Million Dollar JourneyAs we enter into a new decade of dividend and index investing I thought it was time for an update to our Canadian online broker article (whose first version dates back as early as 2006).  Use the table of contents below to dig into our criteria and comparisons as we look at the Best Canadian Online Discount Brokerages in 2020.  If you want to trace the unique evolution of Canada’s  best discount brokerages over the years, our comment section going back to when Dani California was a hit new song is pretty interesting!
 

TABLE OF CONTENTS


What is an “Online Discount Brokerage” or “Discount Stock Broker”?

Before we dive into this topic, let me take a minute and explain what an online discount brokerage, or a discount stock broker is. An online discount broker is essentially a way for you to trade stocks, bonds, ETFs, and a few other types of more niche investments, online. However, there’s no “middle man” like the old movie idea of “stock broker” when you use an online discount brokerage.  You don’t get a person or company to do the buying or selling for you. You are the one in charge. A discount stock brokerage account operates in the same way as traditional brokers do in that these platforms allow investors such as you and me to buy and sell assets such stocks, bonds, mutual funds, GICs, and ETFs. However, as mentioned above, with an online discount brokerage it is you, the investor, calling the shots. This DIY-type of approach comes with a significantly lower commission cost than what you would pay to a traditional Canadian stockbroker (leaving more money to compound as your investments grow!) making it a very attractive option for those willing to do a very small amount of leg work.  

How Does An Online Discount Brokerage Work?

The reason why online discount brokerages fees are so much less than what you would pay if you went to a traditional Canadian stockbroker is because, at the end of the day, they are an online business and it’s you, not them, that is doing the majority of the  work.  A traditional broker will do the planning and research for you, then give you advice during your personal consultation. Online brokers don’t offer those services, it’s all DIY. You need to do the research and planning to build your own portfolio as you see fit.  (Although we’d make a strong argument that with Canada’s all-in-one ETFs and our top Canadian dividend stocks there isn’t much research and planning left for the average investor.) 

The online broker just serves as the platform to execute your requests. This is great in terms of the money that you can save by taking this online approach. However, as I said above, you do need to be confident and sure of what you are doing as there is nobody else to step in and advise you like a traditional stockbroker would.   If you are interested in opening an online brokerage account, it can be done relatively quickly from the comfort of your own home.

Once you open an account with a discount brokerage in Canada (don’t worry, we’ll be sharing more about the best online brokers later in this article), you can transfer your money from your chequing or savings account (or another brokerage account if you are changing firms). The money transfer will take a couple of days, or up to a week depending on your financial institution. Once you have the money in your online brokerage account you can start purchasing investments as you see fit.  

The Best Canadian Discount Brokerage for 2020

When it comes to finding the best discount brokerage in Canada, we have a few choices depending on what you are looking for. These are our top picks for online brokerage in Canada in 2020.  

#1: Questrade

Our top pick for the best Canadian discount brokerage is Questrade. Here’s a look at why they’re #1. To start with, Questrade has incredibly low costs. In fact, they are one of the lowest-cost brokers in the country. There are no annual fees (no matter the size of your account, though there is an account minimum of $1,000) and no fees charged when you buy ETFs.

So, yes, this means if you created a portfolio entirely of ETFs, you’d pay $0 with Questrade, making them one of the best online brokerages for ETFs in Canada. Other trading fees range from $4.95-$9.95 and, should you choose to transfer your TFSA or RRSP, Questrade will cover the transfer fees. While the low costs are great, they aren’t the only reason why Questrade is our top pick for the best online brokerage in Canada.

Questrade is also one of the oldest and most reputable companies in the business. With more than 30 years behind them, Questrade is also one of the fastest growing companies in Canada as well. Plus, since they are covered by the Canadian Investment Protection Fund, you know your money is in safe hands. Finally, for those of you who need elite information platforms to actively trade assets, Questrade has options for you as well. Of course, Questrade, like every other business, has its downsides. In the case of Questrade, one of the things I don’t like about the company is that they charge fees for inactivity. This means that if you don’t place a trade every quarter or have less than $1,000 in your accounts, you will be charged a quarterly fee of $24.95. Now, given that $1,000 is the account minimum and one trade each quarter is very minimal work (even for those following the couch potato investment strategy), this shouldn’t be a problem. However, if you do fall behind on trade or go under the minimum for a prolonged amount of time, you will be penalized for it.

Our advice is simply to login and buy one unit of your favourite ETF each quarter to avoid this trigger.  If you’re making monthly or quarterly additions to your portfolio like a good DIY investor should be, then you’ll never have to worry about it. It’s worth noting that Questrade has now won several awards from Canada’s newspapers and financial publications.

Read the full Questrade Review

 

#2 Qtrade Investor

Qtrade Investor is my second choice when it comes to Canada’s online trading platforms. While they are more expensive than Questrade, Qtrade is known for its incredible customer service. When it comes to fees, there is no annual fee. Qtrade offers mutual funds and select ETFs for free, and there is a flat rate of $8.75 for all other trades. There are no account minimums and Qtrade also covers transfer fees (up to $150). However, if you do go under $25,000 combined between RRSP and TFSA you will be penalized with an annual $100 fee. 

If you are big into trading and will do more than 150 trades per quarter and/ or have over $500,000 in assets, you can take advantage of a lower trading rate of $6.95 with the Investor Plus tier.  As mentioned above, Qtrade has a reputation for fantastic customer service. They are easy to reach by email or phone (they even have a call-back option).

Additionally, the Qtrade website and platform is very clean-cut and easy to use. Plus, they are members of the Canadian Investor Protection Fund as well as the Investment Industry Regulatory Organization of Canada. 

 

#3 BMO InvestorLine

While online banks are becoming more and more popular with many Canadians, there are still some individuals who prefer the old, trusted names of some of Canada’s biggest financial institutions. If this sounds like you, then I recommend BMO’s discount brokerage options: BMO InvestorLine.

Unfortunately, BMO InvestorLine isn’t the cheapest when it comes to online discount brokerages in Canada. Their trade fees are $9.95 per trade and non-registered accounts with less than $15,000 will face an annual fee of $100 (this fee is waived once your account goes above $15,000).  Registered accounts with BMO InvestorLine are free to open, including an RRSP, TFSA, RESP, RRIF, or LIRA.

That being said, while fees are an important consideration, they aren’t everything.  BMO InvestorLine has a lot of advantages as well. To start with, they have an award winning platform; in 2018 BMO InvestorLine received the highest ranking in self-directed investor satisfaction according to the J.D. Power 2018 Canada Self-Directed Investor Satisfaction Study. It’s also a very user-friendly portal with a reliable customer service team and an impressive collection of 3rd party research. 

Read BMO Smartfolio Review

 

WealthSimple Trade

If you are looking for rock bottom rates and fees, then WealthSimple Trade may be worth a look. I’ll admit, as it stands right now, WealthSimple Trade wouldn’t be my first pick for most investors. That being said, they have only been around since March 2019 and I do expect them to grow and improve.  When you look at how quickly Wealthsimple is innovating and evolving, I think they’re a safe bet to eventually grow into an excellent discount brokerage platform. 

At this time, Wealthsimple has absolutely no fees for buying or selling stocks of ETFs. They also have no opening or closing account fees. In fact, the only real fee here is if you request paper statements instead of email statements in which case you’ll be charged a $20 fee. So, how do they make money?

Well, for any US trades they charge a 1.5% base conversion fee. However, even then, that’s a pretty decent deal seeing as most traditional Canadian stockbroker fees for US trades are 2% or higher. Another perk; there is no account minimum.  However, as nice as ‘free’ sounds, right now WealthSimple Trade is pretty basic compared to other online brokerage accounts. They offer limited stocks and ETFs, the platform can only be accessed via the app, and they only have 3 types of accounts: TSFA, RRSP, or a non-registered personal investment account.

