFSA is not considered a withdrawal or a contribution, so it does not impact your TFSA contribution room. Your assets stay in your TFSA.
Can I unlink my TFSA after I've linked it?
Yes, you can unlink your TFSA at any time, provided that unlinking won't cause your margin account to become under-margined. If removing the link would result in insufficient margin, you'll need to either deposit additional funds or reduce your margin positions before unlinking.
What happens if I receive a margin call with a linked TFSA account?
If your account receives a margin call, you'll be notified and given an opportunity to deposit funds or reduce positions to meet the margin requirements. If you don't take action within the specified timeframe, we'll liquidate the assets in your margin account first. If that's not enough to cover the margin call, we may sell assets in your linked TFSA.
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