From: AlanBaggett@volcanomail.com   
      
   Canada Revenue Agency CRA looks to collect $75M over improperly used TFSAs :   
   CRA SOTW    
      
   CTVNews.ca Staff    
   Published Tuesday, July 4, 2017 8:14PM EDT    
   Last Updated Tuesday, July 4, 2017 8:16PM EDT    
      
   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 be reflected in the $75M.”   
      
   The annual TFSA contribution limit is currently set at $5,500 per year, with   
   up to $52,000 in cumulative contribution room. If TFSA deposits exceed an   
   account holder’s contribution room for the year, he or she may be subject to   
   a tax on the excess    
   amounts, the CRA said.   
      
   “Taxpayers are liable to a 1 per cent tax per month on your highest excess   
   TFSA amount in each month,” the CRA said. “This tax will accumulate until   
   the excess amount is withdrawn. If a taxpayer has excess contributions, they   
   should withdraw the    
   funds immediately to avoid any additional tax.”   
      
   In the 2015 tax year, approximately 20,000 Canadians, or only 0.16 per cent of   
   the 12.7 million TFSA holders, were issued notices as result of TFSA excess   
   contributions.   
      
   With files from BNN and CTV News’s Chief Financial Commentator Patricia   
   Lovett-Reid   
      
      
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