March 21, 2019 – TFSA Owners to Be Liable for Tax Owing on Day Trading Income Made Within Their Accounts

by | Mar 21, 2019 | Industry Updates

As reported in Investment Executive “Under current legislation, if a tax liability arises from the carrying on of a business in a TFSA, the TFSA itself and the financial institution that issued that TFSA are “joint and severally” liable for the tax owing, but not the account holder.”

Financial institutions raised concerns with this legislation, arguing it leaves them on the hook to pay taxes owed on a TFSA account when the tax liability exceeds the amount in the account or when the account has been moved. Budget 2019 addressed this concern proposing the joint and several liability be held up for only the amount held within the TFSA. The proposed changes would have any amount owing over and above the amount in the TFSA be the liability of the account holder. The carrying on of a business within a TFSA refers to carrying on excessive trading activity within a TFSA as defined by specific factors that CRA investigates.

Source

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