Written back in 2010 when the TFSA program started. TFSA overpayment was common, and the CRA was diligent in catching them.
Don’t do the Crime if You Can’t do the Time?
So this past weekend, I got to watch a Formula One race. The Europen Grand Prix race was horrific in one spot (a tremendous crash which both drivers walked away from), and it had controversy. This fits with another story this weekend that I have been reading.
The race controversy centred around a driver not stopping for the Safety Car. The driver was punished with a drive-through penalty (he had to drive through the pit lane at slow speed). The controversy arose because the driver jumped the safety car. He gained a significant advantage and still ended up in 2nd place. The Ferrari 2 meters behind them that did pull in behind the safety car came in 9th place instead.
In my opinion, the punishment given by the race stewards did not fit the crime committed. More importantly, the advantage gained by this breaking of the rules.
What does this have to do with Personal Finance?
The CRA decided to revisit their punitive charges against folks who did not follow the rules of the new TFSA plans and made overpayments (in the eyes of the CRA).
If you received a letter from the CRA about a TFSA overpayment, read this page very carefully. The page is about what you need to do next, and what may happen next.
The letters may only be warnings from the CRA:
If you have received a return from the CRA regarding your TFSA, it does not automatically mean that you will be subject to a tax. It may just mean that more information is needed.
Will the CRA tax everyone who overpaid into the TFSA? My guess would be that you may not get off with a warning, given the complexity of the rules and scenarios presented, but we shall see that the CRA can do what they wish (since in their opinion their rules have been contravened).
As opposed to the Formula 1 controversy, I feel that taxing everyone who made these TFSA mistakes is not making the punishment fit the crime, either. A warning is sufficient, with a statement that next time they will have to pay penalties.
Does anyone disagree?
