# Using Your Mom, Dads, or Brothers TFSA account



## razz (Oct 21, 2014)

Hi Folks,

I'm wondering if my family is not using their TFSA accounts. Could I have them open one up in their name and I'll give them the money to fund it. I'll then be able to use the account for investment purposes. And when I'm done with it, they just withdrawal the money from their account and hand it back to me. For 2016 the max accumulated contribution since the program started it $46.5K. Would handing such a check to family members tax exempt? It's it legal, and does CRA have any issue with such a practice?


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## OnlyMyOpinion (Sep 1, 2013)

You can certainly gift them money for their tsfa but the account & money remain theirs - not yours. What you are proposing is fraud for which you will be heavily fined and possibly imprisoned.


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## twa2w (Mar 5, 2016)

razz said:


> Hi Folks,
> 
> I'm wondering if my family is not using their TFSA accounts. Could I have them open one up in their name and I'll give them the money to fund it. I'll then be able to use the account for investment purposes. And when I'm done with it, they just withdrawal the money from their account and hand it back to me. For 2016 the max accumulated contribution since the program started it $46.5K. Would handing such a check to family members tax exempt? It's it legal, and does CRA have any issue with such a practice?


Not sure if I agree entirely with OMO.
You can certainly gift your parents and brother money.
If they happen to put it into their respective tfsa's, they can certainly do that. If they grant you trading authority on the tfsa's that is also fine.

What you are hoping is at some future date they decide to cash in their tfsa's and gift you back the money. You cannot have any agreement or expectation in place for repayment ;-).
Once you gift them the money it is theirs. Period.

Ok two issues I see.
If you have a fight with your brother or parents, they are under no obligation to gift you back.
If they die, the money forms part of their estate and it may not go back to you. Yes they can name you beneficiary but they can change the beneficiary at any time.
If they get sued or go through a divorce or separation, these funds are vulnerable. 

No fraud involved AFAIK. So far. 

However, if CRA digs and finds expectations or any agreement of payback then I suspect potentially they may go after you under their GAAR and the penalties can be severe.


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## carverman (Nov 8, 2010)

Interesting. The way I see it; When an individual opens a TFSA, you are opening a tax free savings account in YOUR name. Depending on how much contribution room you are allowed under CRA rules, you can contribute *up to YOUR maximum allowed* before any penalty assigned by CRA (due to over contrbution)in a given 12 month period. 

While CRA may not care about how you come up with the money to put into your TFSA which grows tax free,
any withdrawals in a given 12 month period also means , that unless you have sufficient contribution room left, you or the person you have 'gifted" the money to, *has to be very careful, keep accurate records of contributions and withdrawals.*

It's hard enough to do that with your own TFSA, but using other peoples TFSA accounts as a way to invest more than you are allowed to under the current rules, will *more than likely run you afoul with CRA* with HEAVY PENATIES at some point due to over contribution.

ONCE that occurs, it's like being caught cheating on your taxes..once discovered, CRA flags your SIN and they can audit your tax assessment and TFSA at anytime. 
While it's not exactly deliberate fraud ..IF too many family members get involved in a scheme where they withdraw, and then "re-contribute" again, keeping track of the contribution room is not always easy or accurate, as the banks may not update CRA's records until a few months into the next year.

Any over contribution carries a 1% penalty on the over contribution until it is straightened out with the banks and CRA.



> If, at any time in a month, you have an excess TFSA amount, you are liable to a tax of 1% on your highest excess TFSA amount in that month.


http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/txtn/txtn-eng.html

This is CRAs guide on what can happen because of overcontribution to an individual's account:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/txtn/xcssxmpl-eng.html#xmpl3


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## carverman (Nov 8, 2010)

twa2w said:


> You can certainly gift your parents and brother money.
> If they happen to put it into their respective tfsa's, they can certainly do that. If they grant you trading authority on the tfsa's that is also fine.


As far as CRA is concerned, the TFSA belongs to the individual that opened it and the TFSA is tracked by CRA with the owners SIN for any remaining contribution room and any overpayment in a given 12 month period, once that is
reported by the FI as required by law. 



