David Rotfleisch is the founding tax lawyer of Rotfleisch & Samulovitch PC, a Toronto-based boutique tax law firm.
A tax-free savings account allows taxpayers to make an annual contribution into a registered account that is completely tax-free. There is no tax deduction when funds go in but no taxation on earnings or withdrawals. This is in contradistinction to an RRSP, for which a tax deduction is available for contributions, earnings are tax-free when incurred, but all withdrawals are taxable.
That’s why it’s no surprise the Canada Revenue Agency has for some years had an audit program of TFSAs with large returns. There have been a number of types of transactions or activities within TFSAs that are, in the view of CRA, abusive or prohibited within a TFSA. Mr. Ahamed, a licensed investment adviser, established the TFSA as a self-directed TFSA trust, so he was responsible for making all purchases and sales. Almost all the investments held under the TFSA were speculative penny stocks of nominal value and held for only short periods. Mr. Ahamed capitalized the TFSA by making appropriate maximum contributions throughout 2009, 2010 and 2011.
Ok government mouthpiece
No, I shouldn’t pay any of my earnings to the fucking government.
Can’t call it tax-free anymore then.