Read Wealthsimple Trade Review

  

Who Should Use an Online Trading Platform?

The promise of low investing fees is attractive to everyone, but the concept of doing your own trading can also be quite intimidating. However, it doesn’t have to be. Part of what makes online trading platforms so enticing is that they really can work for everyone due to the fact that they are so customizable. Online trading platforms can work well for both active and passive investing. For those who are unsure of the difference between the two, active investing is a much more hands-on approach.

An active investor will try to pick and choose which stocks or bonds will perform best and trade accordingly. Passive investing, on the other hand, involving having a little piece of every company or bond in a market, rather than relying on a select few. Passive investors usually rely on index investing (the couch potato strategy) when it comes to their investments and is seen as an effective long-haul investment strategy.   For those interested in active investing, you will essentially have to become your own portfolio manager.

This requires knowledge and understanding of the stock market and also involves you needing to do your own research. It will take time and effort; however, if this is the strategy you wish to use and you are confident in your abilities, then using an online trading platform instead of a traditional financial planner can save you a lot of money. That being said, you don’t need to be an active investor to make an online trading platform work for you.

You can also use them for passive and index investing which doesn’t require the same amount of expertise or commitment. If you want to copy the same index investing strategy as a robo advisor, you absolutely can; no one will stop you. That being said, using an online trading platform will require slightly more time and effort than a robo would but, again, you are saving yourself money in terms of the fees so it just might be worth your time. 

Check out our Questrade vs Wealthsimple article for a detailed look at whether robo advisors or online brokers would be the best fit for your passive investing strategy. Using an online trading platform does not necessarily mean you need to be trading on a regular basis; 4 times a year is enough if that’s your preferred strategy. However, you do need to be interested and disciplined enough to keep up with your research as nobody else will step in to help you if you take this approach. If you aren’t confident in your abilities, don’t have the time, or would rather have some personal interaction or advice to help you out along the way, then you are probably better to go with a financial planner or even a robo advisor.

However, if you are willing to put in some time and do the research, then an online trading platform could work really well for you, whether you are interested in pursuing active or passive investing.   

Top Discount Brokerage Promo Offer Code for 2020

With discount brokerage fees getting slashed to the bone in the competition between Questrade and Wealthsimple Trade, the discount broker promo offer code 2020 battle is almost irrelevant to ETF index investors.  That said, it never hurts to have $50 in free ETF trades available, or $50 in free trades available if you are pursuing a dividend investing strategy, and/or using a Smith Maneuver.  Simply click below to check make use of our best Canadian discount brokerage offer code.

Questrade promo (no code needed):

 

Comparing Canadian Stock Broker Fees

Everyone is looking for low investing fees in Canada, and there’s no doubt that online discount brokerages offer the best rates relative to mutual funds and even robo advisors. But, just how much better off are you with a discount broker? Let’s take a look.

Fees to Trade ETFs: When it comes to ETFs we need to remember that even though a few of the online brokerages mentioned in this article offer free ETFs to buy, you do need to pay a fee to sell. Here’s a breakdown of ETF fees among our selected discount brokerages.

  • Questrade: $0 to buy, $4.95-$9.95 to sell
  • Qtrade Investor: $0- $8.95 to buy and $8.95 to sell
  • BMO InvestorLine: $9.95 to buy and sell
  • Wealthsimple Trade: $0 to buy and $0 to sell (select ETFs)

Wealthsimple is the winner here when it comes to fees to trade ETFs; however, keep in mind that their ETF selection is also quite limited right now. 

ECN Fees Another fee that you will want to keep in mind are ECN fees. So, what exactly is an ECN fee? ECN stands for Electronic Communication Network and these fees are essentially service charges that you will pay on your trades, although they can sometimes be avoided. Here’s what you can expect to pay in ECN fees with each respective online broker.  

  • Questrade: $0.0008- $0.004 per trade
  • Qtrade Investor: $0; Qtrade tries to avoid having you pay any ECN fees. However, they do indicate that if you have repeated high volume trades on the active side of the Canadian market you may be charged. In this case, they will try to contact you first to notify you of any ECN charges. 
  • BMO InvestorLine: $0
  • Wealthsimple Trade: $0

As you can see, our top pick, Questrade is one of the only online brokerage that regularly charges ECN fees. While these fees are annoying, when you consider that Questrade also has much lower trade fees than some of the other options, those pesky little ECN fees don’t seem so bad.  When you actually do the math on investing $1,000 or $5,000 at a time, you’re looking at under a loonie in ECN fees.

Annual Fees What about annual fees? Here’s the breakdown. 

  • Questrade: None
  • Qtrade Investor: No official annual fee; however, you will be charged $100/year if your combined accounts go under $25,000
  • BMO InvestorLine: $100/year  for non-registered accounts of less than $15,000
  • Wealthsimple Trade: None

Questrade and Wealthsimple Trade come out on top when it comes to comparing annual fees. However, do keep in mind that Questrade does have a minimum requirement of $1000. 

Comparing Questrade Fees to BMO InvestorLine Fees Questrade is my overall winner for the best Canadian online discount brokerage for 2020, but, again, I do recognize that some people are hesitant about these new-comers in the financial sphere and prefer more tried and tested names. However, before you make up your mind that you want to stick with one of Canada’s biggest financial institutions rather than trying someone newer, let’s take a second to pit the two against each other. For trading fees, Questrade ranges from $4.95-9.95 with the added bonus of offering users to buy ETF for free.

BMO InvestorLine has a flat trading fee of $9.95 for everything. Perhaps the biggest difference though, in terms of fees and where you can save, is the annual fee. Questrade has a minimum initial funding requirement of $1,000, which is very reasonable, and charges $0 annual fees.   BMO on the other hand allows you start a registered account for free, but charges a $100 annual fee on every non-registered account under $15,000.  At the end of the day, being comfortable with your chosen online broker is important. But, if you are really looking to cut down on those fees, then it’s probably worth your time to try someone new and try Questrade. 

I think it’s also worth mentioning that Canada has some of the highest investment fees in the world. This 2017 global study compared the investment fees and expenses in 25 different countries around the world. So, where did Canada fall on the scale? At the bottom. We paid the highest investment fees out of all the other developed countries on this list.  When you read or hear stats like that, it’s really no wonder that more and more Canadians are becoming interested in taking the proverbial bull by the horns and getting into trading themselves rather than paying others to do it for them. After all, the end goal is to make money, not flush it away on unnecessary expenses.    