> What you are hoping is at some future date they decide to cash in their tfsa's and gift you back the money. You cannot have any agreement or expectation in place for repayment ;-).
> Once you gift them the money it is theirs. Period.


Yup. as soon as you allow a family member to invest your money (as a gift and without any legal paperwork stating that it is NOT a gift , but to be treated as an "investment" on your behalf, to be repaid to you at a later date...you could get into some trouble either with CRA at some point later on, or lose control of "your" money which is no longer "your money" and had to be treated as a gift. 



> Ok two issues I see.
> If you have a fight with your brother or parents, they are under no obligation to gift you back.
> If they die, the money forms part of their estate and it may not go back to you. Yes they can name you beneficiary but they can change the beneficiary at any time.
> If they get sued or go through a divorce or separation, these funds are vulnerable.
> ...


Very sound advice TWA2w.



> However, if CRA digs and finds expectations or any agreement of payback then I suspect potentially they may go after you under their GAAR and the penalties can be severe.


This scheme is "small potatoes" for the GAAR review committee..they certainly have 'bigger fish to fry' in the
tax avoidance criteria and rules. The main issue here is that the money contributed to the TFSA is after tax
money....unless there is a tax fraud involved to avoid paying taxes by gifting to family members...even then
it would be hard to prove that it wasn't a gift if it is from son to mother or vice versa.


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## Nerd Investor (Nov 3, 2015)

As noted above, there is no issue (or tax consequences) with you gifting them cash to put in their TFSAs as long as you realize the money is legally theirs and they have no obligation to return it to you in the future (although they could certainly choose to). I'm not seeing anything fraudulent in this, it's actually not even particularly aggressive compared to many of the tax strategies floating around out there.


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## OnlyMyOpinion (Sep 1, 2013)

> I'm wondering if my family is not using their TFSA accounts. Could I have them open one up in their name and I'll give them the money to fund it. I'll then be able to use the account for investment purposes. And when I'm done with it, they just withdrawal the money from their account and hand it back to me. For 2016 the max accumulated contribution since the program started it $46.5K. Would handing such a check to family members tax exempt? It's it legal, and does CRA have any issue with such a practice?


Nothing wrong with the OP's question, all of us should legitimately minimize our taxes. My point was that the scenario described - using other people's TSFA account as yours to shelter your investment income is illegal. 
IMO, a 'wink-wink', here's a gift, oh here's a larger gift back to you a few years later speaks of a corrupt individual (or family?!#?). The kind of Canadian(s) that deserve large fines and jail time.
Canada depends on a self-assessment income tax system. Abusers of the system damage the integrity of the system and of honest taxpayers. 
"_Under the Income Tax Act and the Excise Tax Act, individuals convicted of tax evasion can face fines ranging from 50 percent to 200 percent of the taxes evaded and up to five years in jail. In some cases, an individual may be charged with fraud under section 380 of the Criminal Code, which, if convicted, carries a jail term of up to 14 years in jail."_ 
I am certainly not aware of all the audit flags and processes the CRA uses to identify tax fraud but I assume they are sophisticated. There also exists the _Informant Leads Program_ to encourage anyone suspecting tax fraud to report it. So even if I or my whole family (really?) lacked the morals to care about breaking the law, I would hope I'd decide it is not worth the risk.


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## carverman (Nov 8, 2010)

OnlyMyOpinion said:


> Nothing wrong with the OP's question, all of us should legitimately minimize our taxes. My point was that the scenario described - using other people's TSFA account as yours to shelter your investment income is illegal.


Well maybe CRA frowns upon this kind of transaction between FAMILY members, BUT if I didn't have any more contribution room left in my TFSA for 2016, (and I don't because of withdrawals during the year), I could certainly ask my brother (whom I trust as a family member) if he has (say..$10K of contribution room left in his TFSA), then write him a check for $10k, which he then cashes, puts it in his checking acct and then moves it to his TFSA for some better return than 0.8% which most banks are paying next year.

