Tax payable on an advantage

If the holder of a TFSA or a person dealing at non-arm's length with the holder was provided with an advantage in relation to their TFSA during the year, a tax is payable which is:

  • in the case of a benefit, the fair market value (FMV) of the benefit
  • in the case of a loan or a debt, the amount of the loan or debt

The tax payable on an advantage extended in relation to a TFSA may apply to the holder of the TFSA or the TFSA issuer, depending on the specifics of each situation.

If the advantage is considered to be extended by the TFSA issuer, or by a person not dealing at arm's length with the issuer, the issuer is liable to pay the tax, rather than the holder.

An individual subject to this tax must fill out and send Form RC243, Tax-Free Savings Account (TFSA) Return.

Note

If, in the same calendar year, an individual has to pay tax on an advantage related to the same contributions that also results in them being liable to pay tax on excess TFSA contributions or tax on non-resident contributions, the tax payable on the advantage for the year will be reduced by the amount of these two taxes.

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