Ultimate Summary of Canadian Discount Brokerages Fees and DRIP Options

In addition to trading fees, keep an eye on annual maintenance fees if you are below the minimum balance, and especially foreign exchange fees.  Most discount brokers will hide the fee in the exchanged amount.  Some investors also like the simplicity of a Dividend Reinvestment Plan (DRIP), and while it shouldn’t be a primary comparison point, we’ll including that in the feature table below as well (last update January 4, 2019):

Broker Fees Free ETFs? Drip
Questrade (Rated #1) $4.95 for up to 495 shares ($9.95 max) $9.95 per mutual fund trade ETFs are free to buy, reg commission to sell Yes (for buying) $0 for balance above $5k $19.95/ quarter if balance < $5k
QTrade $8.75/ trade or $6.95/ trade if assets > $500k Yes (select group) $100/ yr admin fee if under $25k balance $60/ yr for USD RRSP
Scotia i-Trade (formally e-trade) $24.99 or $9.99 /trade with $50k in assets or 30+ trades /quarter, $4.99/trade with 150+ trades /quarter Yes (select group) Yes
IB Min $1 /USD trade. Max 0.5% of trade value ($0.005/ share)  No $10 USD $50/year annual RRSP fee Min $10k to open an account
BMO InvestorLine $9.95/ trade no minimum balance No $100/ yr if balance < $25k
RBC Direct Investing $9.95/ trade no minimum balance $6.95/ trade if 150+ trades / quarter No $25 / quarter if balance < $25k
Credential Direct $8.88 / trade No None
TD Direct Investing $9.99/ trade no minimum balance $7/ trade if 150+ trades / quarter No $100 / yr if balance < $25k
Virtual Brokers  $0.01/share with cap of $9.99  + ECN fees Yes (for buying) $50/ yr if balance < $15k, $50/ yr for USD RRSP
UPDATE: Due to popular demand, below is the foreign exchange fee/spread charged by each of the brokerages to convert your CAD->foreign currency.
Brokerage Forex Fee/Spread (each way)
E-Trade 1.5% (not confirmed)
IB 0.01% + 2.50USD
Questrade 1.99%
BMO 0.90%
TDW 1.40%
BNS ~1%
CIBC 2%
RY ~1%
QTrade 1.75% for < $10k, 1.60% for > $10k but < $25k
Virtual Brokers 0.75%

The Best Discount Brokerage for ETFs in Canada

Before I share my thoughts on the best discount brokerage for ETFs in Canada, let’s dig a little into ETFs, what they are, and how they work. ETF stands for Exchange Traded Fund and an ETF is a collection of stocks or bonds that can be purchased at one price. ETFs can be both actively or passively managed, however, they are most commonly used for passive investing as most are not managed by humans (whereas mutual funds are) and are programmed by an algorithm.  Due to the fact that they can be passively managed and require much less monitoring and work than mutual funds, ETFs are one of the most popular investment options among Canadians. 

For a detailed look at the fees and services involved with picking your own ETFs vs going with an all-in-one ETF vs robo advisors vs mutual funds, check out our Best Canadian All-in-One ETFs article. So, what’s the best discount brokerage for ETFs in Canada?  Well, I’d have to go with Questrade As you’ll remember from above, Questrade allows you to buy ETFs for free, though you will pay a fee to sell them. Now, you might be remembering that Qtrade also allows you to buy for free; however, Qtrade only offers a selection of ETFs free to purchase, not all. The rest come at a fee which, in my books, put Questrade at the top. Of course, you could argue that Wealthsimple Trade allows investors to both buy AND sell their ETFs for free, whereas Questrade only lets you buy for free. Again though, Wealthsimple Trade falls short when it comes to selection and the overall platform.

Wealthsimple Trade only offers 3 types of accounts (basic RRSP, TFSA, and non-registered accounts) versus Questrade who offers, well, pretty much any account option you could want. I will say though, while I choose Questrade over Wealthsimple for DIY brokerage, I do prefer Wealthsimple’ robo advisor. You can read more on my comparison between these two in this Wealthsimple Vs Questrade article. For these reasons, I’d say that Questrade takes the top spot for the best discount brokerage for ETFs in Canada.   

The Best Discount Brokerage Mobile App in Canada

Since discount brokerages are online, it’s important to have a portal that is easy to use, read, and understand. Most (but not all) discount brokerages can be accessed online from your laptop or desktop as well as from an app on your phone. What you prefer to use is a personal choice, but apps help keep everything close and handy. After all, does anyone ever leave home without their phone anymore? So, what’s the best Canadian online brokerage app? Again, based on my experience, I say Questrade because it really lets you stay on top of everything all on one platform. This wasn’t always the case, but with Questrade’s latest updates, they are on par with anything the big banks have going. To start with, I like the look of the app. It’s pretty clean-cut and clear to read and understand. It lets me trade in real time and manage all my Questrade accounts.

The Questrade app also has some great features. These include:

  • Symbol Lookup: which allows you to look up the symbol you are interested in. From this feature, you can access news and history to help you make a more informed decision. 
  • Alerts: You can customize your alert settings to get instant alerts on the items you put on your watchlist.
  • Charting: Take a look at a range of charts that show patterns and volatility to help you better build your trading strategy.  There are also some handy research tools available on the app as well. These include built-in research from industry leaders including Morningstar and Recognia. You can also get access to real time data and, as mentioned above, create your own personalized watchlists. Right now, the Questrade app can be used on iOS devices (iOS 8 or higher) or Android devices (Android 5.0 or higher).   

The Best Canadian Discount Brokerage for Customer Service

Quality customer service is essential for every business, and while each of the options in the Canada discount brokerage review has a customer service option, when it comes to the best discount brokerage for customer service it’s pretty neck in neck right now between Qtrade and Questrade. Everything you read about Qtrade mentions their customer service. First of all, they make it really easy to get a hold of their customer support team. You can reach them by phone or email, or even have them call you with the call-back option.

They also have a walk-in office located in Vancouver, BC. Sure, that doesn’t help everyone but the fact that they actually do have an in-person office that you can visit makes them pretty unique in the world of online financial businesses.  However, there have been a few recent changes to the Qtrade customer service within the past 2-3 years.

They used to have an online chat option which customers loved but that disappeared in recent years. There have also been recent comments in online threads about exceptionally long wait times recently which customers who have been around for a while are finding incredibly frustrating.  Questrade, on the other hand, has really upped their game in the past couple of years. There is a toll-free number you can use to give them a call and, unlike Qtrade, Questrade does have an online chat option to help you get the answers you need right away. 

There has been plenty of positive feedback for both of these online brokers and their customer service. Additionally, both options seem to have a number of loyal users which also speaks to customer care. Qtrade has definitely been the long-time leader for this category, however, their recent decline in services has left room for Questrade to push forward and, perhaps, even ahead.   

How to Use an Online Broker for Beginners

Interested in trying your hand at online brokerages? Here’s how to get started.

First of all, you’ll need to figure out your purpose for trading and how aggressive or active you want to be. Do you want to be trading daily? Or are you more interested in the couch potato style of approach? There’s no right or wrong answer, online brokerages work equally well for both strategies. You just need to know what you want to do and have a plan in place that you will keep up with.

Once you are confident in your knowledge of the stock market and know what type of approach you want to take in your investing, you need to choose your online brokerage platform. I’ve shared what I consider to be the best options in this Canada discount brokerage review, but the final choice is up to you.  For those who want to practice before getting started with real money, Questrade has a free practice trading account that you can demo for up to 90 days.

Not only is perfect for trying your hand at trading to see if you enjoy it, but it also allows you to test-drive the Questrade platform and see if it is a good fit for your needs as well. Once you’ve chosen your preferred online broker, filled out the required paperwork, and transferred the funds you’ll follow these steps to start buying: 

  • Log in to your chosen platform
  • Figure out which stocks you want to buy. You can use the ticker symbols to look them up. 
  • Decide how many shares/units you wish to buy. Note, before you purchase, you’ll need to do a bit of math here; cost of share/unit x amount you want to buy.
  • You will then need to enter the details of the trade. This includes the order type you want to use as well as the duration; how long you want the order to be active for. 
  • The discount brokerage will then confirm with you that you want to purchase “x” units or shares of an ETF or stock, at a price of “x” dollars, for a total cost to you of “x”.
  • Click “buy”

  And that’s it! Congratulations, you just bought your first stock. 

Comparison Summary of Canada’s Best Online Brokers

If you know DIY investing is for you (and that’s a big if) and you are looking to minimize your trading fees, as well as your annual fees, while wanting to remain your money to be kept safe by a reputable, Canadian, financial establishment, then in our opinion it boils down to the 4 best stock brokers in Canada for 2020. Our absolute #1 choice for the majority of Canadians is Questrade but using either of the 4 makes sense (depending on the usage). 

