Tax considerations for your registered account

Each year during January–March we make tax slips available to you in your Questrade account. What tax slips you receive depends on the following:

• Your account type
• The activity that took place in your account during the year
• Your residency (i.e., the province, country you live in)

A tax slip can be generated if any of these activities occur, depending on the type of registered account:

• Contributions
• Withdrawals
• Account income earned by U.S. persons from U.S. sources (for TFSA, FHSA, and RESP accounts only)

We describe the specifics for each registered account type below.

You can find your automatically-generated tax slips by logging in to Questrade and going to the Tax slips page. Also review Important dates for tax slips to find out when the 2023 tax slips will be published. 

A Tax Free Savings Account (TFSA) is a tax-sheltered savings account. This means that income earned in the account (trading profits) is generally not taxed. While there are also no tax deductions when making contributions, you won’t be taxed or penalized for making any eligible gains when withdrawing the funds either. This means that income earned in the account is not taxed, so you do not receive a tax slip at tax time.

Exception: an account holder who is considered a U.S person will receive a 1099-DIV and/or a 1099-INT around January 31, 2024 for dividends and/or interest received in the account from U.S.-sourced investments.

We report your TFSA contributions and withdrawals to the CRA annually by February 29, 2024. This means that TFSA contributions and withdrawals made in the 2023 tax year may not be reflected on the CRA website until after February 2024. The CRA holds a centralized record of your remaining contribution room. You can log on to the CRA website to view your balance.

Overcontribution

The penalty for overcontribution is 1% of the excess amount per month of overcontribution. The CRA provides more details in TFSA excess amount correspondence explained.

Contributions made by non-residents

If you are a non-resident of Canada, you can have a TFSA, provided you are over the age of 18 and have a valid Social Insurance Number (SIN). New contributions will not be permitted; however, you are able to transfer in an existing TFSA.

The tax-free First Home Savings Account (FHSA) allows you to contribute an annual tax-deductible amount of up to $8,000, with a lifetime contribution maximum of $40,000 per person. It combines the power of both RRSP and TFSA, where your contributions are tax-deductible and any qualifying withdrawals from the account are tax-free.

For contributions or withdrawals made during 2023, you receive a T4FHSA. (FHSA contributions and withdrawals appear on the same T4FHSA tax slip.)

Note:

• Unlike RRSPs, contributions to FHSAs made in the first 60 days of 2024 must be claimed (deducted) for the 2024 tax year. They cannot be claimed for 2023
• An account holder who is considered a U.S person will receive a 1099-DIV and/or a 1099-INT around January 31, 2024 for dividends and/or interest received in the account from U.S.-sourced investments

Overcontribution

The penalty for overcontribution to an FHSA is 1% of the excess amount per month of overcontribution. The CRA provides more details about overcontributing to your FHSA.

Contribution receipt

• Contributions made in the first 60 days of 2024 can be claimed (deducted) for the 2023 or 2024 tax year, but not for both years
• Visit the CRA website for more information

T4RSP/RL-2

• Receive a T4RSP for withdrawals that occurred in the 2023 calendar year
• Quebec residents will receive an RL-2 form in addition to the T4RSP

NR4

• Receive an NR4 if you are a non-resident of Canada and a withdrawal occurs

Overcontribution

If you over-contribute to your RRSP you'll be taxed at a rate of 1% of the excess amount for each month the excess remains in your account. For more information on RRSP contribution limits, go to RRSP Season - frequently asked questions, under "What is my contribution limit?"

A Spousal Registered Retirement Savings Plan (SRRSP) is a retirement savings account in which the account holder can receive contributions from their spouse (also called the contributor) on their behalf.

Note: when setting up an SRRSP, it's important to correctly identify the contributing spouse in the account to ensure tax slips are issued in their name, not the account holder's name. Once a tax slip is issued, if the name on the slip is incorrect it cannot be amended to show the correct name. To set up the contributing spouse, do the following:

1. Log in to Questrade from any web browser
2. In the top navigation bar, go to Accounts> Account management
3. Select Account management
4. On the Account management page, under Spousal contributions, enter the information for the contributing spouse

While it is the contributing spouse who receives the contribution receipt and tax deduction in their name, the receipt will still appear in the account holder's account, on the Tax slips page.

For information on when you will receive contribution receipts and what other tax slips you may receive, see above, under RRSPs - Registered Retirement Savings Plan.

