PSA regarding the Wealthsimple 0.5% transfer promotion

[onelittlerabbit]

@jenulguigue The promotion details say you can only remove up to 5% of your total contribution for 1 year or else you risk them removing the bonus from your account.

So you cant just transfer in, get the bonus, and transfer out again.

 

[jenulguigue]

@onelittlerabbit Fair enough, but even then in my hypothetical it effectively becomes an extra $2500 in annual contribution room which is not insignificant.

 

[uhuhuh]

@jenulguigue At the moment the rules appear to allow this. Now, having Financial Institutions run this promotion every year, that's a different question.

 

[alolbu]

@jenulguigue I edited the OP with clarification text from the CRA.

 

[rodr]

@alolbu I use CIBC Investors Edge (ease of use), and they’ve sent me emails that they also have a cashback promo right now. I was curious so I went in to the Terms and Conditions for the offer. And it says the same thing. So I imagine it’s not a screw up on WealthSimple.

“Cash back payments deposited by CIBC Investor's Edge into a registered account as a result of the Offer will not impact your contribution room.”

 

[bible_student]

@rodr So it's more like a dividend kind of thing?

 

[alolbu]

@rodr Good to know. That gives me confidence if CIBC is doing the same.

 

[sozosion]

@alolbu I just replied elsewhere that there’s an order of priority… BMO is the same. The money goes to cash accounts first if there are any.

 

[tom9832]

@alolbu I believe that CRA is fine with such bonus money as long as the bonus is generated from the TFSA money transferred. The idea behind this is that WealthSimple is free to give away it's money to entice customers, as long as the money doesn't directly or indirectly come from another account (i.e. there are rules preventing you from transferring value from a RRSP to a TFSA for obvious reasons).

I.e. if you transfer 400k of RRSP and $100k of TFSA to get a $2,500 bonus. CRA would be fine with $500 going into the TFSA and $2,000 going into the RRSP.

 

[japxican]

@tom9832 This would make the most sense. Transferring 500k of your non-registered to put an additional 2.5k in your maxed out TFSA really seems against the spirit of the TFSA.

 

[sozosion]

@japxican But I’m still going to try it

 

[huxbulldog]

@alolbu How in the hell is a 2500 deposit not going to count towards your room? Does WS have magic laws that let them contribute endless money to my account for me? Can my barber contribute a bonus into my tfsa and push my limit even higher ?

Maybe if it was setup as if your stocks grew or received a dividend, but I don’t see how getting it deposited straight into a tfsa bypasses what you can contribute.

Edit to add. If the bonus is applied to an RRSP or TFSA account, the Bonus will not be counted towards your contribution room. Tax implications on the Bonus’ withdrawal apply, depending on the account. We suggest you reach out to your personal tax advisor if you have any questions related to tax.

I would like to reach out to my personal Reddit Tax Advisors as to why and how this can fly under the contribution room, and what other avenues are available to over contribute with things like this.