  Questrade Qtrade  BMO InvestorLine Wealthsimple Trade
Fees to Trade ETFs $0 to buy, $4.95-$9.95 to sell $0- $8.95 to buy and $8.95 to sell $9.95 to buy and sell $0 to buy and $0 to sell (select ETFs)
ECN Fees $0.0008- $0.004 per trade $0 $0 $0
Annual Fees None No official annual fee, however, you will be charged $100/year if your combined accounts go under $25,000 $100/year  for accounts less than $25,000 None
Strong points Smoothest online platform and app, no ETF fees, and $50 sign up promo Easy to reach, professional customer service Award winning platform, impressive 3rd party research, bank security No ETF nor stock fees (but 1.5% base conversion fee for US trades) and very limited platform
Please post any questions on Canada’s online discount brokerages below as we’ll updating this article throughout 2020 and beyond.  We’re also interested in hearing about your personal online broker experiences so that MDJ readers can get as must firsthand information as possible before they chose their Canadian discount brokerage.

499 Comments

  1. BenC on December 31, 2014 at 11:05 am

    Virtual Brokers Update:

    Not only is the SDPP offered, but a DPP is offered as well.

    No more account fees for CAD accounts (except for $25/year CAD RESP fee). Inactivity fee is $24.95 per quarter if no trades are made and total assets are less than $5000 (it is refunded if a trade is made in the next quarter though).

    If total assets is $50000 or greater, RESP equity trading is free.

    Number of commission free ETFs increased to 150.

    Cheers.

  2. OptionsTrader on January 2, 2015 at 12:21 am

    The fact that Interactive Brokers now offers RRSP and TFSA accounts makes it a no brainier for me. I have used them for my non-registered accounts for several years and the savings on commissions, forex and other fees is amazing. Last year with Questrade I paid over $2250 in commissions in my RRSP. I calculated the same trades with IB and it would have come to just under $450. That is a savings of about $1800!

    I am now switching all my accounts to IB. They do not offer RESPs unfortunately. If you trade options the savings are even larger as IB does not charge for option assignments whereas Questrade charges $24. On small trades that can eat all your profits.

  3. Nikolai on January 2, 2015 at 2:57 pm

    It would be good to add another metric – “average wait time on the phone”. Looks like it will be more important this year. I have just learned that I can no longer sell DSC mutual fund units online (with TD Waterhouse) because of new IIROC regulation. Cannot really argue about the usefulness of the regulation – now the broker has to tell you the exact commission for your trade, not just put a disclaimer that “some fees may apply…”. So, apparently, they have to call the MF company, confirm everything with them and get back to you with the exact numbers!

    On the phone with TD Waterhouse, waiting for over 25 minutes so far….

  4. Nikolai on January 2, 2015 at 10:00 pm

    @OptionsTrader ,

    IB offers RRSP and TFSA?????!??!! #@$@(*$(*@# Oh my, how did I miss it? It is not April 1st but I do see it now in their FAQ. Hmmm….Somehow I have a feeling that I will be transferring more accounts from TD Waterhouse this year. Thanks for the tip!

  5. john on January 12, 2015 at 1:34 am

    WOW IB offering TFSA/RRSP is HUGE. I just made the mistake of opening and funding my TFSA for 2015…will definitely be closing everything and moving over. As an options trader, I’ve been with them for 2+ years now, great execution. No more scams from the BIG5

  6. John on January 12, 2015 at 10:41 am

    I spoke with IB CS and apparently we have to submit 3 separate applications (causing us to buy 3 separate data feeds/charged $10 monthly) rather than one consolidated account. Anyone have any experience linking them together?

  7. Nikolai on January 12, 2015 at 12:43 pm

    @john

    I am sure you know that, but just in case…do not “close” it, transfer it. If you close your TFSA and withdraw the funds, then you get your contribution room back only next year. Better do account transfer instead.

    And, yes, they charge $10 inactivity fee per account. Plus $50/year. But you know what? I took my statements from TDW for two last years and laid down all commissions I paid them in each year. I ended up with pretty large numbers. I tried to calculate how much would I pay to IB and even my most pessimistic scenario was still interesting in terms of savings. Since you do options you will understand…just the assignment fee with TDW is $43.

  8. John on January 12, 2015 at 5:20 pm

    There is no doubt TDW is one giant scam –

    Thanks for the heads up – I plan to leave some of my TFSA at questrade since its free ETF purchases and does nicely for a passive portfolio.

    I’m already an IB Customer, I’m trying to get around the fact I have to pay for TWO data feeds and be charged commission on TWO accounts from their $10 minimum policy. I’m not sure if its avoidable if we can just open TFSA and then link it under your current IB?

    the $50/annual fee looks like it is only applied to RSP and not TFSA.

    I’ve created a support ticket with IB hope they get back to me soon, I was close to funding TDW. Yikes!

  9. John on January 12, 2015 at 5:32 pm

    Spoke too soon…..FYI

    Starting tonight 6:00 PM EST you will be able to open linked TFSA account directly from you account management. You will be able to do this under Manage Account > Add or Link Accounts > Create Linked Account. Make sure to select the TFSA account type.

    If you have any other questions please don’t hesitate to contact us.

    Regards,

    Vince P.

  10. Nikolai on January 12, 2015 at 7:29 pm

    @John

    To be fair, I would not call TDW “total scam”. I have been using them for a while and while I did have a few issues, most of them were resolved to my satisfaction – including the one that did cost them $$$. However, I am tired of their inflexibility, lousy reports (I had to write quite a bit of code to be able to extract the data I needed for taxes). And on top of that – very high fees sometimes discouraging me from doing relatively small but still profitable trades.

    And thanks for correcting me – it does seem like there is no fee for TFSA. I was confused by the fact that they often mention RSP and TFSA together.

    However, I did some more checking and found a few serious disadvantages of new IB accounts.

    1. “IB only allows funding of RSP and TFSA accounts in Canadian Dollars”. This sucks because in the past I was able to move USD to RRSP and TFSA without incurring any extra fees. Essentially, I was telling the broker how much CAD I want to transfer and they would tell me how much will it be in USD. And the transfer was done using money-market mutual fund, in kind. I am sure it would be possible to find some kind of CAD-denominated USD ETF but there is item number 2.

    2. “IBC does not accommodate asset swaps or transfers in kind (cash or securities) from a cash or margin account at IBC or elsewhere to an IBC RRSP or TFSA account at this time”. I think this is a serious disadvantage. I have been doing in-kind transfers to my registered account in the past (yes, I know about the deemed disposition ;) ). This is particularly important for US securities. With these two limitations if I have free USD and I want to contribute to my RRSP/TFSA and buy some US securities I will need to exchange the currency twice! And if I already have the security in margin account – pay two commissions.

    3. A bit unclear if IBC actually allows US securities in RSP and TFSA. They do not seem to say they do not but I am going to confirm with them.

  11. John on January 12, 2015 at 11:27 pm

    @Nikolai

    Forgive my opinion, I’ve been charged exorbitant fees from TDW and may have a slight biased opinion toward them :)

    Thanks for checking additional details – would definitely like to know if US securities can be held.

    While I hope these comments help future readers which brokerage to pick – I would like to add that I tried opening the TFSA today under account management but it appears you need a beneficiary designated before you can proceed. The only options on the drop down are spouse/common law, child or grandchild (and their SIN). For someone who is single in their early 20’s without children…not sure how I’m able to open one.

