Interactive Brokers (IB) Review Canada 2021

   (Editor Rating)

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Interactive Brokers Review
  • Simplicity for Average Canadian Investor
  • Account Variety
  • For ETF Trading
  • Monthly Fees
  • For High Volume Traders
  • App Rating
  • Customer Service
2.6

IB Reivew Summary:

Interactive Brokers Canada is the Canadian wing of the worldwide brokerage better known as IBKR. While it’s competitive trading fees and wide access to the world’s trading markets have made it an international stalwart, it just doesn’t represent a good value for Canadian customers.

Not being able to access the IBKR lite package, combined with potential tax liabilities, and the excellent homegrown options that we have here in Canada, make this an easy stay away for us.

Pros

  • low foreign currency exchange fees
  • Access to stock exchanges outside of Canada and USA
  • Geared toward advanced international day traders

Cons

  • Tax liability possibilities for Canada
  • Poor Mobile App
  • Complex trading platform
  • High Monthly Fees
  • Many many complaints about customer service

Interactive Brokers is not one of the best Canadian brokerages: Their fees are too high and they offer no signup bonus.

View Alternative, Better Rated Canadian Brokers

Comparing Interactive Brokers to Our #1 Discount Broker: Qtrade

Qtrade

Interactive Brokers

Inactivity Fee

$8 per month - WAIVED IF you hold more than $25,000 in the account OR you make 2 trades per 3-month quarter OR you add $100+ automatic recurring monthly contribution (my preferred option)

$20 per month - Waived if you hold more than $100,000 in the account, or if you pay more than $30 in commissions each month

Canadian ETFs

Free to buy and sell

$1 CAD minimum, maximum of .5% of total purchase or sell value

User Experience

Excellent - consistently ranked #1 in Canada

Mediocre at best. Aimed at professional stock traders. Good value if you need day trading platforms, and rarely need questions answered.

Foreign Exchange Capability

None (other than CAD to USD)

#1 in World

RESP Accounts

Available
N/A

Safety

CIPF Member

CIPF Member

Research Tools

Has been at the

top of Canadian brokerage ranking

in this category for over a decade

Consistently ranked as the

best research tools for international day traders.

Mutual Fund Purchases

Free

Some are free, some are $5.

Promotion

$150 In Free Credit
None in Canada

Sign Up

Is Interactive Brokers Safe and Secure? It’s Complicated

Like other discount brokerages in the Great White North, Interactive Brokers Canada is regulated by the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF).

BUT – and this is a massive BUT – there is a very important question mark when it comes to using any US-based online brokerage as a Canadian resident.  This question mark comes in the form of the interpretation of US Tax Law.  It’s not that Interactive Brokers is in and of itself unsafe for Canadians to use from a tax standpoint, it’s that the USA has some unique tax rules when it comes to inheritance tax.

It gets complicated in a hurry, but the basic idea is that the USA taxes “US In Situs Assets” at the time a person passes away.  The estate of any Canadian resident who owns over $60,000 worth of assets at the time of their death must file a tax return in the USA.  IB is obviously located in the USA, so the question quickly becomes – do investments in my Interactive Brokers account fall under USA inheritance tax law, are they considered “US In Situs Assets”?

The answer is… *drumroll*… no one really knows.

It appears to boil down to if your investments are considered “domiciled” in the USA.  That phrase is being debated by people smarter than myself each year in the USA.  I know that my go-to resource for international personal finance is author Andrew Hallam, and he does not use IB for this exact reason.  

Now if you’re a USA resident, or a USA Citizen, then you’re going to have to deal with US estate taxes anyway – so this drawback to going with IB is not really relevant.  If you live in Canada however, I just don’t think saving a couple of bucks on non-ETF transactions are worth it

So while your investments are likely as safe as possible from hackers or fraud, it’s perhaps the US taxman that you have to be most careful of.

Can I Buy Canadian Stocks and ETFs on Interactive Brokers?

Yes – you can definitely buy Canadian stocks on Interactive Brokers (IBKR).  

You can also buy ETFs, mutual funds, options, and several other Canadian investments using IBKR.

In fact, if you’re looking to purchase stocks from around the world (and not use a straight forward ETF to get international stock exposure), then International Brokers allows you to buy on 135 markets, in 33 countries, in 23 currencies.  Personally, I’ll stick to the Toronto Stock Exchange and international ETFs, but professional day traders rave about the flexibility that IBKR offers.

Interactive Brokers 2021 Fees

In the USA, IBKR has an excellent option called IBKR lite.  Unfortunately, Interactive Brokers Canada does not offer that option.

So, Canadian investors are left with the IBKR Pro pricing package.  Consequently, the main fee that jumps out to me right away is the very high monthly minimum.

