This article has 54 comments

  1. I find it hard to get very excited about the fairly small penalties when I recently paid a penalty more than 2 orders or magnitude larger and face a further tax bill that is larger still. That said, the number of people caught by the TFSA rules seems very large. I think more needs to be done by financial institutions to protect their customers. It seems that some banks did a decent job of preventing their customers from making mistakes, but others didn’t.

    I got intrigued by this as I heard of people complaining of tax bills in excess of $600 but swore that they never had more than $5000 in their TFSAs. Unfortunately, I’ve only been able to confirm one such case where it seems that CRA miscalculated the tax amount. Even then this confirmation is based on the assertions of someone whose real identity I don’t know.

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  3. The Toronto Star seems to be suggesting that some people were facing penalties for direct transfers from TFSA A to TFSA B:

    “But he didn’t say transfers of TFSAs from one institution to another would be penalized – or transfers within a single institution – even though it’s happening to some taxpayers.”
    http://www.thestar.com/business/article/822383–roseman-taxpayers-hit-with-penalties-on-tax-free-savings-accounts

  4. I read the article in the star too. I almost mde the same error myself. I am very surprised that switching the type of account you hold your money in results in a penalty. You did not remove it you just changed the container it was in. Plus 1% interest per month for 12 months? Wow. I wish I could get $600.00 out of a gic in 2010!!!

    Great to complain but how does someone switch from a savings account to a mutual fund for example and avoid this penalty? Is there a way? If you did at the end of December for example then put it back january?

    I contributed $5000 each year can I now remove 2009’s contribution (or change the type of account it’s in) and put it back with no penalty. A post explaining these questions I think would help greatly.

  5. Where was the word “registered” in TFSA?

    60,000 letters printed to date, and maybe more to come soon.

    (link to Kieth M. comment)

    “It would appear that the CRA’s and the law’s definition of ‘contribution’ can be taken different ways…”

    Should have stated:
    “CRA will ignore withdrawals, and treat any subsequent deposits to be over the 5000 limit, even if the prior balance was zero, then you will pay 12% a year on this amount”

    So why are so many people in this position? Im in favor of the tripped taxpayer.

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  7. I agree that the rules were clear who read the fine print or are financial savvy. But people who have been affected are the most vulnerable sections like elderly or the low income group because they got second hand information which was often misleading. Charging $600 penalty when interest income was only $70 is at best unfair on CRA’s part. I hope CRA wasn’t counting on this windfall revenue.

  8. Windfall revenue? I for one have little sympathy for people in this position. Ignorance is not an argument to break a rule. All it would have taken was a visit to the CRA website, or a phone call to their office for someone to determine if a withdraw followed by a subsequent contribution was permitted. Buyer beware.

  9. Sampson you must be reffering to this one?

    http://www.cra-arc.gc.ca/nwsrm/rlss/…90102-eng.html

    just to oppose your comment, but in your favor there are too many publications and some changes also.

    So keep an open mind. Dont stride on a one sided point of view!

  10. Just to clarify, doing a direct transfer of a TFSA from one institution to another should not cause an over contribution penalty as it is not considered a withdrawal. Correct? I could not find anything on the CRA website to suggest this. Perhaps these institutions reported the transfer incorrectly as a withdrawal.

  11. Canadian Capitalist

    @Michael James: I agree. This reminds me of the old 1% on RRSP accounts whose foreign content exceeded 30%. I was personally caught by that one because the foreign content rule applied to each account, not across all RRSP accounts. It’s unfortunate but sometimes you make mistakes. It comes with the territory of being a DIY investor.

    @max toronto: When a TFSA transfer is treated as a withdrawal and a new contribution, it is the financial institution that screwed up. They should own it up and fix it.

    @Paul: Simply transferring a TFSA account *should not* result in a penalty. I would demand the financial institution responsible to fix it / pay for any penalties.

    One option is to withdraw the entire balance of a TFSA account in December, open a new one in the new year and contribute the initial balance. I’ve done this personally. I’m planning more posts on this topic this week.

