So, Wealthsimple had sent me an email regarding the 0.5% account transfer promotion. I've been a Questrade client for 9 years and have a decently large amount spread across all 3 of the major self-directed account types (RRSP, TFSA, taxable). r/JustBuyVGRO subscriber here.
Anyway, the promo enticed me. A free $2500 or whatever just to move my accounts over? Plus no ECN fees or commissions if I ever need to actually sell ETFs instead of buy. Sign me up. Yes I know QT has more advanced features but as someone who just buys VGRO once a month and then checks out, I don't need them.
Anyway, the point of this post: The fine print of the promotion says that if the bonus is paid into a registered account, it doesn't count as a contribution. I also confirmed on the phone that the bonus is not taxable if received in the Cash account (so it won't show on a T5). While the promo lists the accounts the bonus will be paid into in a sorted list (Cash account first) I was able to, during my phone conversation, specifically request that the bonus be paid into my self-directed TFSA instead, because why not? it lets me add a couple grand to it without it counting towards the contribution room.
Wealthsimple also stated that although it's not advertised as such, they were going to apply the 0.5% transfer bonus to money transferred into my cash account in February as well, so now I'm going to shove my emergency fund over there sooner than I'd been planning on.
EDIT: Based on the discussion below, I have reached out to WS again to explain the details of how the bonus doesn't count as a contribution based on the CRA's rules regarding TFSAs. If I hear back with details I will provide them here with a later edit.
EDIT 2: Here is some text Wealthsimple cited from the CRA regarding this:
Anyway, the promo enticed me. A free $2500 or whatever just to move my accounts over? Plus no ECN fees or commissions if I ever need to actually sell ETFs instead of buy. Sign me up. Yes I know QT has more advanced features but as someone who just buys VGRO once a month and then checks out, I don't need them.
Anyway, the point of this post: The fine print of the promotion says that if the bonus is paid into a registered account, it doesn't count as a contribution. I also confirmed on the phone that the bonus is not taxable if received in the Cash account (so it won't show on a T5). While the promo lists the accounts the bonus will be paid into in a sorted list (Cash account first) I was able to, during my phone conversation, specifically request that the bonus be paid into my self-directed TFSA instead, because why not? it lets me add a couple grand to it without it counting towards the contribution room.
Wealthsimple also stated that although it's not advertised as such, they were going to apply the 0.5% transfer bonus to money transferred into my cash account in February as well, so now I'm going to shove my emergency fund over there sooner than I'd been planning on.
EDIT: Based on the discussion below, I have reached out to WS again to explain the details of how the bonus doesn't count as a contribution based on the CRA's rules regarding TFSAs. If I hear back with details I will provide them here with a later edit.
EDIT 2: Here is some text Wealthsimple cited from the CRA regarding this:
- 3.12 It is common practice for financial institutions and other firms in the investment industry to offer fee waivers, preferential pricing, bonus interest, and other promotional incentives. Often these incentives require the customer to satisfy certain criteria such as maintaining a minimum investment balance, having a minimum number of products, opening a new account, or investing additional funds. Where a customer’s registered plan is taken into account in determining eligibility, the incentive could be viewed as conditional on the existence of the plan. However, most conventional incentives are accommodated by one or more of the exceptions described in ¶3.7(a), (d), or (e). Examples 2 to 6 demonstrate common situations that are covered by these exceptions. In addition to not being treated as an advantage, the payments described in Examples 4 and 6 do not constitute a premium, gift, or contribution to the plan (as they are considered a return on investment). This ensures that such payments will not affect contribution limits or the registered status of the plans. In contrast, if a controlling individual directs that a referral bonus be paid into their registered plan, the payment will be considered to be a contribution or premium to the plan. A referral bonus is paid as a consequence of the relationship between the existing investor and the new investor. When a registered plan is involved, it is actually the controlling individual who earns the referral bonus, not the plan itself.
Taking the money in cash and then contributing it to your RRSP is clearly better.