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Thread: "High Flying" TFSAs being audited

  1. #1
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    "High Flying" TFSAs being audited

    http://business.financialpost.com/20...-flying-tfsas/

    I'd be interested in knowing exactly what type of "aggressive tax planning" activities they are looking for.

    Mike Holman
    Money Smarts Blog Investing and Personal Finance

  2. #2
    Senior Member Toronto.gal's Avatar
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    I read it this morning, but it can't come as a total surprise.

    I definitely fall in the category below, so I have nothing to worry about.

    "Anyone who has a highly valued TFSA because of a smart purchase of a legitimate publicly traded stock that went through the roof doesn’t need to worry either, Golombek says. “However, if it involved various issuances of private shares or illiquid securities, that’s when they should seek professional tax advice.”
    "Colour in a picture is like enthusiasm in life."

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    Well I don't have $300,000 but I started my TFSA last august put in $20k and am up to $23k in just 7 months hope that's not a flag, I've just been lucky the market went up big time since I bought!

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    Instead of wasting millions on audits why doesn't CRA just build a cap into the TFSA rules. Sort of a "circuit breaker" clause.

    Eg. your account can grow tax free up say 15 or 20% per annum. Or maybe pegged to the S&P.

  5. #5
    Administrator CanadianCapitalist's Avatar
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    Quote Originally Posted by Four Pillars View Post
    http://business.financialpost.com/20...-flying-tfsas/

    I'd be interested in knowing exactly what type of "aggressive tax planning" activities they are looking for.
    In the first year of the TFSA apparently a number of people figured out that they can swap assets back and forth between TFSA and taxable accounts and increase the value of the TFSA. If you don't fall into this category there is nothing to worry here.
    Canadian Capitalist -- Helping you invest & prosper

  6. #6
    Senior Member the-royal-mail's Avatar
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    That would be so difficult to enforce though. It would require some sort of a computer system and staff established to put those monitors into place. And then they would be fielding calls from people who say "My stocks grew 25% this year, but only 5% the next year - do I have to pay tax?"

    I think they got it right. They basically identified the extreme examples through running a simple report, the 1% that most of us don't fall into. I don't think jamesbe has to worry.

    If nothing else, this should be a reminder to all of us that the gov't is watching. Be careful with the schemes and shell games.

  7. #7
    Senior Member Toronto.gal's Avatar
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    Quote Originally Posted by the-royal-mail View Post

    1. This should be a reminder to all of us that the gov't is watching.
    2. Be careful with the schemes and shell games.
    1. No problem, they can watch all they want; it's their job.
    2. It's that simple; don't break any laws and you'll be fine.
    "Colour in a picture is like enthusiasm in life."

  8. #8
    Senior Member humble_pie's Avatar
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    the high flyers did their flying in 2009. Their activities consisted mostly of tricky swapping based on the huge spreads between bids & asks for numerous securities in canadian markets. The cra stopped this practice within months; that is, they stopped it in 2009 by disallowing swapping into & out of tfsas.

    it appears that the cra is finally getting around to auditing the tfsa accounts in question.

    such accounts will present a distinct profile. They will be easy to find. Apparently the cra also wants to know if the trail leads to specific financial advisors.

    for the record, i've never seen any sign or evidence that any party in cmf forum ever posted even a hint of the swapping strategy that was used ...

  9. #9
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    Quote Originally Posted by CanadianCapitalist View Post
    In the first year of the TFSA apparently a number of people figured out that they can swap assets back and forth between TFSA and taxable accounts and increase the value of the TFSA. If you don't fall into this category there is nothing to worry here.
    But that practice was banned. I'm wondering if the audits are focusing on something similar or something that is completely different.
    Mike Holman
    Money Smarts Blog Investing and Personal Finance

  10. #10
    Senior Member MoneyGal's Avatar
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    No, it's what Humble said. CRA has a three-year window to audit. Three years is now up, so those accounts have all been flagged and they are getting their audit notices.

    Last edited by MoneyGal; 2012-03-09 at 10:09 AM.

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