    @Jim: I don’t agree that just putting “Registered” in the TFSA would have avoided this issue. There will always be people who make mistakes. Recall that many seniors demanded change in RRIF rules after their accounts suffered stock market losses.

    If enough people are trapped by the TFSA penalties, writing letters would help. I’m personally not in favour of providing a blanket relief for the reasons outlined in this post.

    @Matt: Fair enough. I have sympathy for those charged these penalties, even those who could otherwise afford to pay the penalty. After all, it is no fun to be tripped up by the fine print. And if some taxpayers experiencing financial hardship, they can make their case to the CRA. I just don’t see why there should be a blanket waiver.

    @Jim: What you’ve pointed out is a news release. Even the news release says “The full amount of withdrawals can be put back into the TFSA in future years”.

    @Michael: A transfer of TFSA from one institution to another should not be charged penalties. I would take this matter up with the institutions concerned.

  12. Hard to argue the contribution rules aren’t clear. You either do a TFSA-to-TFSA transfer, which may be subject to a small fee by the bank, or you do “The December Shuffle” at year’s end: Purge the account at the end of December to gain the flexibility of full contribution room, plus $5,000 of new space, come January 1.

  13. I resisted the temptation to change my TFSA accounts last year because of a 0.25% higher rate at a different bank (hey, that’s a lot in these days of 2% rates) because I was aware of the rules. (I waited till the end of the year). If CRA is going to give a blanket exemption, I would have changed the accounts earlier to my benefit.

    Ignorance of the rules is no excuse. Learn your lessons the hard way.

  14. Doing a direct transfer from bank to bank (sort of like an RRSP transfer – the money should not come into your hands) is not considered a withdrawal but the banks will charge you a fee for the paperwork which will negate most if not all the extra interest you earn at the new bank.

  15. @Sean: It is possible to transfer money between TFSAs without running afoul of the rules. You just have to fill out the correct form and get the financial institution(s) to do it as a transfer rather than a withdrawal and a new contribution.

  16. @Sean: Our comments must have crossed. You’re right that fees can swamp a small advantage in interest rate even if you do the transfer properly.

  17. Canadian Capitalist

    To add to Sean’s comment, transfers typically cost about $125 to $150 plus GST. That will easily eat up a big portion of any returns earned in this low-interest environment.

  18. If anyone should be held accountable for these missteps, it’s the banks who are holding our money hostage with outrageous fees. $100-$150 to “transfer” $5000 from one institution to another. That is insane! I wouldn’t be at all surprised if an FOI reveals that representatives from the banking industry lobbied finance officials to ensure that high transfer fees were allowed on TFSAs. Furthermore, I am sure that there would be some mid-level bureaucratic paper illustrating how much over contributions were “costing” the federal coffers, and how much additional revenue the federal government could generate based on the first six months of people “innocently” moving money back and forth between TFSA accounts.

  19. The only problem is that people don’t even try to become familiar with the rules. If things go wrong it’s easy to blame the government or the CRA. Ignorance is the real problem here. And if the rules seem too complicated to understand get and advisor.

  20. I think what the CRA needs to consider is a 2-tiered penalty system. In cases where TFSA balances have exceeded $5000, there is significant opportunity for financial gain so the 1% per month penalty is reasonable. But, for most people (like me), the combined balances of all TFSA accounts never exceeded $5000, although contributions did (either through transfers from one bank to another or using the account as a regular savings account). In these cases, whether intentional or not, the penalty should be proportional to the interest earned by the account holder while the account was being misused. In my case, $0.50 of interest resulted in a penalty of $50… That’s 10,000% of my interest earned. It would be easy for the CRA to differentiate between these cases and assign penalties accordingly.

