Q: What is a Self-Directed RRSP/TFSA?
A: A Self-Directed RRSP (SD-RRSP) or Self-Directed TFSA (SD-TFSA) is a Registered Plan in which the investor (called the “Annuitant”) determines which and what types of investments are to be held in the account. The annuitant sets up a Self-Directed contract under a CRA-approved Registered Plan, like the SD-RRSP and SD-TFSA plans administered by CWCF.
Q: Can CWCF staff provide financial or investment advice?
A: Due to the self-directed nature of the Registered Plans administered by CWCF, staff are prohibited from advising account holders in any capacity. CWCF staff can describe the options available in a given situation and explain the effects of each so that the account holder can make an informed decision; however, we generally recommend that account holders speak with a financial, investment, or tax advisor for guidance.
Q: Can I invest in any company through CWCF’s RRSP/TFSA Program?
A: No, CWCF only holds securities of companies that are members of our organization. Membership is generally limited to co-operative or similar entities (such as Community Economic Development funds) and non-profit organizations (NPOs). If such a company is interested in applying for Associate Membership for the purpose of allowing its investors to hold securities in a registered plan, CWCF is happy to discuss this option with them.
Q: How much can I contribute to a Self-Directed RRSP or TFSA?
A: The same limits that apply to any RRSP or TFSA contributions apply to Self-Directed RRSPs and TFSAs. Your deduction limit appears on the Notice of Assessment sent to you by the Canada Revenue Agency (CRA).
Q: Can securities (investments) that I have purchased previously be deposited to my RRSP or TFSA with CWCF?
A: Yes, as long as the security is issued by a member of CWCF, and meets the eligibility requirements to be held in a registered plan. This type of deposit can be made through a process called a Contribution In-Kind. The deposit of securities to the Registered Plan is considered a contribution; the amount of the deposit is based on the Fair Market Value (FMV) of your securities at the time they are contributed to the plan. If you are making a Contribution In-Kind to an RRSP, you will receive a Contribution Receipt for the value of the securities being deposited, which can be claimed as a tax deduction.
Q: Can I use money in an existing RRSP or TFSA to purchase securities through my account with CWCF?
A: Yes, funds from an existing RRSP or TFSA can be transferred in to your CWCF account of the same type to purchase new securities. Your Account Representative can provide you with the required forms to initiate this transaction.
Q: Can I view my account statement online?
A: Unfortunately, account statements are not available online. CWCF is a very small financial institution, and is therefore not yet set up with online capabilities. However, we are generally able to provide an updated account statement upon request.
Q: How can I obtain a copy of my account statement?
A: CWCF mails out annual account statements each September, which detail any and all transactions that took place in the preceding 12 months. If an account holder requires an updated statement because they are planning to take action on their account, CWCF can generally provide this upon request by phone of email.
Q: What can I do with the securities (investments) and/or cash in my account?
A: Questions regarding the value, liquidity or maturity of securities should be directed to the security issuer. The options to initiate a transfer out or withdrawal, either in-cash or in-kind, are generally available; however if you are intending to cash out an investment, liquidity can be an issue. Cash funds in the account, which are generally a result of gains earned on the registered securities, can also be withdrawn or transferred out, and also have the potential to be re-invested with any of CWCF’s RRSP/TFSA Program Members who have an open offering. Please click here to review the options for your cash balance in detail.
Q: How can I transfer my holdings to another financial institution?
A: You can initiate a transfer out by contacting the financial institution to which you wish to transfer your assets. They will have you complete a transfer authorization form and submit it to CWCF for processing. Some institutions have their transfer authorization form available online; however, you may have to request it directly from others. Alternatively, you can complete the Canada Revenue Agency’s (CRA) form T2033, have it signed by your financial institution, and then submit it to CWCF to initiate a transfer.
Q: How can I make a withdrawal from my account?
A: To withdraw assets from your account, you must complete a Withdrawal Request Form and return it to CWCF. This form can be found here.
Q: What are the withholding tax rates for RRSP withdrawals?
A: The default withholding tax rates for RRSP withdrawals by residents in all provinces except Quebec, as set by the Canada Revenue Agency (CRA), are currently as follows:
– 10% on amounts up to $5,000;
– 20% on amounts over $5,000 up to and including $15,000; and
– 30% on amounts over $15,000.
Account holders should be aware that the withdrawn amount will need to be claimed as income when filing your taxes for the year of the withdrawal. Based on your income, you could potentially owe additional income tax, or you may receive a tax refund. Furthermore, if multiple withdrawals are requested over a short period of time in an attempt to avoid a higher withholding tax, it is CRA’s position the lump rate applicable to the total withdrawal value should be used. Ultimately, you will be responsible for any resulting tax liability when you file your personal income tax return.
Q: Can withholding taxes be waived on RRSP withdrawals?