Interactive Brokers Canada Monthly Fees

You will owe IBKR $10-20 each month – unless you keep more than $100,000 in your account or spend $30 in commissions each month.

There are basically two paths to go down in regards to Interactive Brokers Canada pricing:

  • Fixed – the one the vast majority of average investors will use.
  • Tiered – the one day traders will want.

Interactive Brokers Canada Tiered Fees:

It’s hard to pin down exactly what you’ll pay using the tiered fees model, but it will likely be fairly low relative to international competitors.  The exact amount depends on which exchange you purchase on, the regulatory fees involved, how big your volume is, and possible rebates.  On North American exchanges it comes to:

Up to 300,000 shares per month $0.008 per share

300,001 – 3,000,000 shares per month $0.005 per share

3,000,001 – 20,000,000 shares per month $0.004 per share

20,000,001 – 100,000,000 shares per month $0.003 per share

Interactive Brokers Canada Fixed Fees:

Most investors will fit into this Interactive Brokers fixed fee category.  For each trade you pay either $0.01 per share with a $1 minimum, and .5% of trade value as a maximum.

Mutual fund fees

 Some free, some are $5.00.

Interactive Brokers Currency Exchange Fees:

Amongst the lowest in the world.  Definitely an advantage if you want to be shifting money back and forth between currencies (other than Canadian and American dollars).

Interactive Brokers Options Trading Fees:

Canadian options aren’t actually on the website, but I would assume they’d be similar to American Options Fees which are $1 USD min per order, plus $0.60 per contract.  IBKR is known for having some of the lowest option trading fees around.

Interactive Brokers Account Types: TFSA, RRSP, Non-Registered

Interactive Brokers Canada offers most account types, but the glaring omission of RESPs and RRIF options really hurts them in cross Canadian comparisons.

  • Non-registered accounts (both CAD and USD)
  • Joining Accounts
  • Margin Accounts
  • RRSP 
  • TFSA 
  • Informal Trust
  • Formal Trust

Interactive Brokers Mobile App Review

The Good: The Interactive Brokers mobile app probably has more features than any other broker app out there.  You can exchange forex, futures, and much more.

The Bad: The complaint about IBKR has always been… the number of complaints.  In fairness, they are trying to troubleshoot and answer questions from investors all over the world, so it isn’t exactly an apples-to-apples comparison with a Canada-only brokerage.  That said, just Google Interactive Brokers customer service and you’ll see thousands of complaints about their apps. 

The Ugly: It is needlessly complex and the user experience is poor. With a low rating of 1.6 on Google Play, you can read all about frustrated users all around the world.  Compared to almost any of the other Canadian stock trading apps, it just looks clunky and awkward.

interactive brokers mobileapp

Frequently Asked Questions

Who Is Interactive Brokers Best For?

You might be surprised at how negative our IBKR brokerage review was if you’ve checked out other (more positive) Interactive Brokers reviews from around the world.  Here’s the deal, the IBKR Lite package that is available in many other countries does away with those pesky monthly fees and has even lower fees for stock trading. 

At those bargain basement prices, and particularly for professional day traders & options traders, Interactive Brokers makes a lot of sense.  The low margin rates and currency exchange options make the brokerage a solid choice for those investors interested in using those semi-exotic tools.

But for Canadian audiences, it just isn’t all that attractive to us.  The high monthly fees if you have less than $100,000 invested, no RESP option, plus the US tax liability, and the consistent customer service complaints just put IBKR at the bottom of our Best Canadian Discount Brokerage rankings. You can read our Qtrade review and see for yourself how big the difference is.

Jordan

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Lewis Kwan
1 month ago

I trade options in both IBKR and Questrade. Questrade typically costs 3 times more expensive than IBKR in commissions. I also trade futures and IBKR is the cheapest in town, hands down. IBKR also excels in executions speed and performance. Education, charts, tools etc. are first class with IBKR. The only drawbacks could be their steep learning curve and the not insignificant capital requirement.

The only reason I am keeping Questrade is for diversification, i.e. not all eggs in one single basket. I also keep my long equity positions in Questrade as their stock commissions are quite competitive.

Charlie
2 months ago

Jordan, in reading your article I’m astounded by the possibility that holdings within a RRSP held with Interactive Brokers Canada may in fact be taxed by the us IRS in the event of death of the account holder. This seems incomprehensible to me and to be honest I have trouble believing how it could possibly be true. Otherwise absolutely no Canadian would have an RRSP (or any other account) through IB Canada. IB Canada presumably has many thousands of account holders and I’m sure many of them have died over the years. So surely there would be some record (or online complaints by others) highlighting this significant issue. Can you clarify?

Editor
Kyle Prevost
2 months ago
Reply to  Charlie

Charlie – simply Google US domiciled investments in the event of death. No official case precedent that I’ve been made aware of – and trust me, I’ve asked.