    To reply to some of the above comments, I’m someone who read the TFSA rules but interpreted them differently. When the CRA and banks say “Withdrawals can be re-contributed next year”, that’s NOT the same as saying “Withdrawals CANNOT be re-contributed this year”… If I say “You can go to work tomorrow”, that doesn’t mean “you can’t go to work today.” It would have been incredibly easy for banks and the CRA to make this extremely clear, but the marketing spin has abstracted the true meaning. That’s why I think a little lenience is required for Canadians who were dinged by this penalty in the first 18 months of the TFSA. If for no other reason, consider the fact that many could have been accumulating penalties for the entire time… Many people report the penalties exceeding the interest earned by their TFSA by 3 to 4 times! Clearly, the TFSA is still in the beta testing stage. The early-adopters have learned their lesson, so there’s no need to charge them hundreds of dollars for what often amounts to a few clicks of the mouse.

  21. Re: transfer fees among accounts.

    Many institutions will cover transfer costs for accounts even if the balance is less than $10k. Maybe not for a TFSA in cash, since they wouldn’t earn much off you anyway, but make sure to check with your new institution.

  22. PC Financial’s TFSA transfer fee is $50.

  23. I disagree with many of the comments regarding that the average Joe should know all the fine print. I have picked up leaflets printed by the government 2 + years ago with simple printed rules on it. No where did these information leaflets have the “technical” information warning of the proper way to do a transfer for example. Nor did i see it give you a warning that you could be hit with a 12% penalty. Wow should have been better disclosure there!

    @ Gabe – get an advisor? Are you kidding, this should be as simple as a savings account for the majority of savers. Should nothing in this world be somewhat black and white? Anyone except really High wealth clients who subscribe to Moneysense are trying to get away from predatory “advisors”. Most of which are salesman with a financial title licenced to charge you exhorbitant fee’s or steal little bits out of your MER’s for LIFE. (with no guarantee of better returns and offer no help other then directing you into funds which pad their own pockets or the firm they work for’s coffers). You get what’s left over, not much the last few years.

  24. The link below from the TFSA webpage regarding transfers from one financial institution to another, if your financial institutions followed the rules properly. I transferred my tax free savings account last month from PC Financial to TD Mutual funds. TD Bank rep filled out and submitted a tranfer of registered investment form to PC Financial and the transfer took 12 business days ($50.00 fee). If I get penalized because one of the banks screwed up I won’t be liable, I have a photo copy of the documentation.

    http://www.cra-arc.gc.ca/tx/rgstrd/tfsa-celi/fqrtrn-eng.html

  25. Sorry, click the link and scroll down to section C 2 in the frequently asked questions.

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  27. I am one of those that have been assessed $600.00. ING didn’t have a warning at first (2009) and I assumed I could open my wife’s TFSA in our Joint account, silly me. I have talked to CRA and the advisor said to send the cheque for $600.00 and a letter with documentation, explaining how I ended up with 2 accounts.
    My oversight was caught when I tried to add money to my wife’s account in Jan, 2010, then I got a warning from ING about over contributing. It is not ING’s fault, mine entirely, thinking the TFSA accounts could be held in a Joint accounts with different names not numbers. I received $98.00 interest which was not declared on my 2009 return but hopefully CRA will accept my explanation and I can file a Voluntary disclosure.

  28. I read and thought I understood all the information provided regarding TFSA’s. I have had no problems yet, however, It was my understanding, that anything you withdrew could be put back later…………ie: replaced at any time. How then, does depositing $5,000 in a TFSA, withdrawing it at a later date, and then redepositing into a new TFSA consitute an over contribution? Obvious CRA has their head up their “you know what” as usual. You STILL have ONLY the allowed amount of $5,000 in the TFSA.
    Any body else agree?

  29. How many of those people who have inadvertently over contributed to their TFSAs have also done so for their RRSPs? I never received any pamphlets regarding the rule for RRSP contributions (and their are more than the TFSAs), I had to search out all the fine print for myself, then double check by calling CRA to make sure I understood everything.

    Blanket mulligans don’t seem the appropriate action here. Maybe the CRA should introduce a life-time overcontribution limit like for RRSPs.

  30. Last year I registered with iTrade and made a contribution of about $100,000 in total into my TFSA account. I then purchased stocks and have since been holding the stock due to its market value being much lower than my book value.

    Little did I know I was being charged 1% each month for overcontributing.