A: As a general rule, withholding tax cannot be waived. However, there are some cases where tax is not required to be deducted, including: withdrawals under the Home Buyers Plan (HBP) or Lifelong Learning Plan (LLP); certain Estate situations; and withdrawals made due to overcontribution, under certain conditions. In such circumstances, additional paperwork is generally required prior to CWCF being able to process the withdrawal request without withholding any taxes.
Q: Can I request additional tax to be deducted on an RRSP withdrawal?
A: Yes, additional tax can be deducted upon request. To do so, please specify on the Withdrawal Request Form the percentage you would like CWCF to deduct, and initial the note.
Q: How much is my annual Account Fee, and how is this fee paid?
A: The annual Account Fee for investors whose Account Representative is a co-op (specified or non-specified) is $55, inclusive of G/HST. The annual Account Fee for investors whose Account Representative is a Community Economic Development entity (e.g. CEDIF, CEDB or CEDC) or Non-Profit Organization (NPO) is $65, inclusive of G/HST.
Annual Account Fees are billed by CWCF directly to Account Representatives (i.e. security issuers) every December. It is up to the Account Representatives to determine how these fees are collected/remitted to CWCF. Some Account Representatives bill their investors for these fees and remit payment to CWCF on your behalf, while others cover the fees for their investors. CWCF can also accept instructions from Account Representatives to deduct these fees from the investors’ cash balances in their accounts. When you open your account, your Account Representative should discuss their approach to collecting and paying these fees with you.
If an account is closed after March 31 in a given year, the Annual Account Fee is deducted at the time of the closure. In some cases, the Account Representative may cover this fee on behalf of their investors, so the Annuitant will not be charged.
Q: How can I pay a fee that I owe to CWCF directly?
A: If there is a sufficient cash balance in your account, CWCF can pull the fee directly from those funds. Other payment options are as follows:
– send an e-transfer to firstname.lastname@example.org;
– mail a cheque made payable to ‘CWCF’ to 1-41 Aberdeen Street, Kentville NS, B4N 2M9; or
– call our office at (902) 678-1683 to provide credit card information.
Q: How much are my securities currently worth?
A: CWCF does not make determinations of Fair Market Value (FMV) for the securities that are held in trust. Instead, when this information is required, we request that the security issuer provides us with this value by means of an Issuer Representation Letter. If an investor disagrees with the FMV as provided by a security issuer, the onus is on the investor to provide CWCF with sufficient evidence of a different value.
The FMV of a security may be calculated as the amount the investor would receive for that security if the issuer were to dissolve on that specific day, taking into account all of the security issuer’s assets and deficits before distributing the proceeds to its investors. The FMV may also be determined based on the amount the security issuer is currently willing to pay to repurchase its securities, the value for which the securities are being sold in a current offering, or the value for which they were recently sold/purchased in a private sale. For securities that are not publicly traded, which is the case for many of those held in trust by CWCF, FMV can sometimes be quite difficult to determine.
Q: I’ve misplaced my RRSP Contribution Receipt and/or T4RSP. Can I obtain a copy?
A: Yes, CWCF can produce a duplicate of a receipt that has already been issued and send it to the authorized mailing address or email address on file for the account.
Q: Can CWCF send me my Equity Tax Credit receipt?
A: CWCF does not administer the Equity Tax Credit (ETC); this is done by the province. As such, ETC receipts are provided directly by the province based on a report from the security issuer. You will need to contact the appropriate department in your province for more information.
Q: What happens in the year I turn 71?
A: RRSP legislation requires that any RRSP account(s) held by an individual must be closed by the end of the calendar year in which the investor turns 71 years of age. You will receive a letter from CWCF early in the year in which you turn 71 outlining your options, which generally include either withdrawing the assets in the plan and claiming them as income, or transferring the assets to a Registered Retirement Income Fund (RRIF). CWCF does not administer RRIF accounts, so investors interested in this option would need to identify another financial institution to hold the assets. Please note that due to the nature of the investments held in trust by CWCF, liquidity may prevent you from redeeming your securities for their cash value, and you may be required to withdraw or transfer the assets in-kind.
TFSA’s can continue to be held beyond age 71.
Q: Are there any downsides to investing in a co-op, non-profit organization or similar entity through a Self-Directed RRSP or TFSA?
A: There is a certain level of risk involved with placing all or much of your registered investments in these types of entities. If the company fails or dissolves, you will likely lose those registered funds. This risk will have to be weighed by each individual as you decide whether to invest in co-ops, CEDs, NPOs, or more secure investment instruments within a registered plan. The level of investment risk you are comfortable with is something only you can decide. CWCF strongly recommends consulting a financial advisor before making an investment through our Self-Directed Program, and all new investors are required to review and sign our Program Review / Risk Acknowledgement before opening a registered account.