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.

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.

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.

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.

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