    When I opened the account online at iTrade there was never any disclaimer stating these rules. Not on their site nor through any letter. Last week, I got a letter from CRA telling me I’ve overcontributed in excess of $500,000 and that I must now pay 1% of that, which is $5,000. It seems I’ve no way out of this and will have to eat this loss through hard work!!

    Of course, if iTrade made just a little effort in warning their customers about this, I’d just put my $100,000 into my cash account with iTrade instead and buy the stocks from there resulting in no penalty fees.

    Truly this is unfair! A heft cash grab if you ask me, and a very expensive one at that for me and my family. Maybe this wouldn’t have happened if I registered in person rather than online. Nevertheless, I’m extremely upset about this as you can imagine.

    If I had the time and money I’d sue iTrade, even if just to inconvenience them a little. Their explanation to me is that I “should’ve known.” Sure I would’ve if they had told me at some point. They don’t give a rats $#@% about you. They submitted my contributions amount to CRA and now I’m getting you know what up my butt!

    Thinking of becoming an iTrade customer? Beware! Who knows what else they haven’t told us that’ll cost me money now or in the future.

  31. Andy, it was made very obvious to everyone in almost every ad I see and in almost all material I see that the maximum per year was $5000. How is it unfair that you completely disregard the rules and don’t even bother looking up how the accounts work before moving more money than most people make in a year? It’s your fault, plain and simple.

  32. Isabel of Montreal

    @DragonLady, I had the exact same thoughts as you. I’m no financial whiz, like these others strict posters, clearly.

    Also, can someone in financial hardship really afford to put $5000 or more in a TFSA?

  33. Most of you, like the author of the article, are assuming a level of sophistication among investors which may well be true within your circles. And maybe the people you know who screwed up really had no excuse. However, there really are people, real human beings, who don’t use computers, check websites, or consider the tax implications of just moving their savings accounts. I guarantee you that “tax free” and “$5000 limit” were what most people took in.

    You all are not uncaring people, but it is just too easy to take a certain level of education, formal or practical, experience, technical knowledge, and general sophistication for granted.

    Clearly, banks which did not warn their customers upon withdrawal or transfer failed them and ought to make it right, but that the banks were not completely clear by itself Is proof that the matter is not straightforward.

    Finally, the penalty of $600 seems entirely out of proportion, and in the range of predatory.

    This situation needs sorting out. The current state of affairs is not satisfactory. Make it simple, make it clear and upfront. How hard is that?

  34. I distinguish between sophistication and the simple reading of the terms and conditions associated with the account. I say this respectfully. The process of opening the TFSA provided me all the necessary information as to how to use it. I didn’t have to consult any external source. That said, with 70,000 people under penalty it makes me wonder if all banks provided a comprehensive explanation of the rules. (I had no problem with ING.) On a positive note, Rob Carrick in today’s Globe quotes a tax expert saying anyone who has a net contribution of $5,000 or less should be able to avoid penalty if they explain their case to the CRA.

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  37. Wow TFSA is the best deal around….but some for got to read the rules….makes me wonder if these people missed the best investment year in a long time.

  38. Traciatim:

    No, it’s not my fault. I signed up online. I spoke to no one. The online registration at iTrade never mentioned any of this throughout the process. No disclaimer of any kind. So don’t try to educate me now when it’s too late. You should’ve done this before or during my registration…plain and simple. It’s iTrade’s fault for failing to warn their customers.

    When you open a bank account, do you go online and research everything about the process, its penalties or fees? Of course not! The rep usually tells you these things and if not then it’s in the pamphlets they give you along with the registration paperwork. I did not get any pamphlets, letters or warnings of any kind. I shouldn’ t have to go online and research.

    Why let customers put in more than $5,000 in a TFS account? So they can get screwed by the government? Clearly this is the case, intentional or not!

  39. Canadian Capitalist

    Here’s a post I wrote on how to apply for a relief of TFSA penalties:

    http://www.canadiancapitalist.com/apply-for-waiver-of-tfsa-over-contribution-penalties/

  40. Andy, of course it’s not your fault. I mean, you only ignored the governemnt’s announcement about the accounts, ignored all the promotional materials, ignored the FAQ on itrade regarding the account, ignored the bullet points when you open the account, didn’t go out of your way to google them when you opened your account to see how they worked, and didn’t shop around to see who offers the accounts and which is the best deal. Of course we have to take your word that they completely hid all the terms of the account from you when you signed up, unlike now when its’ right on their main TFSA page.