  12. Nikolai on January 13, 2015 at 11:05 am

    @John,

    There is something good to say about almost every broker, I think. With TDW I could relatively easily grow my RSPs initially with TD e-series funds. Considering that their MERs are reasonable and transactions are free it was a good alternative to index ETFs. Well, in fact these are index ETFs that have appeared later as an alternative ;) IB does not offer MFs. This means that some investment strategies (like cost-averaging or reinvestment of relatively small amounts of dividends) are not possible or have to be done differently. For RSPs it is important because they are long-term investments and you can’t easily add more funds there even if you have free cash – you are bound to your contribution limits…

    Interesting thing about the mandatory beneficiary….I would not have this issue ;) but if it is a blocker for the application – I think this is due to IBC’s limited experience with these accounts. I know for sure it is not mandatory.

    By the way, I have asked a bunch of questions about USD and in-kind transfers, waiting for the response on my ticket. Will relay the answers here once I get them.

    There is one more thing that surprises me at IBC – they seem to be limiting the number of sub-accounts under family advisor account to 5. Again, waiting for clarification from them. Maybe I misunderstand the meaning of the sub-account. I think a typical family will have 2 cash/margin accounts, two TFSAs, two RRSPs and, possibly a spousal RRSP. Skipping RESP because IB does not support them. So, that makes 6 or 7 accounts. It would be silly if I can only have 5 out of them.

  13. Nikolai on January 14, 2015 at 7:28 pm

    So I have exchanged a few messages with IBC support and found the answers to my questions. Basically, I was trying to assess what will I lose or gain if I move all my family’s accounts to IB from TDW – except RESP that they do not support. Personally I am not entirely happy about the answers.

    – first, they charge inactivity fee of $10/month for family advisor account, which is an “umbrella” account for the family accounts. This is a nominal account, there is no activity happening there, but they still increase your total commission “minimum” by $10 for that. When I asked “why” I was told “IB has simply decided”.
    – They do allow people to have one RRSP AND one spousal RRSP, not either one or another (a bit unclear on their website)
    – US securities are allowed and the funds (dividends, for example) are not converted automatically to CAD
    – interestingly enough, they allow you buying puts in RSP/TFSA only as protective ones, i.e. if covered. I may be wrong but I believe my current broker allows me to buy long puts.
    – no way to contribute USD to RSP/TFSA. I consider it as a major issue even if you do not receive any income in USD. Sometimes I get bonus paid with company stock + we have stock purchase plan. I often send these shares or USD proceeds to registered accounts. Plus, you may simply want to move a stock you own that is hovering around your ACB to TFSA in the beginning of the year…no way to do it with IB and I was told that it is not something they consider for near future
    – they currently limit the advisor account to 5 sub-accounts. That means you cannot have all your family accounts under it (2 cash/margin, 2 TFSA, 2-3 RRSPs). But I was told that because of the recent introduction of new account types this is something they will change soon.

    So…some food for thoughts. My biggest concern is really the lack of way to move USD to these accounts.

  14. John on January 14, 2015 at 8:42 pm

    @Nicolai

    Thanks for the update! Just to clarify if we don’t go the family account route – accounts such as TFSA and RRSP actually do contribute toward the “minimum $10?”

    So two accounts , non registered and TFSA would require you to generate $20 commissions or else you they charge this amount monthly?

  15. Nikolai on January 14, 2015 at 9:15 pm

    @John,

    Family advisor account seems to be a special case – when someone wants to legally manage the account(s) for close family members.

    Yes, each account with less than $100K balance has inactivity fee of $10. So, say, 5 accounts below $100K make it $50/month. But I was told that this inactivity fee is assessed for the entire set of accounts. E.g. if in this example you will generate $48 in commissions on only one of these 5 accounts and $0 on 4 remaining ones, then you will be charged only $50-$48=$2, not $40. At least this is the way I understood IBC’s explanations.

  16. Mike on January 26, 2015 at 12:22 pm

    I have been with BMO Investorline for over 15 years. In the past year their service deteriorated to the level on totally unacceptable. Most problems are with online access and underlying trading system. Here is the list of problems, some of them are extremely critical:
    1. Poor security. Online login to your account taxes maximum of 6 characters in password and these passwords are not even case sensitive. Any teenage hacker can break-in to your account in less than 10 minutes. Trading passwords are more secure, but I am still uncomfortable that it is so easy to access client’s holdings – to me it’s a big privacy issue. I raise this issue with IL over 3 years ago and they told me that this will be fixed soon – nothing is done as of Jan 2015.
    2. Overloaded servers. Try logging in to your account around 9:30am or 4pm. It takes 2-3 failed attempts (with very “informative” errors like “The proxy server did not receive a timely response from the upstream server. Reference #1.ec2bf648.1422285118.ef29fd99” or “We’re sorry. The page you are looking for is currently unavailable. Please try again.”). This morning I couldn’t login to my account for 25 minutes. Even when you are successful with login it takes up to 3 minutes delay until you get to your portfolio page. Often, you get disconnected for no reason just because their servers cannot handle that many simultaneous connections. Typical response from IL support: “our investigation shows that there was no issue related to slower than normal website responsiveness”)
    3. Poor customer service. I reported a number of problems using their support system – the answers I received were either inappropriate (e.g. “we cannot confirm your complaint looking at our server logs) or plain stupid (“May be you should try another browser?”, “Close the session and login again, it may help”)
    4. Incorrect calculations of totals for market value and unrealized gains/losses. The numbers I see on the screen don’t correspond to reality – I have to manually export my portfolio page to Excel to get correct numbers. This problem is intermittent, but it occurred to me at least 4 times in the past month.
    5. In on one of my accounts I actively trade in options and in the past 3 months I encountered at least 5 days when I would not be able to see bid and ask for all my options for hours. Suddenly, all bid and ask values go to zero and even when you click on the option to trade you get zero values in trading screen. As you can imagine, this is totally unacceptable for options trader. I just love the answer I got from IL support (the screenshot was taken at the middle of the trading day and showed zeros for 15+ options, including GOOG, BX, CNQ, ENB, etc.): “With reference to the screenshot you had provided, the prices were reported accordingly as the option holdings had $0.00 bid”.
    At this point I had enough and will be moving to another discount brokerage. It is too bad as IL used to be the best in Canada. I don’t know who re-designed their interfaces a couple of years ago), but apparently it was designed and maintained so badly that they can no longer provide service to clients and they are obviously unable to fix these problems.

  17. Bernie on January 26, 2015 at 3:36 pm

    Re: Mike’s comments regarding BMO InvestorLine

    While I think BMO InvestorLine could use a few improvements such as commission free ETFs, lower trading costs, a better streamer with more indicators and more tools for dividend investors I have not encountered any of the problems Mike listed in his #2, #3 or #4. I’ve been a, mostly satisfied customer, of BMO InvestorLine since 2007.

  18. Nikolai on January 26, 2015 at 3:51 pm

    Hi,

    Just discovered a new ugliness ;) at TD Waterhouse. Once they have implemented the full USD support for RRSP and TFSA I can no longer use my full buying power in RRSP. Example: I have 10K cash in RRSP and $2K USD. I want to buy something that costs $2500 USD. Before this change I could easily just buy it. The system would automatically use my 200 units of TDB166 mutual fund (TD’s weird workaround for USD in RSP in the past) and convert the difference from CAD, i.e. it would exchange some canadian dollars to get exactly what is missing, e.g. $500 in my example. Now it is not the case. The system actually refuses the transaction with “not enough cash” message. So either you are forced to always keep excessive amount of USD or manually convert most likely excessive amount from CAD to cover your trade.

  19. Steve on January 27, 2015 at 2:51 pm

    You are missing one of the major discount brokerage providers on here : National Bank Direct Brokerage. One of the leading brokerage plateforms in canada but doesnt seem to get the exposure or recognition that it warrents.

