The federal government says that it may not impose penalties on TFSA contributors who honestly misunderstood the new vehicle’s rules.

Keith Ashfield, minister of national revenue, and Jim Flaherty, minister of finance, issued a statement Friday indicating that the government “recognizes that there was some genuine confusion about the rules for the TFSA in the first year”. And, 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.”


The government says that it intends to review each situation on a case-by-case basis and, where appropriate, waive taxes on excess contributions for this year.

For example, it suggests that 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.

Additionally, it is extending the deadline for taxpayers to respond to requests for information about their TFSAs.

The government reports that about 70,000 taxpayers have recently received a letter from the Canada Revenue Agency asking to provide further information about their accounts by June 30. It is extending this deadline to August 3, to give people more time to provide the requested information about their accounts.

IE