Canada Revenue Agency must be flexible with TFSA holders

OTTAWA – New Democrats are calling on the Canada Revenue Agency to be as flexible as possible with the 70,000 TFSA holders who will be penalized for unknowingly violating the rules surrounding this popular financial planning tool. NDP National Revenue Critic Carol Hughes (Algoma—Manitoulin—Kapuskasing) made the comments today at a press conference.

Many TFSA holders were surprised to learn that they must pay tax on excess contributions. Yet the majority of these account holders acted in good faith, following the information provided by the government and financial institutions.

“Canada Revenue Agency provided incorrect or incomplete information to TFSA holders so it must in turn be as flexible as possible to correct this error,” said Hughes.

NDP MPs across Canada have heard complaints from account holders who have learned they will be penalized.

“The government admits its error but is placing the burden of proof on TFSA holders,” said Hughes. “The government must step up to the plate. The onus should be on the government to prove that the taxpayers acted in bad faith rather than penalize all the account holders affected.

“The government wants to put everyone in the same boat,” stated Hughes. “We are calling on the Canada Revenue Agency to show flexibility and devise solutions to correct the error rather than taking an essentially punitive approach. Extending the grace period for TFSA holders is not enough, especially over the summer holidays. The government must find other solutions if account holders do not meet the tight deadlines set by the Agency,” she concluded.

The NDP will closely monitor the CRA’s actions in this regard and has not ruled out the possibility of the House of Commons Finance Committee examining TFSAs in greater detail, especially the way the rules were established, and what information was provided to taxpayers.