    Why let customers put more than 5K in? It’s not up to them to figure out your contribution room, 5000 will only be valid for the first year, and then for people turning 18 in the second year and so on. It would be an administrative nightmare.

    “When you open a bank account, do you go online and research everything about the process, its penalties or fees? ”

    Actually, yes. It’s my money, so I don’t rely on sales people or promotional websites as my sole source of info about account types. When the TFSA came out I read the details in the budget, researched who was offering them, looked on blogs to find out how they are best used, and still haven’t even opened one because I’m still trying to figure out how it best fits in my situation. Ignorance of the rules is NEVER a defence. Unless they intentionally went out of their way to trick you in to depositing the 100grand it’s your fault, I wish you luck proving that. Just because you are reckless with your money doesn’t mean everyone is.

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  42. Traciatim:

    It’s easy to be a smart ass after the fact. I’m so glad you know it all now.

    Btw, for ignorance to be a defence one would first have to know what he/she did wrong before ignoring them. Since I didn’t know then I didn’t ignore anything. Not everyone is as wise as you.

    What government announcement? Did you get a letter? Did you get smambarded with such announcements saying you’ll pay 1% for overcontributing? How could over 70,000 people be in the same boat as me? Because they all knew but ignored the rules? Because they wanted to pay a 1% penalty fee? That could only make sense to someone like you!

    And since when does a customer have to shop around? If I go to a store and I like what I see I buy it. I don’t waste time going home and searching online for deals. Nor do I waste time going to another store and hope that they have the same product for less.

    You don’t have to take my word for anything. You didn’t apply at the same time as I did because if you did you’d probably be in the same boat as me and the other 69,999 people that got a nice surprise in the mail.

    And you don’t rely on websites or sales people yet you rely on blogs. That’s really smart!

    And get your facts straight. iTrade doesn’t have a faq. I’m logged in now and see no such thing. There are no bullets pertaining to any penalties for overcontributing. Even if there are now, there weren’t any when I applied early last year. I, and probably hundreds of others have raised so much hell with them that if there are any such warnings now then they’ve added them recently after the fact.

    Have you even looked at their tfsa application form? It tells you nothing about overcontributions. It does ask you basic things about you…your name, address, etc.

    Do you work for the government or perhaps iTrade? You act like you know so much. Or you really do work for them and so naturally you’d be on their side. Or maybe you’re a lawyer? I guess we all have to be lawyers with lots of time on their hands to read and research everything.

    “Why let customers put more than 5K in? It’s not up to them to figure out your contribution room, 5000 will only be valid for the first year, and then for people turning 18 in the second year and so on. It would be an administrative nightmare.”

    -So let the customers screw themselves for not knowing all the facts…and let them do their own research so that they can have their own misunderstandings. Wow…if everything worked like this we’d all be dead in the water…except you of course since you know it all now!

    Anyway, I’m done wasting my time with you. Say what you want because it doesn’t mean jack.

  43. Actually Andy, the other 70000 are not like you. Many people were caught by withdrawing an amount and then moving it to another account and depositing it in the same year even though their amounts were less than 5 grand. They didn’t blatantly avoid reading anything about the account, they got caught up in a technicality. Which I almost have sympathy for since it’s a pretty honest mistake, but still think the penalties should stand.

    The FAQ and bullet points are easy to find. You go to i-trades web site and click on their tfsa ad and actually read the page . . .
    No annual administration fees
    Contribute up to $5,000 each year
    Choose from a wide range of investments including equities from $6.99 FLAT1, over 3,200 mutual funds3 and ETFs, fixed income, and more
    Investment income (interest, dividends, and capital gains) earned in your Scotia iTRADE TFSA is tax-free*
    Make contributions using Easy TransferTM or set up an Automatic Investing Plan
    You can withdraw money from your TFSA for any reason, and all withdrawals are tax-free*

    Then right under that you see a link that that says to click on it for the frequently asked questions and number 2 states very clearly:

    “2. Can I withdraw money from my TFSA?
    You can withdraw money from your TFSA at any time however, specific product restrictions may apply. The amount you withdraw can be put back in your TFSA starting the following year without impacting your contribution room.”

