The Honourable Keith Ashfield, Minister of National Revenue, and the Honourable Jim Flaherty, Minister of Finance, issued the following statement today:
June 25, 2010—The Government of Canada would like to provide an update on the recent administrative concerns expressed by some Canadians regarding the Tax Free Savings Account (TFSA).
2009 was the first year of the program and the response to the TFSA has been overwhelmingly positive. Approximately 4.7 million Canadians have taken out a TFSA since the program was initiated.
Our government recognizes that there was some genuine confusion about the rules for the TFSA in the first year. We understand that it may take time for some Canadians to learn about the program and for some financial institutions to properly inform their clients about this product.
The Government of Canada confirms that for the 2009 filing year, the first year of the program, we have taken the decision to be as flexible as possible in cases where a genuine misunderstanding of the TFSA contribution rules occurred. Our intention is to review each situation on a case-by-case basis and, where appropriate, waive taxes on excess contributions for this year.
For instance, individuals who used their TFSA as a regular banking account in 2009, making deposits and withdrawals on a frequent basis, or who have transferred funds between TFSAs at different institutions, but whose net contributions never exceeded the 2009 limit of $5000, may not be required to pay the tax on excess contributions for this year.
Of the nearly 4.7 million Canadians who have a TFSA, less than 2% (70,000) have recently received a letter from the Canada Revenue Agency asking to provide further information about their accounts before June 30, 2010. We have decided to extend this deadline from June 30 to August 3, 2010, to allow ample time for Canadians to provide the necessary information about their accounts.
If you received a TFSA return letter:
- You are encouraged to respond to the CRA letter by providing additional information or explanations that you may have in respect of your over-contributions.
- If no additional information is provided or you do not contact the CRA, a notice of assessment will be issued. Only at that time should you use the request for taxpayer relief form or a formal notice of objection.
If you have questions about your TFSA, you are encouraged to contact the CRA at 1-800-959-8281 or visit our Web site at: www.cra-arc.gc.ca.
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