  20. Rob on February 5, 2015 at 3:46 pm

    Thanks to Nikolai and John for the info on IB.

    I have been hoping for a long time for IB brokers to allow registered accounts. I am currently an IB brokers client for a cash trading account and I have all my registered accounts with TDW and RBC.
    I am relatively satisfied with RBC and TDW. However there are things in IB that surpass them by far. For example the settlement of funds in IB is by the end of day if not instantly as far as I can see. As a matter of fact with IB you can get a daily statement. With RBC and TDW you have to wait a couple of days for settlement from the underwriter.
    -With IB brokers their security system is second to none. They just give you random codes that you enter from a card they give you and have to sign in only once. With RBC and TDW after 20 minutes of inactivity your accounts lock out. How can you be an active trader with this nonsense? beats me .
    -Prices for options are dirt cheap in IB. In TDW and RBc is highway robbery, plain and simple. Also with TDW and RBC stock purchases are 9.99.
    -The one thing that concerns me about IB is account management for several accounts ( cash and registered) with their interface. Which means that if I have five accounts , I would have to have 5 monitors for active trading. With RBC , there is a scroll button that takes me from one account to the next, and I can give a customized name to each account.
    -Customer service courtesy is not big with IB, but I seldom call them so is not a big issue for me.
    Just some points to consider.

  21. Nikolai on February 5, 2015 at 7:27 pm

    @Rob,

    I agree with your points. Although TDW has improved a bit last year – now they do update your cash balance almost at real time. Also they update your positions more often, not on next day. Still, account reporting at TDW is simply too primitive. Statements are very unclear and hard to decipher. Confirmations are the same. For cash/margin accounts it is very inconvenient to work on your taxes when using TDW. Most of the improvements TDW does are cosmetic. Customer service gets worse and worse. I called them twice this year – first time I was successfully authenticated with my voice but the agent said that it “did not work”. Last time I called them – I was not even prompted for voice authentication.

    Another thing you mentioned that I find very very important is security. Two-factor authentication is such a simple thing. Can be done even with a smartphone app. And who would argue that any authentication based on password + a token is worse than just a password? The more money you have in your account, the more you get concerned about what damage can be done to your future is someone simply steals your password. And these things do happen even to the most careful people :( So, IB scores big time here – with 100K+ they just give you free RSA-like card.

    Prices..no comments. Especially option exercise/assignment at TDW.

    So far I think I cannot complain about the customer service at IB. They usually respond fast but often the answer is too brief and requires additional clarifications. Looks like they are not very good in “selling” their service. I understand that they target professionals etc but they could be just a bit friendlier and proactive.

    I am seriously considering trying their RRSP/TFSA offerings. I did my concerns about their product in my previous posts. But I think I will take is slowly. First I would like to hear about someone else’s experience with IB RRSP. Second, I need to get rid of some mutual funds that I still have in my RRSPs and I am slowly redeeming them. I would replace them with ETFs long time ago but, again, commissions at TDW were making it less attractive comparing to inexpensive e-series funds.

  22. OptionsTrader on February 10, 2015 at 8:12 pm

    @Rob – write “The one thing that concerns me about IB is account management for several accounts ( cash and registered) with their interface. Which means that if I have five accounts , I would have to have 5 monitors for active trading. With RBC , there is a scroll button that takes me from one account to the next, and I can give a customized name to each account.
    -Customer service courtesy is not big with IB, but I seldom call them so is not a big issue for me.
    Just some points to consider.”

    Rob – I have 4 accounts with IB and they are all linked. I login once and have access to all 4 accounts in a single window. I can pick from a drop down list to view only one account or look at the consolidated holdings as a single view. My 4 accounts include TFSA and RRSP. As you stated, trading options in IB is very profitable and I now write a lot of in-the-money covered calls in my TFSA and RRSP. I love getting called away and repeating this method for a nice safe and profitable trade.

  23. Rob on February 12, 2015 at 3:22 am

    Thx Optionstrader.
    Any negative feedback on IB with your registered accounts? thx

  24. Rob on February 12, 2015 at 10:23 pm

    Optionstrader. Another question. I am not sure if it was mentioned before , but with reference to the monthly data fees. Do you have to pay those for each account? Are there any inactivity fees?
    thx for the info.

  25. John on February 16, 2015 at 3:33 pm

    IF I recall, you pay the data fees on ONE account i.e your main account (you can choose where this gets billed).

    Say you have a regular, a TFSA and a RRSP. You can bill your regular for data fees, but by virtue of having 3 accounts you must generate $30 in minimum commissions…

  26. Rob on February 17, 2015 at 11:23 am

    thx John. I appreciate the answer.

  27. Rob on February 17, 2015 at 4:05 pm

    I just contacted IB live chat. This is the transcript for everyone to see and then decide:

    Alexandre R: How can I help you?
    me: I have several questions, first , do you allow shorting in TFSA and RRSP accounts? If not am I allowed to buy puts?
    Alexandre R: No trading on margin – all purchases must be paid in full; No account debit allowed.
    Accounts are restricted to cash balances in CAD and USD.
    An FX currency trade must be executed for buy trades if the customer does not carry a balance in the given currency ( CAD or USD ) since a margin loan is not allowed in these accounts.
    Free ride in effect, i.e. no waiting for a settlement. A purchase for the account can be sold in part or whole on the same day ( similar to IRA account ).

    The RSP and TFSA accounts are allowed to trade the following qualified investments (QI):

    Stocks listed on designated US and Canadian exchanges (See table below)
    Long call equity options resulting in a stock position on a qualified investment.
    Long put equity options resulting in a stock position on a qualified investment.
    Short call equity options with a fully covered position on a qualified underlying stock ( covered call ).
    Long put equity options with a fully covered position on a qualified underlying stock ( protective put ).
    Long put/call options on indices.
    Warrants if the underlying asset acquired under the right to purchase is a qualified investment.
    Installment Receipts reflecting a partial payment on a share listed on a designated stock exchange.
    Rights if the underlying asset acquired under the right to purchase is a qualified investment.
    U.S. Bonds.
    FX conversions limited to USD/CAD

    The RRSP and TFSA accounts are restricted from trading the following non-qualified investments (NQI):

