How to most effectively build your TFSA portfolio in Canada

TRADING AND TECHNICAL ANALYSIS
#1

Hello, my first post and topic so please be kind…I am learning.

The TFSA is a tax haven available to all Canadians. Within it you can place certain fixed amounts of money annually which can grow tax free…yup, no capital gains taxes upon redemption.

I just received notification that QBTC.U is a bitcoin fund that is listed on the TSE which is Canada’s major stock exchange.

It appears to me that this is a strategy every Canadian should act on. Now likely someone has thought of this before so how can this strategy with the TFSA be made better?

Are there ALT coin funds listed too?

Cheers and be blessed.

#2

Hey Maximus,

I’m Canadian and have been thinking about this for a long time. A good option is to invest in crypto miners, if you believe in the future of Bitcoin.

You can look into Bitfarms, Hut8 or Riot Blockchain, for example, which are publicly traded.

QBTC.U is definitely an option as well, but when it comes to funds, just watch out for management fees (~2% for QBTC). Always good to compare these fees with other funds (currently not many other options).

#3

Thankx much, it is always advisable to diversify so creating your own mutual fund makes very good sense (no management fees…lol…I forgot about those).

BTW I had no idea how big mining was in Western Canada (I recently lived in Calgary area)…I just found out about Hut8 today in my research, unbelievable. But I did read an article about how the government could cut their power supply off especially during the hot summers where the locals are using their A/C…it can get in the 100’s (40s) there. A big plant in Texas apparently has a deal with the utilities though that they get paid when they don’t mine and someone did the math and argues that this texas company will be far more profitable than the farms in China…

…but I digress, thankx for tip as it is a dream to retire off TFSA alone and not have to set up a corporation or deal with taxes and this appears to be the absolute best vehicle to do that!

#4

I would guess that Hut8 would work on a deal with the cities for a certain downtime during the hottest days. But I don’t think it would be a shut down for an extended period.

Bitfarms has a lower break-even cost on their BTC than Hut8 does, but Hut8 currently has more hashpower. Hut8 also has a stock-pile of Bitcoin, which is a good thing if you think BTC price will rise. Hut8 and Riot stock prices are overall more correlated to BTC price at the moment.

#5

Is RIOT listed on Canadian exchanges? NASDAQ Canada? What is ticker?

#6

Riot is on NASDAQ (NASDAQ: RIOT). You can still have it in your TFSA though, just keep in mind foreign exchange rates will affect your return since you’ll be buying the stock in $USD.

#7

OK, very good to know.

Is that true for all publically traded stock in north america? What I am getting at is can I buy stock in that mining firm in Texas in my TFSA?

I found that on myCRA it displays your TFSA information in detail. In fact, this is like having your own off-shore Cayman Islands bank account except it’s all legit!

I believe the maximum you can contribute is $66,029.07 CDN. That is a hefty amount of seed capital for a tax-free trading account.

Also, is they any way to get ALTCOINS in your TFSA portfolio???

#8

You can invest in any North American publicly traded stock within your TFSA tax-free. So yeah, if that mining firm in Texas is publicly traded, then yeah!

The current TFSA limit in Canada is $69,500 CDN. Every year it grows. It’s an incredible investing option, but you should also consider your RRSP if you think your personal tax rate is higher now than it will be when you retire. TFSA gives you the flexibility of withdrawing at any time, while the RRSP has to wait until your mid/late 60s to pull it out.

As for Altcoins in your TFSA, to my knowledge that isn’t possible right now. There is no publicly-traded fund that holds altcoins.

#9

As far as I know QBTC.U is the only publicly traded crypto ETF in North America. 3IQ does have a mixed fund, but it is not listed on the TSX so is not eligible for Canadian tax sheltered accounts like TFSA and RRSP.

For those wondering, the CRA explicitly states that Bitcoin and other crypto are not qualified investments when held directly:
https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-3-property-investments-savings-plans/series-3-property-investments-savings-plan-folio-10-registered-plans-individuals/income-tax-folio-s3-f10-c1-qualified-investments-rrsps-resps-rrifs-rdsps-tfsas.html

1.12 …Digital currencies, such as bitcoins, are not considered to be money issued by a government of a country and are not qualified investments

1.16 Except for certain derivatives, any security that is listed on a designated stock exchange (as described in ¶1.17) is a qualified investment

  • Shares of corporations
  • Put and call options
  • Futures contracts and other derivative instruments in respect of which the holder’s risk of loss may exceed the holder’s cost are not qualified investments

Designated stock exchanges (pretty much every major stock exchange):
https://www.canada.ca/en/department-finance/services/designated-stock-exchanges.html

1.18 Over-the-counter (OTC) quotation systems, such as the OTC Bulletin Board and OTC Link ATS (formerly Pink Sheets) in the United States, are not designated stock exchanges

For example a lot of cannabis companies are available by OTC only, so are not qualified investments.

The good news is, you only get taxed when you sell. So hodlers can defer taxes. Perhaps by the time crypto gets really big the tax laws will be more favorable. You can also use DeFi to defer capital gains by taking out a crypto loan instead of cashing out.

