Investment Accounts

Investment Account Types

Tips for Investment Accounts

Capital Builder Calculator Investment Account Application Taxes and Mutual Funds

An investment account offers the ultimate in flexibility. Unlike registered accounts, there are no restrictions regarding how much to invest, when to redeem or how to invest. All income generated in an investment account is taxable in the year received.

Investment accounts are ideal for investors who wish to save for short-term goals, such as a car, a wedding, home improvements, or for longer-term goals, such as building a retirement nest egg.

While securities should never be chosen solely on tax considerations, it is important to consider the impact of taxes on your return on investment.

Investment Account Types

Individual: an individual account may be opened by investors who have reached the age of majority (either 18 or 19, depending on the province you reside in).

Joint accounts can be opened using one of the following registration options:

Joint Tenants with Right of Survivorship e.g. John Smith and/or Mary Smith Most investors prefer the flexibility of this type of registration. Both parties can authorize transactions on the account, and if either party dies, the assets automatically go to the other party. It is not necessary to probate the assets.
Joint Tenant in Common e.g. John and Mary Smith All parties must authorize transactions with a signed letter or fax. Very few people use this type of registration because of its restrictive nature. In the event of death, the assets must go through probate.

Corporate: requires a copy of the resolution, which states who has trading authority on the account. We also require a copy of the Articles of Incorporation.

Informal Trusts: since a minor cannot enter into a binding financial contract, an informal account is opened by an adult in order to invest funds on a child's behalf. The adult will sign the application on the child's behalf. For alternatives see RESPs.

The application must state the name of the trustee as well as the beneficiary e.g. Mary Smith in trust for Baby Smith. The adult's personal information should be used in Section 1 of the application (The minor's SIN may be used instead of the adult's SIN if available.)

When the child reaches the age of majority, a letter must be sent to authorize a change of registration on the account. Both parties must sign the letter and the minor must complete a new application form.

Formal Trusts: a copy of formal trust documents are required to open a legal family trust.

Tips for Investment Accounts To top

Earn a Higher Rate of Interest on Short Term Savings

If you have a savings account that is used to hold emergency cash, or cash for other short-term goals (e.g. car down payment, vacation), consider holding Altamira CashPerformer in your investment account. You will likely earn a higher rate of interest than a traditional deposit account, and the money can be transferred back to your chequing account within 2 to 5 business days using our MoneyLine service.

Hold Tax Disadvantaged Investments in an RRSP or RRIF and Growth Funds in an Investment Account

If you have a long time horizon and are holding funds within an RRSP as well as an investment account, consider using the RRSP to hold fixed income funds. This way, more highly taxed interest income can accumulate tax-free. Also, consider holding growth funds in your investment account to take advantage of the more favourable tax treatment of capital gains and dividends.

Use a Joint Account For Estate Planning

Setting up a joint account using the AND/OR registration can help with estate planning. If either party dies, the assets automatically go to the other party. It is not necessary to probate the assets. With the AND registration, the assets must go through probate in the event of death.

Use Capital Losses to Reduce Taxes

Before year-end, review your portfolio for realized capital gains or losses and consult an Investment Specialist regarding any potential capital gains distributions. If capital gains have been realized, review your portfolio for unrealized losses. Consider selling any funds that have unrealized losses before year-end, to offset any realized capital gains. Remember that you must wait at least 30 days before buying back the same fund or CCRA will disallow the loss.

Consult an Investment Specialist Before Making Purchases Near Year-End

Funds may pay a significant capital gains distributions at or near year-end. Since these distributions are fully taxable, consider waiting until after the distribution is paid before you buy a specific fund. Contact an Investment Specialist if you plan to invest in a fund near year-end. While the actual amount of the distribution cannot be determined ahead of time, we can sometimes provide an estimate.