    Leveraged FX (LEVFX).
    Futures.
    Future options.
    Short selling on stocks, equity, and index options ( other than covered calls ).
    Over-the-counter bulletin board (OTCBB).
    Pink Sheet stocks.
    Contract for Difference (CFD)
    me: great thx.Do you cover the transfer fees charged by other institutions? I asked this because many banks do so, if you have a certain balance
    Alexandre R: We do not, but then we do not charge transfer out fees
    me: What is the max number of accounts I could link to my account?, ie my wife’s TFSA, My TFSA, my RRSP and my wife’s RRSP. Maybe by wife’s investment account ad so forth
    Alexandre R: You could link them under a friends and family account and have up to 5. We are currently working on increasing that number
    me: thx, What about fees, how does it work when you have all linked?
    Alexandre R: Each account minimum commission of 10 USD per month if account has 2000 to 100 000$
    Alexandre R: For commission, depends on how you trade
    Alexandre R: You could trade all on master account and only have market data on master which would reduce fee per account
    me: Let me get this , so if I have 5 accounts and if I trade 50 dollars worth of trades per month on any of those accounts , the fees are then technically waived?
    Alexandre R: Yes
    me: what about market data subscriptions. Do I have to pay that for each account?
    Alexandre R: Only on master account and it is optional
    me: Could you please tell me if I am paying the appropriate market data subscriptions, I want to see amex, nasdaq and Dow live quotes as well as TSX live quotes , I am subscribed to US Value Bundle , US Value Bundle Plus as well as Toronto stock Exchange fees. Do I need both US bundles? thx
    me: I also buy options
    Alexandre R: US value bundle plus is only for futures
    Alexandre R: you then also need US Options 1.5 USD
    me: Are the settlement on any registered accounts done instantly, so the balance on any account is accurate at any point in time of the day?
    Alexandre R: Yes, there is the free riding rule. Cash balances are accurate in cash accounts as well
    Alexandre R: You are referring to settled cash I believe, which you can view in your account window regardless of your account type
    me: Yes I meant the latter thx. Can I transfer accounts IN kind to IB?meaning non cash from another institution?
    Alexandre R: Yes
    me: In all registered accounts I assume the mandatory currency base is Canadian dollars?
    Alexandre R: YEs
    me: But you don’t allow forced Currency conversion? so for example If I would like to purchase Microsoft, but I dont have Us dollars. I first buy American dollars make the purchase, then sell it and is not converted back to Can dollars automatically?
    Alexandre R: Never converted automatically (except sometimes in case of margin call)me: In order to be able to invest on behalf of my wife’s TFSA, RRSP do I/her have to sign any legal documents?
    Alexandre R: If the account is set up under the friends and family set up, no need for legal documents
    me: Any plans to expand the scope to LIRA accounts or RESPs in the future?
    Alexandre R: Unfortunately not in our plans
    me: In order to start the transfer process and application. I take it, I have to go to the Canadian side of IB brokers internet site?
    Alexandre R: Yes.
    http://www.interactivebrokers.ca

    me: Well that is all for now , I will digest all the info and decide. Thx for your time. I really do appreciate it.

  28. OptionsTrader on February 18, 2015 at 1:14 am

    Rob:
    I have nothing bad to say about IB at all. My big thing is saving money on any and all fees, forex conversions, option trades etc. IB wins on all of these and very significantly.

    I have now been using IB for me RRSP and my TFSA for a few weeks now and I couln not be happier. For example, I bought 300 shares of MSFT and sold covered calls at $41, $42 and $43. All my shares were assigned and I paid no assignment costs. These 3 calls would have cost me $72 at questrade ($24 for each strike). That makes that trade uneconomical at Questrade but it was a very profitable one at IB.

    I would not worry about forex conversion. My cost to convert $25,000 CDN to US$ is $2.50. I believe Questrade charges approximately $500 for that amount! And as stated by John, subscription fees are charged to one account only.

    Good luck and let us know what you decide. As for me, I am very happy with IB.

  29. Nikolai on February 18, 2015 at 10:51 am

    In process of opening the advisor account with IB (actually, just opened) and moving some accounts from another broker. So far I have found that Family Advisor account support at IB is far from perfect. First, the fee structure is somewhat confusing, they even have a mistake on their own web page explaining the fees :) Second, the way they charge these fees is also unclear and I have got two absolutely conflicting answers from their own support over chat. Also the account linking process happens once a week on Fridays…and in order to link your account you need to switch to fixed commission structure (but the advisor can use the tiered one so the disadvantage is temporary)…Opening other accounts is an annoying repetitive process – if you already have a margin account and want to open TFSA you still need to go through all the forms and prompts – and this process always times out in the middle so you have to re-login and resume.

    Will see how it works out at the end.

    About the fees, I have found a little detail that makes it less predictable if you do not trade like crazy on all of these accounts. Assuming you have 5 accounts, all below $100K and, thus, you need to generate $50/month in commissions. You generate $50 on one of them and 0 on others – you won’t pay any additional fees. But if you generate $49 only on one of them and zero on others, then IB reassesses the inactivity fees for each account and will gladly charge you $40 – i.e. $10 for each dormant account, not $50-$49 as I was told originally. I find it a bit unfair. I understand that they want active traders but, still, I imagine that people like me trade at different pace on different accounts.

  30. Nikolai on February 18, 2015 at 2:55 pm

    Got some additional clarifications from IB…indeed these guys make the things complicated…

    Quote: ”
    There is indeed a new feature to charge client fees to the master which implies that all fees would be supported by master account. The master account must maintain 1000 USD or equivalent after fees or the fee will be affected to the sub-account. This is currently the only way to have the RRSP fee not charged on the RRSP account.”

    Well…maintaining 1000 USD in cash is roughly equivalent to $25/year of lost interest…not too bad – especially if IB does not really charge for transferring the cash between the IB accounts in the same name.

  31. Nikolai on February 23, 2015 at 9:16 pm

    I have discovered an interesting thing about IB today. I have noticed that they now have iOS (and Android) apps for generating the login challenge responses. This eliminates the need for the smart card. I was able to activate it for two accounts without any issues.

    I have to say – these guys are really serious about the account security, something I like a lot.

    I am wondering how do they announce all these features? I do not remember receiving any emails from them – neither about RRSP/TFSA back in December, not about this security feature…

  32. sunny on February 23, 2015 at 11:16 pm

    Hello,
    Has anyone ever seen such problem in tax filing?
    I am facing some trouble about reporting capital gain/ loss from investment in publicly traded shares. Individual tax filing has schedule 3 and T5008 that needs to be completed. After completing that I found entries from T5008 have added up in schedule 3 , making all figures appear twice than they were.
    I can call software developer. But I do not know if this is an error in program or should I use T5008 for 2014 tax year and cover the rest of gain/ loss of prior years in schedule 3? In that way it will not double.
    My question is: Why is there a duplication of data required and whether should I report in schedule 3 and in T5008 as well, and what about figures that are doubled. I am using Tax Studio as software.
    thanks

  33. Nikolai on February 27, 2015 at 11:34 pm

    Interactive Brokers platform does not seem to be that stable….Right now I am facing some quite scary problems – all my positions have disappeared, I see only cash #8-(). Hopefully they resolve it soon. If they do some sort of maintenance – then they do it quire carelessly.

  34. Nikolai on March 3, 2015 at 11:27 am

    One important tip for TD Waterhouse customers who transfer their accounts out of TDW. Once the account is transferred out they block your access to the account history. So, you lose all the online statements and confirmations for this account. Not too bad for registered accounts (unless you track your investments carefully as I do) but definitely a big issue for cash/margin accounts. Without some statements and confirmations you won’t be able to properly calculate ACB for tax purposes. Not to mention that sometimes they reclassify the dividends 1-2 year backwards…

    Better to download everything before moving the account + take the snapshot of the recent account history.

  35. Rob on March 6, 2015 at 2:14 am

    As per the last message from Nikolai. Same thing happens to RBC Direct Investing. Once the account is transferred it disappears from RBC. You lose stetements, confirmations, etc
    FYI

  36. Imtiaz on March 8, 2015 at 2:09 pm

    I have been a virtual brokers customer for more than 3 years and I would not recommend anyone to be with them. They have a horrible customer service. I was first of all charged US TFSA fees for two years 2013 and 2014 together in 2014. When I asked them why they said they forgot to charge it 2013. Second, I requested them to close my account and they said the interest charges are not charged yet. It took them 3 months to charge interest for one month and my account close request is still not processed. This has been the worst experience I have had with of the brokerages I have since 14 years of investing in Canada, Dont be fooled by their low commissions.

  37. Nikolai on March 12, 2015 at 11:21 am

    Just discovered another little hiccup with IBC. I have noticed that one of my account transfers (to IBC) got stuck for too long. Tried to get some information from them…finally after two chat sessions I was told that they have a problem on their side with one of the securities that I have – STX (Seagate Technologies). It is “not set up correctly” in their database. Hmmm…Interesting. Hopefully they will fix it soon.

