Interactive Brokers (IBKR) Canada Review 2022

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

Interactive Brokers Review Summary:

Interactive Brokers Canada is the Canadian wing of the worldwide brokerage better known as IBKR. Interactive Brokers is a fan favorite for forex and day traders thanks to its extremely attractive exchange rates, fractional share options and cryptocurrency options.

With trading fees as low as $0.005 per share and wide access to the world’s trading markets, Interactive Brokers is an international stalwart.

Unfortunately, many of its most attractive features are not available in Canada. Not being able to access the IBKR Lite package, combined with potential tax liabilities, and the excellent homegrown options we have here in Canada, make this an easy stay away for us.

For Canadians that are looking for the attractive options available on IBKR Lite, we recommend Qtrade – rated the best broker in Canada consistently over the past decade. If finding a low-fee brokerage is your number one priority, Questrade could be your best option with their low $0.01 fees on stock trades, plus free ETF purchases.

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
  • Poor customer service reputation

Interactive Brokers is not one of the best Canadian brokerages: The mobile app is bad and they offer no signup bonus.

View Alternative, Better Rated Canadian Brokers

What is Interactive Brokers?

Interactive Brokers Canada is part of the parent company Interactive Brokers Group, Inc., which has been around for over 40 years and boasts a consolidated capital of over $10 billion. It’s mission has always been to develop technology to help traders maximize their potential. Interestingly, way back in 1983 they were one of the pioneers of using technology to give their traders an upper hand. 

They introduced the first handheld computers used for trading. Since then, they have remained committed to integrating technology to provide mobile and desktop trading platforms for their clients, among other technology-driven services. 

Comparing Interactive Brokers to Our #1 Discount Broker: Qtrade

Qtrade

Interactive Brokers

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. Built for Canadian users exclusively.

Mediocre at best. Aimed at professional international stock traders. Good value if you need day trading platforms.

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

Up to $2,000 in Cashback
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 Interactive Brokers.

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 it offers.

Interactive Brokers 2022 Fees

As Canadians are not eligible for IBKR Lite, Canadian investors are left with only the IBKR Pro pricing package, which overall has higher fees than platforms like Qtrade. Here are where the disadvantages of this broker for investors in this part of the North really start to show.

In addition to the higher fees, its fee structure is complicated. In general, you want to know up front exactly what your fees will be so that you can know how to get maximum returns on your investments. With Interactive Brokers Canada, it’s not that simple.

In short, the amount you pay in fees and commission varies depending on what security you are trading. Let’s take a look at some examples so you can get a better idea of what you’re in for if you choose Interactive Brokers.

Interactive Brokers Canada Fixed Rates and Fees

  • A fixed rate of $0.01 CAD per share applies to all Canadian securities and $0.005 for all US securities with a minimum commission of $1 CAD.
  • Some Mutual Funds come with fees, but there are more than 7,700 mutual funds with no fees.
  • The fees for trading options range from $0.15 – $0.65 USD per contract.
  • There are other fees, such as withdrawals and telephone orders that range from $12 to $50 depending on the transactions.

When it comes to trading shares, the fee structure for more active traders will follow a tiered structure.

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 Currency Exchange Fees:

Amongst the lowest in the world. Definitely an advantage if you want to be shifting money back and forth between currencies. Interactive Brokers clients can trade 23 currencies at an attractive .02 and .08 basis points.

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 this broker 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

Interactive Brokers Launches Cryptocurrency Trading in 2021

Tired of letting Robinhood and Wealthsimple have all the fun, in September of 2021, Interactive Brokers began allowing their clients to trade cryptocurrencies.

The brokerage is teaming up with the Paxos Trust Company (PayPal’s US crypto arm) to offer these new options (at typically low commissions compared to rivals).

Currently this feature is only available to US residents, but as stated in their press release that they intend to make the crypto venture available to international audiences in the near future.

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 Interactive Brokers at the bottom of our Best Canadian Discount Brokerage rankings. You can read our Qtrade review or this Questrade vs. Interactive Brokers comparison article and see for yourself how big the difference is.

Jordan

Subscribe
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

6 Comments
Newest
Oldest
Inline Feedbacks
View all comments
frederic
3 months ago

Interactive Brokers has eliminated its activity fees, i.e. the monthly fees, in July 2021

Lewis Kwan
8 months 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
9 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(@kyle)
9 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.

Serge
5 months ago
Reply to  Kyle Prevost

Hello Kyle, a quick google search of that sentence let me read some minutes and to me it sounds like the Canadian US estate tax treaty majorly increases that threshold up from $60k to 11,2 million worldwide assets (simplified) and doubled again when left to a surviving spouse. On top of this treaty that is set to expire 2025 RSP’s are recognized tax exempt vehicles in the USA. But thank you for the warning that over $60k a form 706-NA needs to be filled for US owned stocks to be tax exempt.

This however would be the case if you own it at a Canadian broker too, a good point in favor of owning Canadian based EFT’s instead of US stocks directly!

Editor
Kyle Prevost(@kyle)
3 months ago
Reply to  Serge

Hi Serge,

It has yet to be definitively stated anywhere that I’m aware of that “domiciled” refers to only where the ETFs are listed, and not the company you are using to broker the purhcasing and holding of the assets. Hopefully it’s just where the ETF is based, but I personally know several millionaires who refuse to hold their assets in IB because of this hazy legal quandry.