A Registered Education Savings Plan (RESP) is an educational savings account in which the account holder (also referred to as a subscriber) can make contributions to a child’s (beneficiary's) future post-secondary education. Family RESPs are able to have more than one beneficiary, as long as all of the beneficiaries are siblings.
The funds in an RESP are categorized into two groups:

• Post-Secondary Education Payments (PSE)
  • Initial contributions made to the account of after-tax funds
  • At the time of withdrawal, no additional tax filing for the beneficiary
• Educational Assistant Payments (EAP)
  • Grants and account income
  • At the time of withdrawal, the funds are considered the beneficiary’s income, not the subscriber’s

   

When the beneficiary makes an EAP withdrawal:

• They will receive a T4A slip in their name, as the money received due to an EAP withdrawal is considered income
• If they are a Quebec resident they will also receive an RL-1
• If they are a non-resident of Canada, they will receive an NR4
• The funds will be taxed at the beneficiary’s tax bracket instead of the subscriber’s

Considerations for U.S. persons

A subscriber who is considered a U.S person will receive a 1099-DIV and/or a 1099-INT around January 31, 2024 for dividends and/or interest received in the account from U.S.-sourced investments.

A Locked-In Retirement Account (LIRA), or a Locked-In Retirement Plan (LRSP) depending on the jurisdiction, is generally used to accumulate pension funds outside of a pension plan. The funds inside a LIRA are not usually accessible until retirement; however, there are some exceptions which allow a LIRA to be "unlocked", or withdrawn from.

T4RSP/RL-2

• Receive a T4RSP for withdrawals that occurred in the 2023 calendar year
• Quebec residents will receive an RL-2 form in addition to the T4RSP

NR4

• Receive an NR4 if you are a non-resident of Canada and a withdrawal occurs

A Registered Retirement Income Fund (RRIF) is a retirement income account that used to be an RRSP before retirement. A minimum payment is required annually to provide income for the account holder.

This minimum payment does not incur any withholding tax at the time of withdrawal (unless you are a non-resident of Canada at the time of withdrawal); however, you can choose to withdraw more than the minimum amount, up to the full value of the account. The withholding taxes below will be applied at time of withdrawal, for the amount that is in excess of the minimum.

Withholding taxes for Quebec residents include both the CRA and Revenu Quebec withholding amounts combined.

¹Represents the CRA withholding amount. ²Represents the Revenu Quebec withholding amount.

The tax withheld may not always be enough to account for the tax you owe for your tax bracket. You may be asked to pay more on the withdrawal when you include the withdrawal on your income tax and benefit return for that year.

You can expect to receive the following tax slips each year, where applicable.

T4RIF/RL-2

• Receive a T4RIF for withdrawals that occurred in the 2023 calendar year
• Quebec residents will receive an RL-2 form in addition to the T4RIF

NR4

• Receive an NR4 if you are a non-resident of Canada and a withdrawal occurs

A Life Income Fund (LIF) is a retirement income account that used to be a LIRA or LRSP before retirement. A minimum payment is required annually to provide income for the account holder.

This minimum payment does not incur any withholding tax at the time of withdrawal (unless you are a non-resident of Canada at the time of withdrawal). If you choose to withdraw more than the minimum, withholding taxes will apply at time of withdrawal for the amount that is in excess of the minimum, as below. There is also a maximum annual withdrawal limit for LIFs.

Withholding taxes for Quebec residents include both the CRA and Revenu Quebec withholding amounts combined.

¹Represents the CRA withholding amount. ²Represents the Revenu Quebec withholding amount.

The tax withheld may not always be enough to account for the tax you owe for your tax bracket. You may be asked to pay more on the withdrawal when you include the withdrawal on your income tax and benefit return for that year.

You can expect to receive the following tax slips each year, where applicable.

T4RIF/RL-2

• Receive a T4RIF for withdrawals that occurred in the 2023 calendar year
• Quebec residents will receive an RL-2 form in addition to the T4RIF

NR4

• Receive an NR4 if you are a non-resident of Canada and a withdrawal occurs

If you trade actively, you need to be aware that you may be considered as a day trader by the CRA, which can have tax consequences—meaning that when you sell securities they could be considered as business income rather than capital gains, and as such would be fully taxed.

Whether you are considered a day trader by the CRA can depend on a number of factors such as frequency of trades (especially intraday trades), whether this trading activity is a core part of your normal business activity, and other factors.

If you are concerned about whether your trading income may be taxed as business income because of your frequent trading activity, please contact a tax or accounting advisor for guidance.

Note: The information in this blog is for information purposes only and should not be used or construed as financial, investment, or tax advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied is made by Questrade, Inc., its affiliates or any other person to its accuracy.