    As an paranoid IT person, all these troubles lead to one concern that started having recently – can we really trust our brokers 100%? Did it happen to anybody to lose a position (or part of it) because of a software bug? Honestly, I have no idea about how the broker’s backends and books are organized. Certainly, any software has bugs but some bugs are worse than others ;)

  38. Tax_help on March 12, 2015 at 12:16 pm

    Does anyone know for Tax purposes under IB we simply fill out book value and disposition amounts in T5008 with the form IB provides? We don’t have to report based on trades right? The total figures should suffice?

  39. Nikolai on March 12, 2015 at 4:43 pm

    @Tax_help

    I have found absolutely identical question here: http://canadianmoneyforum.com/showthread.php/11532-T5008-Interactive-Brokers-1%29-Aggregate-totals-2%29-trading-vs-investing-T123

    Personally I never entered individual stocks. I always do my own spreadsheets and always report complete amounts. At the end, I know that even if CRA challenges my numbers – I am right as long as there is no additional tax due. So, if you have 4 times $250 capital gain or you report $1000 capital gain – same thing.

    Also I never trust any forms from the brokers. From the mutual funds – yes, because only they have the raw data. I verify all the numbers the broker provides, I calculate the ACB according to the original trade confirmations and distributions (anyway, brokers do no track the things like ROC and reinvested dividends, for example). It is time-consuming and I am yet to find the best way to handle it, but at the end I am confident in my numbers.

  40. Nikolai on March 12, 2015 at 4:46 pm

    @Tax_help

    …also, if you read the T5008 description it clearly says:

    “Box 20 – The amount in box 20 may or may not reflect your adjusted cost base (ACB) for the purpose of determining the gain or loss from the disposition of the security. You are required to make the adjustments, as needed, to the amount indicated in box 20, at the time of determining and reporting your gain or loss from the disposition.”

    and

    “This information slip does not have to be attached to your income tax return, but you have to keep it in case the CRA requests it.”

    To me this means that it is provided for reference purposes. As always, you may be asked to justify your numbers and you’d better be prepared to do so with the statements and trade confirmations in your hand.

  41. John on March 14, 2015 at 8:32 am

    Thank you Nikolai – links/answers are very helpful

  42. sunny on March 15, 2015 at 1:34 am

    @ Nikolai, @Tax_help
    I read your comment on MF, and ACB.
    Your broker sends a report every year for tax purposes, they carry out ACB calculation taking into consideration the reinvested dividend, apparently by using computer program (for their thousands of clients). Individual calculation would be very difficult. You may verify this.
    I do not want to boast but this year I entered almost 125 entries in CRA tax filing. It is not difficult, just little time consuming. Looking at report CRA knows it all.

  43. Nikolai on March 15, 2015 at 11:44 am

    @sunny

    Maybe I misunderstood you, but when I was talking about the MF, I was saying that with MF you do not have a choice but to trust the MF reports, and that’s fine because: a) they are all Canadian anyway b) they take responsibility for these tax materials. For individual stocks and ETFs it is a different story. For example, U.S. ETFs often do distributions that are not just plain and simple dividends – they have ROC and reinvested dividends inside. Cannot speak for all Canadian discount brokers, but TDW was always simply taking the actual amount of distribution (before 15% US tax) in USD and providing both numbers in T3s – as foreign dividends and foreign tax paid (if I remember correctly).

    TDW could also simple decide and recalculate your dividends two years backwards sometime in March or so without even telling you. The only thing you would probably notice is a slight change in the cash balance and additional entries in the account history. The latter covers only few recent transactions. I have complained to them about it but they did not care at all.

    As for CRA, I simply do not use their worksheet because it is not detailed enough. I prefer my own worksheet and I do not like the idea of spending time and moving some numbers from my worksheet to theirs. So, I think, when the time comes and they decide to question my numbers I can either give them my worksheet which has it all, or give them their worksheet – depending on what will make them happier. If they can be happy at all ;)

  44. sunny on March 15, 2015 at 9:32 pm

    @Nikolai,
    thanks for explaining and taking time.
    I understand that.

  45. Nikolai on March 21, 2015 at 10:03 pm

    For those who are as paranoid as me ;) when dealing with the distribution, their tax characteristics, T3s etc…Just in case you do not know – you can access the original information submitted by the trusts (like REITs etc) here: http://services.cds.ca/applications/taxforms/taxforms.nsf/Pages/-EN-LimitedPartnershipsandIncomeTrusts?Open

  46. Justin on March 26, 2015 at 10:48 pm

    @ Nikolai

    I know you were contemplating earlier in the thread – have you opened an RRSP with IB? Any issues encountered? Doesn’t look like annual fee of $50 is avoidable.

    If I am only planning to run a couch potato, would Questrade be a better choice than IB?
    Looks like even with the $50, you break even quite fast once you become an active trader – especially transacting in USD.

    Just want an opinion on user experience before I make a decision.

    Thanks

  47. Nikolai on March 27, 2015 at 3:19 pm

    @Justin,

    I have moved two TFSAs and one RRSP so far to IB. The only technical issue I had (not really RRSP-specific) was about Seagate stock, but IBC has resolved it quickly. Well…quickly after I pointed out that the transfer process seems to be stuck after two weeks ;)

    I look at the annual fee from different perspective. I took my last year annual statement and got the amount of commissions I have paid to TDW. Then I roughly estimated how much would I pay to IBC. Then I have realized that even factoring in the annual fee I would be saving quite a bit IF I do same amount of transactions. And since the transactions are cheaper, quite possible I will do even more – which is a direct saving. There is still a big gap between me and anything that you may call “active trader” (and this is not a goal – BTW ;) ).

    I have also tried to convert some CAD to USD and realized that with IBC’s approach you may still relatively efficiently contribute USD to RRSP. Yes, double conversion etc – but it is not anywhere as bad as with the banks ;)

    One thing I am definitely missing in IBC user interface is a quick access to the recent history of the account. With TDW I could do it in one click. With IBC it means running a query and it just displays too much data :) I suspect I will do some coding in the future to address this shortcoming.

    The main disadvantage that I see comparing to the banks is the absence of commission-free index funds. Yes, commissions are low, but still – I was successfully using TD e-Series funds for part of my portfolio, rebalancing often enough or even trying to time the market a bit. With IBC you have to stick to the ETFs. I have not done the math yet to see what is the “sweet spot” in terms of how often you would trade EFTs to achieve the same efficiency as with e-Series funds. In many EFTs the MER is lower but you pay the commission. In funds the MER is higher but there is no commission – so I am sure there is a sweet spot somewhere. I do keep part of my account in index ETFs to reduce the volatility and control how much time do I spend managing it.

    I am about to move more accounts to them, but I really need them to raise that limit of 5 accounts per “family advisor”.

  48. JD on April 1, 2015 at 2:06 am

    The fact that IB requires a $10 more minimum consolidated commission for the placeholder family advisor master account is very unfair…

  49. Nikolai on April 1, 2015 at 12:28 pm

    @JD,

    I totally agree. I am OK for some kind of minimum expected commission per month for real accounts with securities – there is at least bookkeeping that needs to be taken care of. Plus, it is a barrier for small clients that IB does not want to see. Maybe unfair but still acceptable. However, the fee for a dummy “umbrella” account that cannot hold any securities…that’s really unfair. I believe they should be waiving this fee.

  50. Justin on April 1, 2015 at 12:42 pm

    @ Nikolai

    Thank you for your response

    Are you currently running a Family Adviser account? I suspect they charge minimum commissions on EACH account

    I’m not nearly as active as you but the negative reviews above this post about Questrade for the past few years I decide I will go with IB for RRSP.

Leave a Comment





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