    Then you claim:
    “-So let the customers screw themselves for not knowing all the facts…and let them do their own research so that they can have their own misunderstandings. Wow…if everything worked like this we’d all be dead in the water…except you of course since you know it all now!”

    Actually yes., You chose a discount broker so that you would be responsible and they can fascilitate the transactions you request. So suck it up and take some responsibility for your actions. If you didn’t happen to notice the little star in the TFSA account page it says this:

    “Information is provided to you for general information purposes only and is not intended to be and should not be construed as tax advice or any other investment advice of any kind. Scotia iTRADE does not provide investment advice or recommendations of any kind, including tax advice. Individual circumstances will influence your investment decisions and you should consult with your own tax and investment advisor. You are responsible for determining whether your investment is TFSA eligible.”

    If anything out of this whole post is read, just read the last line of their disclaimer, and pay your bill like a big boy.

    P.S. I work in tech support, and have no financial background… but unlike you I actually can read.

  44. Canadian Capitalist

    @Andy: “Why let customers put in more than $5,000 in a TFS account? So they can get screwed by the government? Clearly this is the case, intentional or not!”

    Actually, there is a good explanation for letting people overcontribute. Initially, a lot of traders deliberately overcontributed to their TFSA hoping to make tax-free gains even after paying the 1% overcontribution penalty. How does a discount brokerage know that you are not such a trader and are about to make an honest mistake?

    In any case, if your mistake was an honest one, CRA is willing to consider penalty waivers under specific provisions under the TFSA legislation when taxpayers make a “reasonable error”. It is up to you to convince CRA that your case qualifies for penalty waivers under the “reasonable error” clause. Here are the details and you may want to file your application ASAP.

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

  45. the “reasonable error” clause……oh,boy can’t wait to try this on some other CRA ruling …did Preet do a post on taking a tfsa Dec. – Jan roll over to gain more room….now that he has changed his web page i can’t find it.

  46. If you can still make gains after paying a 1% penalty then that’s beyond me. iTrade doesn’t have to know if I’m such a trader or not….but a simple warning message telling me of such possible fees or penalties wouldn’t hurt would it?

    It was an honest mistake and I’ve already filed with CRA. Hopefully I’ve convinced them that indeed it was an error.

    All I can do now is wait and see what they say.

  47. The following information was just posted on the CRA website at http://www.cra-arc.gc.ca/whtsnw/tms/jntsttmnt-eng.html

    The Honourable Keith Ashfield, Minister of National Revenue, and the Honourable Jim Flaherty, Minister of Finance, issued the following statement today:

    June 25, 2010—The Government of Canada would like to provide an update on the recent administrative concerns expressed by some Canadians regarding the Tax Free Savings Account (TFSA).

    2009 was the first year of the program and the response to the TFSA has been overwhelmingly positive. Approximately 4.7 million Canadians have taken out a TFSA since the program was initiated.

    Our government recognizes that there was some genuine confusion about the rules for the TFSA in the first year. We understand that it may take time for some Canadians to learn about the program and for some financial institutions to properly inform their clients about this product.

    The Government of Canada confirms 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. Our intention is to review each situation on a case-by-case basis and, where appropriate, waive taxes on excess contributions for this year.

    For instance, 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.

    Of the nearly 4.7 million Canadians who have a TFSA, less than 2% (70,000) have recently received a letter from the Canada Revenue Agency asking to provide further information about their accounts before June 30, 2010. We have decided to extend this deadline from June 30 to August 3, 2010, to allow ample time for Canadians to provide the necessary information about their accounts.