I have declared all my pretax income on the money that I ask my brother to "invest" for me, and then make arrangements to have him withdraw at a later date, when I need it for my personal care should be all legal.
This is MY after tax money after all, and I can spend it any way I choose ..
or have my brother squirrel it away in HIS TFSA if I have no contribution room left for the year and he does.


> IMO, a 'wink-wink', here's a gift, oh here's a larger gift back to you a few years later speaks of a corrupt individual (or family?!#?). The kind of Canadian(s) that deserve large fines and jail time.


Only Your Opinon. 

Nothing illegal about a family member helping another family member, PROVIDED the money going into a TFSA was declared as pretax income in the person's hands that is giving it to a family member to "invest" on his/her behalf. 
It's only the allowable contribution limit and keeping track of the remainder to avoid the 1% over contribution penalty.



> Canada depends on a self-assessment income tax system. Abusers of the system damage the integrity of the system and of honest taxpayers.
> "_Under the Income Tax Act and the Excise Tax Act, individuals convicted of tax evasion can face fines ranging from 50 percent to 200 percent of the taxes evaded and up to five years in jail. In some cases, an individual may be charged with fraud under section 380 of the Criminal Code, which, if convicted, carries a jail term of up to 14 years in jail."_


I think you are getting confused with outright tax fraud and the TFSA thing which can be handled through family members. It really isn't any different than Mom giving the son/daughter a gift of money as a down payment on their first home. 

The mother would have had to pay any PRE TAX on the money saved to put in her TFSA. 
Then that money grows tax free, and as long as the mother doesn't exceed her maximum allowable yearly contribution 
there should be no problem with CRA.
The son or daughter could receive a gift from her to help them with the purchase of their home without paying income
tax on the money again. Taxes were already paid by the mother and gifts (AFAIK) are not taxable..at least not yet.



> I am certainly not aware of all the audit flags and processes the CRA uses to identify tax fraud but I assume they are sophisticated. There also exists the _Informant Leads Program_ to encourage anyone suspecting tax fraud to report it. So even if I or my whole family (really?) lacked the morals to care about breaking the law, I would hope I'd decide it is not worth the risk.


There is no tax fraud. If taxes have been paid on the initial contribution into the mother's TFSA, by the son, and next year,he want's his Mom to pull out $10K + interest earned in the Mom's TFSA for say a down payment on his house..as long as taxes were intially declared and paid by the mother, there is nothing illegal about it..Mom (or Dad) can pull out $10k or more to give to their son as a gift.


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## Nerd Investor (Nov 3, 2015)

OnlyMyOpinion said:


> Nothing wrong with the OP's question, all of us should legitimately minimize our taxes. My point was that the scenario described - using other people's TSFA account as yours to shelter your investment income is illegal.
> IMO, a 'wink-wink', here's a gift, oh here's a larger gift back to you a few years later speaks of a corrupt individual (or family?!#?). The kind of Canadian(s) that deserve large fines and jail time.
> Canada depends on a self-assessment income tax system. Abusers of the system damage the integrity of the system and of honest taxpayers.
> "_Under the Income Tax Act and the Excise Tax Act, individuals convicted of tax evasion can face fines ranging from 50 percent to 200 percent of the taxes evaded and up to five years in jail. In some cases, an individual may be charged with fraud under section 380 of the Criminal Code, which, if convicted, carries a jail term of up to 14 years in jail."_
> I am certainly not aware of all the audit flags and processes the CRA uses to identify tax fraud but I assume they are sophisticated. There also exists the _Informant Leads Program_ to encourage anyone suspecting tax fraud to report it. So even if I or my whole family (really?) lacked the morals to care about breaking the law, I would hope I'd decide it is not worth the risk.


No one would ever go to jail for this. I understand what you're saying, and I'm all about people paying their fair share, but there are several legitimate planning options out there which are more complex and higher impact than this. There is no reason not to use the rules in our existing tax legislation to try to minimize the total tax you pay as a family. 

