A.: No, you cannot. When shorting, your potential losses are unlimited, and your TFSA account IS limited. The only two ways to short stocks in TFSA (known to me) is via buying put options or the inverse ETFs. Both are pretty risky if you don’t know what you’re doing, and even if you do…
Starting 2013, an additional $500 will be added to tax free savings accounts bringing the yearly limit to $5,500.
The Ministers highlighted key features of the TFSA that make it a popular savings vehicle for Canadians:
- A TFSA is available to all Canadians, 18 years and older;
- Any interest, dividends and capital gains earned in a TFSA are not subject to tax;
- A TFSA allows you to invest in a number of types of investments, be it a high-interest savings account, mutual funds, guaranteed investment certificates, listed securities, or other types of qualified investment products;
- Unused TFSA contribution room is carried forward and accumulates for future years;
- Funds available in your TFSA can be withdrawn tax-free at any time for any purpose. You can re-contribute withdrawn amounts in the same year only if you have unused TFSA contribution room. Otherwise, you have to wait until the following year;
- Income earned in a TFSA and withdrawals do not affect your eligibility for federal income-tested benefits and credits; and
- Contributions to a spouse’s or common-law partner’s TFSA are allowed.
I opened up a TFSA with Questrade as soon as it became available.
This account must be in the individual’s name. If you’re transferring funds from a joint bank account, Questrade may ask for proof that you are, in fact, one of the account holders of this joint account (I ran into that issue). A simple screenshot of your bank e-statement is enough proof.
I started with the minimum CAD $1,000 and after thinking about it for some time, decided to make it my challenge for the year – turn $1,000 into $5,000, without additional deposits. No restrictions on the method, except no direct shorting or selling naked options (it’s not a margin account).
In the top menu on the site, there’s a new button, TFSA $5K. On that page I’m going to post all the trades I make in TFSA.
Quick backgrounder on this new account type —
TFSA (Tax-Free Savings Account) advantages:
- Invest up to $5,000 each year and every year
- Accumulate faster by never paying tax on your investment income, interest, dividends and capital gains
- Withdraw funds any time and for any purpose without paying any taxes
- All income earned — dividends, interest, capital gains – grows tax free
Questrade’s trading services in TFSA:
- No annual fees, no inactivity fees, and a low account-opening minimum of CAD $1000
- Low commissions on stock trades: 1¢ per share, minimum $4.95 / maximum $9.95
- Hold and trade U.S. dollars and pay no forced currency conversion fees
- Trade gold bullion
- Get $50 in free trades when you open a new account (must open account from the link above)