Confusion Reigns Over TFSA Rules

Contribution rules for a popular tax shelter continue to perplex ordinary Canadians, despite a year-long information blitz by the Canada Revenue Agency and the big banks.

The agency sent out almost 103,000 letters to holders of tax-free savings accounts this month warning they likely over-contributed in 2010 — and now must pay additional tax.

That number is up sharply from the 72,000 letters issued on June 1 last year for the same excess contribution problem in 2009.

The tax shelter “is still a relatively new program and, naturally, some misunderstandings might still exist regarding the rules and may have led to inadvertent over-contributions,” said spokesman Noel Carisse.  Read More…

This article has 11 Comments

  1. August K.

    I can’t say i am surprised. I was in the same boat for the longest time even after i was made aware of the rules.

  2. Luther G.

    I’m an American (dual citizenship) and i wish we had someting like a TFSA in our country. My parents are Canadian and so that is why i know about it. You guys are spoiled up there. lol

  3. Drayden

    I almost made the mistake a few weeks back in contributing after i had withdrawn. Yikes! Thank goodness my bank warned me that i had already taken out and had no more room this year for any more deposits.

  4. Leo

    Wow so the Conservatives are planning to up the limit from $5K to $10K? That would be swell! I do wonder what kind of whole it will do to our country’s revenue.

  5. Kristopher W.

    This is quite normal and expected. There are always going to be people still not aware. Nothing that CRA can do about this no matter how much they try. It can be 20 years from now and there will be some who dont know.

  6. Nathen Levake

    You can count me as one of the unlucky ones 🙁 I just found out through this article there was a limit. Oops!

  7. Fred D

    I was dinged this year for over-contribution and i can tell you it sucks. I was so steamed i was thinking of not paying but realized that was not going to be a good idea.

  8. Jason

    I kind of feel bad for all those people (100,000+). They are going to be shocked to find this year they owe all of that interest and penalty back to the government. Not a good start for a calendar year.

  9. Shay S

    The problem is CRA does not make it very clear and upfront. I had to talk to their reps on several occassions to get a consistent answer.

  10. Landan

    Umm, well Canada Revenue Agency makes it quite clear and has been as such for the last 3 years and so I see how there can be no excuse for over contribution. Blame yourself.

  11. Jamil G.

    People actually over contribute? What they think this is free money with unlimited amounts like a Camen Islands thing?

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