Canadian money The Canada Revenue Agency is looking to collect more than $75 million in taxes from Canadians who may be running afoul of the tax-free savings account rules.
The CRA said that while most Canadians are using their tax-free savings accounts, or TFSAs, properly, “there are a small number of wealthy individuals using these accounts in aggressive tax planning.”
“These individuals are putting millions of dollars into TFSAs by manipulating valuations and/or using non-arms length transactions to work around contribution limits,” the CRA said in a statement Tuesday.
The CRA said it has been conducting TFSA audits since 2011 and has selected less than one per cent cent of accounts for review.
The audits have identified $75 million owed due to inappropriate use of TFSAs. The CRA said about 20 per cent of that amount came from audits which looked at TFSAs that were considered to be “carrying on a business,” such as day-trading stocks and other securities.
The rest of the money is owed due to “prohibited investments, swap transactions, and valuation concerns,” among other issues, the CRA said.
“The number is high. We know that there are people doing things with TFSAs that they maybe shouldn’t,” said Jamie Golombek, the managing director of tax and estate planning at the CIBC Wealth Strategies Group.
Golombek told BNN that a lot of people also may be inadvertently over-contributing to their TFSAs. But he said the average TFSA holder is not actively involved in day trading and shouldn’t have to worry about the latest CRA warning.“If there’s too much activity in a TFSA, there is a risk for some people, particularly I would say professionals, traders,” he said.The CRA said that although over-contributions were not the focus of its audits, they “may have been identified as part of the non-compliance in the audit and would therefore […]
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