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“The IIAC requests comfort that TFSA trustees will not be liable for any shortfall in taxes should funds within a TFSA be insufficient to cover off any liability arising by virtue of a TFSA being found to have carried on as a business,” the group wrote, in its submission to Ottawa.

Some taxpayers report that the CRA has offered them a deal where, if they agree to pay taxes on income within a TFSA, it will not demand additional penalties. That tactic has resulted in settlements, according to sources.

That’s what happened to one Quebec investment advisor, who says he was called a “pirate” by a CRA auditor. The advisor — who did not want to be identified due to his clash with the tax agency — was told he must pay income tax on all the gains inside his TFSA or face his wages being garnished along with interest penalties. The CRA says someone operating a “business” pays income tax on earnings, which is an even higher rate than the capital gains tax usually charged on investment income.

The Quebec investment advisor says he was flagged after making about 200 trades in his TFSA, manoeuvring his account to a value of about $180,000. He has since taken all the money out and paid taxes on it.

The accountants and lawyers have told me to shut up

“I’ve already paid the $35,000 and now I’m sure the province is going to come after me for their money,” he said, referring to provincial taxes he’ll owe based on the federal assessment. “The accountants and lawyers have told me to shut up.”

He claims he was able to make all this money because he has some expertise in resource stocks. “I could have lost that money,” he says, adding when he filled out forms for his TFSA under the know-your-client rule he said his profile was “100% risk and 100% speculation.”