2 Likes
#10

Interesting strategy to use DeFi to defer capital gains. Smart thinking!

#11

Hummm, I haven’t taken the DeFi course yet as I really am green but I think I get the gist of it from experience. DeFi is the crypto equivalent of Universal Life Insurance Policy segregated investment loan???

I used to have this vehicle for this purpose but life happened, lol.

But the concept I think is the same…very interesting and incentive for me to push through Bitcoin 101 then Eth101 THEN DeFi…

#12

This is my first 10 minutes in here as a member. Fellow Canuck! I think I already see value … :+1:

I’ve got a TFSA but haven’t been utilizing it… Gonna ask a dumb question now, is the method mentioned here when investing 1) just to make an investment and fund it from that account? Or 2) some added registration process is also involved?

Thanks in advance. I’m off to study - and hopefully gain just enough knowledge to be dangerous

#13

Hey you Hosier, take off…lol.

My intention is to use the TFSA to generate tax free income for living expenses. That’s my primary goal…I just don’t know how to do it yet.

Due to circumstances, I have the full 65k contribution limit and with some restructuring and selling of some assets on Canadian soil I could make that contribution. It is doing it wisely though that will generate that tax-free income.

I don’t intend to live like a king nor buy frivelous depreciating assets with this income souce, just simple living.

I am accumulating crypto assets right now from savings but not redeeming anything. This is where I intend to create wealth. But should that portfolio start to increase in value, that’s where it gets tricky and you can run into problems when you start converting those wins to fiat and spend it and don’t report your taxes properly…that can get you in a whole heap of problems.

Which is why I think the solution is to open a one person corporation and pay yourself an income from that. I have always used an accountant to process my personal and professional corporation taxes in the past, but I think that if I keep this structure simple enough and stay meticulously organized…I think I can handle this task.

I have experience bookkeeping with Simple Accounting…love that program as it is true accounting, not like Quickbooks…but of course if something like this were to work out I would most definitely retain a professional to make sure everything is done right and filed right with CRA.

But, to go back to your original question…yes, this is TREMENDOUS value for the wealth of information here.

I am new as well and supposedly have finished Bitcoin 101…they issued a certificate…but I am not ready to move to Eth101 yet as I haven’t comprehended bitcoin to my satisfaction level yet.

I paid the full price I think for the premium and could get a discount offered from the webinar yesterday but heck, I’m not going to seek it as whatever I paid was a tremendous value. Knowledge is priceless, surrounding yourself with people, contacts, propels you in directions you have never considered…it creates opportunities to break free from the rat race by collaborative thinking.

last question: Labbats blue, Canadian, or Pilsner? that’s right, bob and doug drank Pil!!! lol

#14
  1. QBTC.U is a way to get exposure to Bitcoin in your TFSA or RRSP accounts. It’s similar to a gold trust fund in that it holds pretty much all of it’s assets in BTC, so shares in the fund track the price movements of BTC.
  2. Both TFSAs and RRSPs are special kinds of accounts that must be registered with the CRA (done by your broker). You would need to open a separate TFSA type account with your brokerage firm. Same for a self-directed RRSP account. These accounts are different and separate from a normal margin account. A regular brokerage account is subject to capital gains, where TFSA and RRSP accounts are not (as long as the rules are followed).

I’m sure you have or will, but check with your tax accountant first! Your brokerage firm will be reporting all your transactions to the CRA. If you trade too much in a TFSA, especially if you are regularly withdrawing those gains for the purpose of income, then the CRA will say you need to pay capital gains on it. You’ll likely need to structure it as a trading business.

FYI I have not taken the “Trading & Technical Analysis” academy course yet. I’m a software developer so have been focused on the blockchain developer courses and DeFi.

Oh and…

#15

HAHA I’m from Ontario, so it’s Canadian (and Busch) :facepunch:! Pilsner is not the same here as out West.

And thanks @mayjer We all benefit from the advice there. If/when this course opens up avenues into crypto universe, a trading business seems like a natural (plausible) way to be set up. I see the tool of somewhat legitimizing crypto holdings on a portfolio in the CRA eyes as well as squeezing the most out of the uniquely Canadian TFSA potential!

Side note… I’ve got BTC mining dreams that involve a secluded, private waterfall and a paddlewheel (well turbine)… Any comment? Am I nuts?!

Ahh Busch… You can drink a thousand of 'em - and you can drink 'em warm…

#16

My intention is to use the TFSA for exactly what it is stated as, Tax Free. If CRA were to interpret ‘tax free’ as a capital gain then:

I guess I am a Libertarian subject only to the Creator of the universe!

#17

Ivan always recommends this site when people ask about mining:
https://whattomine.com/

Keep in mind that BTC mining is becoming more and more the game of large enterprises. The network hash power and difficulty is so high you need ASIC miners and access to large quantities of low cost electricity to be profitable. Other coins with ASIC resistant PoW consensus may be more profitable for you.