TFSA account type in Quicken

carolmac

Hi, Canadian user here ... I have just noticed that when I set up a TFSA investment account in Quicken, the "account type" (when I try to edit account details) defaults to "IRA". I tried to change this, but the drop-down list only gives me other IRA options (I do not know what these are and don't care because they're not relevant to me).

The account also shows as "tax-deferred" (not tax-free). The options are "tax-deferred: Y or N", and there's no option for tax-free (and I can't change this field anyway, since it's greyed out).

I thought maybe I'd made a mistake in setting up the account, so I tested by creating a new TFSA account. Nope, same result.

I only noticed the problem when looking at an investment income report, because some investment income shows up as "tax free" and some does not. When I check the income showing up as "tax free", it's linked to securities that (when I look at security details) are marked as "tax free". So it's not driven by the account type.

This is a problem for accurate information, since I hold some securities in both registered and non-registered accounts - if I mark the securities as taxable, then reports show way too much taxable income because the TFSA account doesn't appear to matter. If I mark securities as tax-free, then reports are showing too little taxable income. Either way, I'm never going to have the right information to estimate what tax I'm going to owe for the year in investment income, without downloading info and manually sorting it into the right place - which defeats the purpose of using software that should be able to do this correctly for me.

I hope this makes sense. Does anyone have a fix for the TFSA issue? Is there a way to show the account type correctly (as TFSA, not IRA)? And a way to correctly delineate between taxable and tax-free investment income in reporting (without having to create two versions of each stock, one to use in taxable accounts and one in tax-free)?

carolmac

Ok, I think I can get the information I need from the Tax Summary report, as it looks like it's correctly classifying TFSA investment income as tax-free.

Still bugs me though that other reports are inaccurate, and that I don't have the option of choosing the actual account type (a TFSA is not just a version of an IRA).

Arctic Hare

As with so many of the features of Quicken Canadian, what you get is not a true Canadian version, but the US version with Canadian lipstick. The IRA account type is from the US version - modelled after the USA IRA investment type. Quicken has used the USA IRA account type because of the "tax deferred" nature. It is, as you suggest @carolmac, anything but a perfect model of the TFSA. 

One other approach would be, where you hold the same security in taxable and non-taxable vehicles, you could create two versions of the same security: you could include "[taxable]" in the name of one and "[taxfree]" in the name of the other, for example. Then you would set the tax applicability accordingly. Not pretty, but I believe it would achieve what you are trying to achieve.