Now, take a scenario where someone recruits low income arms-length individuals with unused TFSA room and tries to arrange to use their TFSAs with an agreement to be paid back less a fee for their trouble? That's the type of convoluted transaction I could see them going after someone for. Hmmm... that's kind of an evil yet brilliant idea.


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## carverman (Nov 8, 2010)

Nerd Investor said:


> No one would ever go to jail for this. I understand what you're saying, and I'm all about people paying their fair share, but there are several legitimate planning options out there which are more complex and higher impact than this. There is no reason not to use the rules in our existing tax legislation to try to minimize the total tax you pay as a family.
> 
> Now, take a scenario where someone recruits low income arms-length individuals with unused TFSA room and tries to arrange to use their TFSAs with an agreement to be paid back less a fee for their trouble? That's the type of convoluted transaction I could see them going after someone for. Hmmm... that's kind of an evil yet brilliant idea.


Agreed..that could considered tax avoidance..the GAAR could go after them, provided they have the resources to do so.

All I was trying to say is I don't see this as a problem between FAMILY members. 

Even if "sonny" happened to win a lottery (no income taxes payable in Canada on lottery winning PRINCIPLE AMOUNT so far)... and Mom had 7 yrs of contribution room available in her TFSA (tfsa was first introduced in 2009... TFSA contributions starting at $5K, then increased to $5.5K and one year at $10k, when the Harper gov't passed it before the election. Trudeau has reduced it back again to $5.5K max per year + any used contribution room available from previous years since 2009.

So Mom could now have (roughly) $10K(2015) plus ($5K x 3yrs =$15K); plus ($5.5K x 3 years= $16.5K) 
added up together= $46.5 k of TFSA contribution room available to her..provided she has NOT contributed anything already so far.


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## humble_pie (Jun 7, 2009)

Nerd Investor said:


> Now, take a scenario where someone recruits low income arms-length individuals with unused TFSA room and tries to arrange to use their TFSAs with an agreement to be paid back less a fee for their trouble? That's the type of convoluted transaction I could see them going after someone for. Hmmm... that's kind of an evil yet brilliant idea.




this idea was discussed as a legitimate social benefit plan for disadvantaged folks - who would contribute their unused TFSA room - with some concomitant tax advantages for the well-off - who would contribute the TFSA dollars. I believe the discussion was before Nerd Investor's time here, though.

i for one believed such a plan actually could work. Conceptually, as far as the idea got, the disadvantaged partner would receive half or even slightly more than half the income, but it would have to be spend on approved items such as tuition, job training, day care while parent worked, etc.

the passive partner - the party who had contributed the $$ - would receive the other half of the income with no strings attached. Keep in mind that this passive partner would be presumed to already have his own & his spouse's TFSA fully maxed out, so the social sharing TFSA would be an extra one which otherwise he would not be allowed to have. 

the income recipient & the capital donor would be strangers to each other, so it was obvious that a financial institution would have to build, offer & manage the product. 

as i write this, it occurs to me that withdrawals could not occur, since these would disturb the income stream upon which the disadvantaged income beneficiary would be depending. Perhaps this problem could be resolved by limiting each shared social benefit TFSA to a renewable 5-year plan, or even a 2-year plan.

i still think it's a fine idea each:

.


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## OnlyMyOpinion (Sep 1, 2013)

Sorry, maybe I'm missing something in the translation but I continue to hold that you cannot use someone else's Tax Free Savings Account as a 'shell' to earn tax-free dollars to your benefit.

If my two sisters and brother are all spendthrifts who are not utilizing their TSFA's, and we agree to put my capital into their accounts to shelter it, and the tax free earnings are to come back to me - we have committed tax evasion. I believe the term used is an 'implied trust'. 

If the capital is gifted and I have no enforceable right to the money or earnings then we would be ok, but I would have to be crazy to give each of them $46.5K which they, their spouse, boyfriend or creditors might find other uses for. 

But I admit that I'm not a lawyer, so feel free to roll the dice.


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## twa2w (Mar 5, 2016)

Yep, perfectly legal but you would be crazy to do it.


