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The firm says the CRA is asking to see TFSA account statements and that individuals who comply are receiving assesssment proposals for each year, equal to the annual growth in value of the TFSA shown in the statements. Proposed assessments are “virtually confiscatory in nature,” the law firm says. Except for the initial $5,000 annual contributions and the allowance of a negligible return of 1% on those contributions, the CRA is seeking to impose a 100% tax personally on the value of the assets held in the TFSA.

Worse, it appears there is no ability to offset portfolio gains arising in one year by losses in another year. As the law firm puts it, “only the winning assets are valued and taxed; any losing years are ignored.” It says many of these assessments may be “ill-founded and may be unsustainable.” It has been working with various clients since the questionnaires were first distributed and have developed “several strategies with which to counter the CRA’s course of action.”

The questionnaire includes 11 questions, starting with a request to explain how the investor first came across the particular TFSA investment and their reason for choosing it. It asks whether they were contacted by a broker, agent or promoter and requests their co-ordinates. It also seeks “details and copies” of any documents signed relating to the investments.

Golombek says ordinary Canadians with TFSAs have little reason to fear an audit. “This would affect very few people: far less than 1%. The average Canadian need not panic because there’s no way no matter how lucky they got on the stock market that they could possibly have a six-figure TFSA after only three or four years of contributions.”

Anyone who has a highly valued TFSA because of a smart purchase of a legitimate publicly traded stock that went through the roof doesn’t need to worry either, Golombek says. “However, if it involved various issuances of private shares or illiquid securities, that’s when they should seek professional tax advice.”