Canada Revenue Agency says it’s still auditing high-balance TFSAs | Tax Free Savings Accounts | Discussion forum

It brings no comfort to think that Big Brother has nothing better to do than delve into the details of people's TFSAs.

We are always told that there is a risk-reward ratio. If you want bigger rewards (along with the possible losses), you must take bigger risks. Or so the story goes. Except in the case of TFSAs, where there is some sort of ceiling on how risky you can be, but nobody can tell you what it is exactly, until after you've exceeded it. This may end up penalizing inexperienced investors more than those who know what they are doing. There are lots of people out there who would be happy to sell risky investments to naïve people.

The argument goes that because it's a Tax-Free SAVINGS Account, that people should not be investing in very risky products. However, they'd likely be doing it regardless of what kind of account it was if that's their perspective on investing. Again, the inexperienced will likely take the hit, either from outright losses (in which case there is no further penalty) or from CRA. If the gov't were truly concerned about people's SAVINGS not being lost, they would restrict the kinds of investments that can be made within TFSAs in clear language and penalize any financial institutions that permit people to invest in them. That way, people would be protected from big losses. However, this will never happen because, the way it is now, CRA profits when the riskier behaviours pay off.

The previous thread went into the whys and wherefores in some detail, so there is no point in arguing about it. Any government will likely do the same, no matter who is in power. Trudeau has noted that increasing TFSA contributions helps those who need it least, so has said he will bring contribution levels back to where they were. We'll see. It's always different AFTER the election, no matter who it is. The first thing that ANY newly elected government always says, about a month after they win, is that they've now examined the books and have discovered that things are much worse than they had been led to believe, and therefore the budget will have to be tighter than anticipated. I've heard this so many times that I can practically set the clock by it! I also think it's probably true, because it's always in the interests of the party in power to make things look rosier than they are when approaching an election.

This issue doesn't affect me personally because I don't have the stomach for anything risky, but it will hit people who are inexperienced and just got lucky - or thought they did before CRA found them.

If you can truly afford to take such risks, the wiser more experienced investor would almost certainly do it through non-registered accounts where he can claim capital losses when it doesn't work out. If you lose it in a TFSA, well, it's just gone forever and there is no compensation and you can't replace it.

I am will Bill on this one. Media hype has blown this out of proportion time and time again. It is the Trading Businesses they are trying to uncover, perhaps a few hundred accounts, likely primarily owned and operated by professionals in the industry. Zzzzzzzzzzzz......

P.S. I am a taxpayer. I want them to contribute their fair share to the General Ledger and not get away with abuse of the law.

Loonie said

Perhaps it makes some people "feel better" to use sarcasm to dismiss the insights of others.

Not sure to whom your comment is directed but I see no sarcasm. Way too many 'talking heads' and 'industry' types needing continued headlines have used this 'issue' to misrepresent the issue and further their own agendas.

It is ultimately those (likely) financial professionals who are in the business who should not be abusing a 'personal' plan designed to augment retirement income to hide business income. Not really different than the income trust issue of several years ago, e.g. the likes of BCE, etc. attempting to convert.