Overview
Linking your self-directed investing accounts to your margin account lets you use assets in those accounts as collateral to increase your buying power. This means you can borrow more in your margin account without taking assets out of a linked account. Using a TFSA as collateral does not affect its tax advantages.
Eligibility
You can link up to three of your individual self-directed investing TFSA and non-registered accounts to your margin account.
You don't need to have money in your margin account to boost your buying power with a linked account. If your margin account has a $0 balance, your buying power will be based entirely on the eligible assets in your linked account(s). This allows you to use margin without first transferring assets to your margin account.
Considerations and risks
Consider the following before you link your accounts to your margin account:
- We can use your linked account(s) to cover margin debts: If you owe money on your margin account, we have the right to use assets in your linked account(s) to resolve that debt.
- Your linked account(s) become collateral: By linking your accounts, you're using them as security for any money you borrow on margin. This gives us legal rights to your linked account(s) if you can't pay back what you owe.
- We could sell your linked investments: In some situations, we may need to liquidate securities in your linked account(s) to meet your margin obligations.
- A sale of assets in a non-registered account is a taxable event: If we sell assets from your linked non-registered account to cover margin debts, this could result in a capital gain or loss that you'd need to report.
- We may reject your order: We may automatically reject any order that causes your margin account to go into a margin call.
How to link your accounts to your margin account
Follow these steps to link your eligible accounts to your margin account:
- Log in to the Wealthsimple app
- From the Home page, select your non-registered margin account
- Select the Boost your buying power card
- Read the margin account linking disclosure
- Check the box to confirm you've read and understood the disclosure
- Tap Link account
- Log in to your Wealthsimple profile
- Select your non-registered margin account
- Select the Boost your buying power card
- Read the margin account linking disclosure
- Check the box to confirm you've read and understood the disclosure
- Tap Link account
How to unlink your accounts from your margin account
You can unlink an account 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.
Follow these steps to unlink your account(s):
- Log in to the Wealthsimple app
- Select the Profile (person) icon in the top right corner
- Choose Settings (the gear icon) from the menu
- Select Accounts
- Select your margin account
- Under Investing Settings, select Collateral accounts
- Uncheck the account(s) you no longer want to use as collateral for your margin account
- Tap Save
- Log in to your Wealthsimple profile
- Select the Profile (person) icon in the top right corner
- Choose Settings (the gear icon) from the menu
- Select Accounts
- Select your margin account
- Under Investing Settings, select Collateral accounts
- Uncheck the account(s) you no longer want to use as collateral for your margin account
- Select Save
How margin calculations work
When an account is linked, we calculate your overall margin buying power using the value of eligible assets in your linked account(s) and your margin account. This increases your buying power and the loan value available to you.
You can unlink an account 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 account.
Limitations
You can only link individual self-directed investing TFSA and non-registered accounts to your non-registered margin account. You can't link managed investing accounts, joint accounts, or RRSPs.
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 doesn't impact your TFSA contribution room. Your assets stay in your TFSA.
Are there tax implications if I link my non-registered account?
The act of linking the account itself has no tax implications. However, if assets are sold from your linked non-registered account to resolve a margin call, this sale is a taxable event and could result in a capital gain or loss.
What happens if I receive a margin call with a linked 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 account(s).
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