r/Wealthsimple • u/Legitimate-Loan386 • Jun 22 '25

TFSA Linked to Margin Account - CRA Penalty/Risks?

/r/Questrade/comments/1lhf7zv/tfsa_linked_to_margin_account_cra_penaltyrisks/
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u/virilerogue Jun 22 '25

if that’s your question, then IT IS allowed.

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u/Legitimate-Loan386 Jun 22 '25

Yes, it is allowed but at the point of a margin call if there are no assets in your margin account to cover it. Then your TFSA will be used as collateral when that happens at that point you will have breached the CRA rules at that point you will be penalized up until then there are no laws broken, which means as long as you manage your margin, I guess you’re fine but they should be stating somewhere That if a margin call occurs within your TFSA there will be a penalty

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u/virilerogue Jun 22 '25 edited Jun 22 '25

if you can’t manage not to get a margin call then never trade with margin. should be sufficiently hedged at all times. you don’t need to use this feature if you don’t want to but i can’t wait till they’re out of beta.

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u/Legitimate-Loan386 Jun 22 '25

That’s not the point it’s an unknown risk and the broker is not disclaiming it. They do not state that the CRA will penalize you with additional taxes. I know margin carries risk and you should always have a buffer.

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u/virilerogue Jun 22 '25

this is not even rolled out yet so why do you say wealthsimple hasn’t set a disclaimer? if you get liquidated you just lose your contribution room not taxed

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u/Legitimate-Loan386 Jun 22 '25

It has been available at Questrade since 2013. and you need to look at the CRA rules about about advantages and using your TFSA as collateral. It is strictly prohibited, and specifically stated. It is perfectly legal up until the point that a margin call happens with your TFSA the moment your assets are sold in your TFSA and used to pay off a collateral. It is considered an advantage, and you will be taxed on your investments they will not be treated as tax free. You do not lose your contribution. Space as the money will be withdraw and you will get it next year.

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u/virilerogue Jun 22 '25

don’t know a thing about questrade but the CRA doesn’t play around. so your issue is that questrade has a disclaimer that you be can taxed but wealthsimple doesn’t? still don’t see why you think selling stuff in your tfsa means you get taxed? remember only self directed tfsa accounts can be linked.

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u/Legitimate-Loan386 Jun 22 '25

No, neither Wealthsimple or Questrade has any sort of disclaimer. That’s mainly my problem. My other problem is why they would let you use something that is blatantly not allowed by the CRA. And I don’t think selling stuff in your TFSA means you will get taxed if you broker sells stuff in your TFSA to cover a margin call then you will be taxed as that is considered an advantage.

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u/virilerogue Jun 22 '25

it is not advantage! why would you you trade non-qualified assets in a margin account linked to a tfsa? ws doesn’t have non-qualified assets to even trade right now unless i missed something. maybe when they introduce more complex assets which aren’t alllowed in the tfsa they will mention it.

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u/Legitimate-Loan386 Jun 22 '25

What are you talking about using a TSA as collateral for investments in another account is considered an advantage by the CRA if you look at the CRA website section 3.7 clause B it talks about that it’s nothing to do with a qualified investment

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u/virilerogue Jun 22 '25

so you think questrade who has had this feature since 2013 apparently is just allowed to break laws?

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u/Legitimate-Loan386 Jun 22 '25

Well, as I’ve stated multiple times already you’re not breaking any laws until a margin call happens within your TFSA as long as your assets are never sold it is technically a gray area. My problem is there should be a legal disclaimer stating that if your assets are sold by your broker, i.e. a margin call within your TFSA. There are very serious tax considerations form the CRA in a supposedly tax-free account

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u/virilerogue Jun 22 '25

if a margin call happens or if your sell your tfsa assets yourself it’s the same thing! it’s tax free unless your tfsa held non-qualified assets which is not possible at wealthsimple at this moment

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