    If you received a TFSA return letter:

    * You are encouraged to respond to the CRA letter by providing additional information or explanations that you may have in respect of your over-contributions.
    * If no additional information is provided or you do not contact the CRA, a notice of assessment will be issued. Only at that time should you use the request for taxpayer relief form or a formal notice of objection.

    If you have questions about your TFSA, you are encouraged to contact the CRA at 1-800-959-8281 or visit our Web site at: http://www.cra-arc.gc.ca.

  48. In my view, a big problem in all of this is, is the language that has been used to describe this new savings vehicle as a “savings accounts”. In my mind, they are not in fact “savings accounts”.

    My sense is that the Conservative Party of Canada and the banks have misrepresented these financial products and therefore may be jointly responsible for consumer fraud.

    I’m not sure how a “savings account” might be legally defined, but in this respect, the TFSA rules might actually be quite secondary..

    In my mind there are explicit and implicit privileges that are attached to a saving account.

    Basics such as:

    -No limits in allowable contributions, which serves the action of saving money,

    -The right to freely withdraw and deposit funds, according to one’s best personal judgment, without any interference from financial institutions and regulators. For example, when an institution lowers its interest rates from 3.75% to 0.75% in less than 6 months; the consumer should be able to freely withdraw his funds and reinvest them elsewhere, without a second thought with regards to rules and regulations.

    As it is, the TFSA is a joke and a fraud, perhaps not only figuratively speaking.

    If the government wanted to create a popular savings regime, for gains in public approval ratings, that is fine.

    It is not permissible however, for it and the banks to commit consumer fraud in the process.

    It seems to me that the concept of a “savings account” has been misrepresented in the packaging and the nomenclature used in describing the TFSA.

  49. Matt said”For example, when an institution lowers its interest rates from 3.75% to 0.75% in less than 6 months;”….Call b.s. on this ,it took alot longer then 6months……..”As it is, the TFSA is a joke and a fraud, perhaps not only figuratively speaking.”…..TFSA is the best deal around….but some for got to read the rules….makes me wonder if these people missed the best investment year in a long time…..and Matt come back to this blog in Dec. an will show you how to roll over a TFSA.

  50. dj…

    He may be exaggerating a bit but he is close. ING for example had a teaser rate before January 2 years ago. So did PC bank. ING also would give you some bonus points (to pay your tax) if you opened the account early. I wish I could remember the rate exactly. Those two banks dropped the rate 2% in 1-2 months. Matt is almost correct there. I was very disappointed as I was going to open the account with PC bank but that higher teaser rate was history. It was simply there to lure you.

    I wound up putting my 5K in the TD monthly income fund instead. Kind of a safe, conservative simple fund.
    I put 5K in BMO’s comparable fund this year – Bit of a competition to see which performs better!

    In any case to everyone above, I think we all come here for advice. I think we should all be civil with each other – even if one persons perspective is vastly different then another’s. I think all of us should focusing on legal ways to beat the taxman, not beat on each other. We are so burned by ridiculous taxation with what seems a diminishing standard to all the services we receive with those monies taken from us. The general population (sadly) would rather watch “E-channel” or “reality? – TV ” then try to help themselves become more financially literate.

    In 2 days the gas will jump 8-10 cents a liter in Ontario. I wonder how many people will all of a sudden pay attn. to the HST issue that day. We are so reactive. I know that i don’t have numbers to back this up, but above that $1.00 mark changes the way people use their cars. People change their spending and even their vacation plans with a jump like that. I’ll bet there will be a lot of surprised people with posts on other blogs saying “they never heard that gas was going up”. Much like the surprised people in this blog regarding the TFSA rules… That tax jump will hurt most of all.

  51. Ok Paul….my point is read the fine print….like you did….Warwick’s fund is idea for the TFSA.

  52. Canadians interested in knowing more about Tax-Free Savings Accounts may be interested in the Consumers Council of Canada’s comprehensive research report on the subject.
    http://www.consumerscouncil.com/index.cfm?pagepath=Council_News&id=13930&modeX=Cat&modeXval=FDF15716-A488-1836-86373580B8F80203

  53. Pingback: Problems with over contributing to the Tax Free Savings Account | Retire Happy Blog

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