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## OhGreatGuru (May 24, 2009)

It would be fraud. Every adult individual is entitled to a certain limit of tax-free investment room. By pursuing such a scheme you are effectively exceeding those limits. Admittedly it would be hard for CRA to track. But if many people did this it would hasten the scrapping of TFSA's.

If you are expecting to get this money back, with earnings, it is, by definition, not a gift.

If they can't get you on the above 2 points, they will get you on receiving an advantage as "any other person" not at arm's length from the controlling individual of the TFSA:

_Tax payable in respect of *advantage*
•	207.05*(1)*A tax is payable under this Part for a calendar year if, in the year, an advantage in relation to a registered plan is extended to, or is received or receivable by, the controlling individual of the registered plan, a trust governed by the registered plan, or any other person who does not deal at arm’s length with the controlling individual._

There is a very lengthy definition in this section dealing with the meaning of an _advantage_. 

Actually, as I read the Act, it may be the owners of the TFSA's (your relatives) who may be liable for the taxes. They will not thank you for roping them into your conspiracy.


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## Eclectic12 (Oct 20, 2010)

carverman said:


> ... It's hard enough to do that with your own TFSA, but using other peoples TFSA accounts as a way to invest more than you are allowed to under the current rules, will *more than likely run you afoul with CRA* with HEAVY PENATIES at some point due to over contribution.


Odd ... people for a long time have kept an accurate chequing account balance, using paper and pencil - what's so difficult in this age of spreadsheets to do similar with one's TFSA contribution limit?

I grant you - giving money to someone else puts them at risk if they hate simple math but where one is going to benefit - surely one can balance two TFSA contribution limits, including tracking what the $$$ invested grew by.


The bigger reasons I wouldn't want to do it is losses may upset the TFSA account holder as it destroys *their* contribution room, not yours. Secondly, where one is a good investor, with sparkling growth - they can decide to keep it as the TFSA is registered in their name.

There is also the reason that one knows one's own TFSA contributions/withdrawals accurately - unless the books are opened on a regular basis, so to speak, one may not be kept up to date by the surrogate.




carverman said:


> ... ONCE that occurs, it's like being caught cheating on your taxes..once discovered, CRA flags your SIN and they can audit your tax assessment and TFSA at anytime.


Or it can be a double whammy as there's two TFSAs (the OP's and the surrogate's) that can be assessed penalties.

If only the surrogate's is in trouble, they may be upset about the mess. People in a will do strange things over money.




carverman said:


> Any over contribution carries a 1% penalty on the over contribution until it is straightened out with the banks and CRA.


As I understand it, unless the bank made a mistake that one is hassling them about - they don't care. CRA will simply charge one of the several levels of penalties.

Those who missed the "next year" for withdrawals becoming contribution room in 2009 were reporting the first letter from CRA detailing many months of 1% penalty arriving as much as fourteen months after the over contribution happened.


The other potential issue is that should CRA become aware of the "gift that is not a gift", they can decide it is a deliberate action. Under the updated rules, instead of 1% a month, 100% of gains can be assessed as the penalty.




carverman said:


> Well maybe CRA frowns upon this kind of transaction between FAMILY members ...


I will have to find it again but another thread where the person with the empty TFSA was one's wife, the CRA interpretation bulletin said that if the wife withdrew the $$$ then made income with it - that was a no no. Where the wife *spent* the withdrawn $$$, it was okay.

It seems there are some situations where CRA (or probably more accurately, the tax law) allows this situation and others where it does not.


Cheers


Cheers


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## carverman (Nov 8, 2010)

Eclectic12 said:


> Odd ... people for a long time have kept an accurate chequing account balance, using paper and pencil - what's so difficult in this age of spreadsheets to do similar with one's TFSA contribution limit?


Nothing difficult about it. I keep TFSA limit for the current year, my TFSA contributions per month, and my TFSA withdrawals per month on my monthly budget spread sheet which I also correlate with my online bank statements. 

Once a year in Feb or March, I check with my CRA account to see how much contribution room I have for the year and check that against my own records and my banks TFSA account entries.(contributions and withdrawals).
But how many people out there would do that? 



