Crypto ETFs in TFSA

[eppievillaruel]

So I’ve held positions and sold positions in the Canadian crypto ETF’s (BTC and ETH) within my TFSA and have made quite a bit of money. The issue is that in some cases, I’ve held for relatively short periods since I’ve wanted to harvest the gains. Then I’ve seen dips and get back in again.

When I say “short periods”, we’re talking a week to a month. Now, my understanding is that CRA can deny the TFSA tax exemption if they determine you’re using the account for “active trading” and can even deem the income business income (fully taxable).

So I’m wondering a couple things: 1) if I’m holding these ETFs for at least a week, could I still be considered to be trading “actively”; and 2) suppose I made very good gains and doubled the value of my maxed-out TFSA, would that get flagged by CRA for audit?

P.S. not looking for public scolding on my risk taking and lack of diversification here

 

[dsmd14]

@eppievillaruel I thought the entire point of the TFSA was to encourage investment? Now they can punish you for being too successful with those investments

Silly me-- it was just a method to pump cash into Canadian blue chips all along.

 

[tenakwa]

@eppievillaruel The CRA has yet to provide clarification to what’s allowed and not for TSFA . I think they also take in to consideration if your have any knowledge of trading etc and not running it like a business . Last year I put in 15k and have over 200k atm but I mostly just held 4 company’s and some leveraged ETFs . Spoke with my accountant about it he said I have nothing to worry about . My background is in HR if it matters .

 

[eppievillaruel]

@tenakwa Thanks for the comment. I have heard that it basically needs to be day trading to get looked at (or a very high TFSA balance). Maybe I’m paranoid.

 

[tenakwa]

@eppievillaruel Yea the accountant pretty much said “ don’t feel bad for making money “ . And from what I seen online people that did get audited were folks that was intentionally running their accounts full time as in a business . I don’t even think the amount of trades matters .
I mean The TFSA guidelines indicate you can save for anything (i.e trips, school, a new car) so can be short, medium or long term investments, there are no restrictions. They do NOT state that when buying equities, they can only be long term investments or dividend paying stocks. Therefore a person is not restricted from investing in equities using short or medium term investment strategies so you should be able buy/sell growth stocks or any stock on an allowed exchange.