> I grant you - giving money to someone else puts them at risk if they hate simple math but where one is going to benefit - surely one can balance two TFSA contribution limits, including tracking what the $$$ invested grew by.


Well it is simple math, but this is where it can be "sticky: If "junior" manages his contribution limits, and Mom allows him to use her unused contribution room in her TFSA account, Mom also has to keep track on what "junior" has given to her to contribute in her account.


> as I understand it, unless the bank made a mistake that one is hassling them about - they don't care. CRA will simply charge one of the several levels of penalties.
> Those who missed the "next year" for withdrawals, or let junior keep track of it for both of them.


IF it is just a case of a lump sum of ($46.5K) for the year, and no other contributions or withdrawals, it should be easy to keep track , 
but if there are monthly contributions by junior to give to Mom to put into her account and during the year some withdrawals are also made by Mom (to give to junior), it can get a bit confusing on what the remaining contribution limit is for the remaining year. 
Hence possible over contributions for a given year and CRA assessing the 1% PER MONTH on the excess. 



> The bigger reasons I wouldn't want to do it is losses may upset the TFSA account holder as it destroys *their* contribution room, not yours. Secondly, where one is a good investor, with sparkling growth - they can decide to keep it as the TFSA is registered in their name.


No argument there.



> There is also the reason that one knows one's own TFSA contributions/withdrawals accurately - unless the books are opened on a regular basis, so to speak, one may not be kept up to date by the surrogate.


This is the main problem as I was trying to explain above..it's very easy to lose track, especially if there are monthly contributions/withdrawals from the SAME TFSA plan.



> Or it can be a double whammy as there's two TFSAs (the OP's and the surrogate's) that can be assessed penalties.
> If only the surrogate's is in trouble, they may be upset about the mess. People in a will do strange things over money.


Then it becomes evident that favour done for a family member is no longer a favour...and.... who is responsible to pay the CRA penalty?



> The other potential issue is that should CRA become aware of the "gift that is not a gift", they can decide it is a deliberate action. Under the updated rules, instead of 1% a month, 100% of gains can be assessed as the penalty.


If the $46.5Kthat "junior" decides to "invest" in Mom's TFSA is returns only the current 0.8% that most banks now pay on TFSA balances, it really isn't going to be that much of an issue. 
in 1 year it's only around $372 (simple interest) for $46,500. I seriously doubt that CRA is going to raise any eyebrows.

Even if junior advises Mom to invest that $46.5K in mutual funds within "Mom's" TFSA shell, even with better returns, and removal of the invested amount on a piece meal basis, it still shouldn't trigger any kind of audit. 

Mom can certainly withdraw those funds anytime for her own purposes, which could be family gifts or may be just
helping her son make ends meet financially.


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## Eclectic12 (Oct 20, 2010)

carverman said:


> Nothing difficult about it.
> 
> I keep TFSA limit for the current year, my TFSA contributions per month, and my TFSA withdrawals per month on my monthly budget spread sheet which I also correlate with my online bank statements ...


Then I am lost as to why in post # 4, it is described as "hard enough" while in post # 16 it is not.




carverman said:


> ... But how many people out there would do that?


Is your concern the difficulty or whether people are willing to do this tedious but simple task?




carverman said:


> ... this is where it can be "sticky: If "junior" manages his contribution limits, and Mom allows him to use her unused contribution room in her TFSA account, Mom also has to keep track on what "junior" has given to her to contribute in her account ...
> 
> Hence possible over contributions for a given year and CRA assessing the 1% PER MONTH on the excess ...


This IMO is more of a concern about the specific people ... we seem to have already agreed that the basics are relatively easy. More transactions plus tracking two account can be handled relatively easily as well, IMO. 




carverman said:


> ... it's very easy to lose track, especially if there are monthly contributions/withdrawals from the SAME TFSA plan ...


That IMO would be the easier part to track ... the same person has to make the contributions as well as withdrawals, where the TFSA owner was disciplined. If they are not, then it will be a problem ... or if the holder like so many others, does not understand the withdrawal rules.




carverman said:


> ... Then it becomes evident that favour done for a family member is no longer a favour...and.... who is responsible to pay the CRA penalty?


Presumably, CRA will only know about the TFSA holder who is doing the favour and that is the account the issue will occur in. CRA will charge the one doing the favour as the issue happened in *their* TFSA.

As a side agreement, the contributor may decide to pay the penalties or split them or not pay the penalties. Though if the contributor has $$ in the TFSA, it may be their $$ that are deducted to pay the penalty! It is a mixed account.

Of course - should our two people be TFSA clueless so that both the person doing the favour and the person asking for the favour have TFSA accounts that are over-contributed to, then both would have penalties assessed.




carverman said:


> ... If the $46.5Kthat "junior" decides to "invest" in Mom's TFSA is returns only the current 0.8% that most banks now pay on TFSA balances, it really isn't going to be that much of an issue. in 1 year it's only around $372 (simple interest) for $46,500. I seriously doubt that CRA is going to raise any eyebrows.


I was thinking more along the lines of an upset family member calling CRA to flag it.

In any case - the point is that CRA can charge more than the 1% per month is the most common penalty but not the only one available to CRA.


Cheers


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## carverman (Nov 8, 2010)

Eclectic12 said:


> Is your concern the difficulty or *whether people are willing to do this tedious but simple task*?


The latter.
Without having some TFSA acount tracking displine on contribution amount remaining for the year VS any amounts withdrawn in the interim for that year...the accounting could get skewed. 

IE: Junior gives Mom some money to invest in her TFSA, then later in the same year junior asks Mom to pull out some money out of her TFSA, which means that that money withdrawn counts against any remaining contribution room.

Lets say Mom contributes $46.5K in one lump sum into her TFSA , then withdraws $15k during the year twice...that $30k cannot be put back into Mom's TFSA *during the same calendar year* IF Mom doesn't have enough contribution room remaining for the balance of the year. She has already put in her maximum contribution (assume here $46.5K) If she puts in any more contributions, then an "over contribution penalty will apply against mom, not junior. 





> This IMO is more of a *concern about the specific people .*.. we seem to have already agreed that the basics are relatively easy. More transactions plus tracking two account can be handled relatively easily as well, IMO.


yes




> That IMO would be the easier part to track ... *the same person has to make the contributions as well as withdrawals, where the TFSA owner was disciplined. If they are not, then it will be a problem *... or if the holder like so many others, does not understand the withdrawal rules.


yes, Mom would have to be disciplined to have her accounting of contributions vs withdrawals not to run afoul of CRA and then have to pay penalties on over contributions. 



> Presumably, CRA will only know about the TFSA holder who is doing the favour and that is the account the issue will occur in. CRA will charge the one doing the favour as the issue happened in *their* TFSA.
> 
> As a side agreement, the contributor may decide to pay the penalties or split them or not pay the penalties. Though if the contributor has $$ in the TFSA, it may be their $$ that are deducted to pay the penalty! It is a mixed account.


This is basically a nutshell game. Whose money is it in the TFSA and who is ulitmately responsible for it. As mentioned, if there is a family squabble for some reason, the person with the "family money" invested in somebody elses TFSA may or may not be able to get it back.
it's a risk one has to take, if one wants to play this "game' with a TFSA.



> Of course - should our two people be TFSA clueless so that both the person doing the favour and the person asking for the favour have TFSA accounts that are over-contributed to, then both would have penalties assessed.
> I was thinking more along the lines of an upset family member calling CRA to flag it.
> In any case - the point is that CRA can charge more than the 1% per month is the most common penalty but not the only one available to CRA.


If junior is giving money to Mom to put into her TFSA to maximize tax free growth potential and there happens to be a fallout between
junior and Mom. CRA will only penalize Mom because they know her as being the legal owner of her TFSA. The scheme we are
discussing is a gray area scheme and the only way it could be favourable to junior is if he trusts Mom and Mom trusts him.


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