• Q1. When will your system shut down this year for accepting amendments, and for how long?
• Q2. Can the CRA provide any guidance about what financial institutions should and should not be amending?
• Q3. For example, if an individual is 17 in 2010, do they accumulate contribution room from 2009 or only from 2011, i.e. in the year they turn 18?
• Q4. Is it the responsibility of the financial institution to issue any income tax slips if the TFSA is not properly registered due to missing/invalid personal required information?
• Q5. Can a non-resident open a TFSA?
• Q6. Can a TFSA be successed multiple times within a year?
• Q7. What happens when an individual over-contributes an amount ($10,000), receives a proposed TFSA return, and then makes the subsequent withdrawal, but due to market fluctuations only has $9,000 to withdraw from their TFSA? Do they still have to pay the tax? What are the appropriate actions that need to be taken by the financial institution or the client?
• Q8. If a Canadian resident contributes for two years ($5,000), becomes a non-resident in the third year, and continues the contribution that year as well, what would be the consequence?
• Q9. If a client has made an over-contribution and it is subsequently withdrawn, is the withdrawal added to the individual's TFSA contribution room in the following year?
• Q10. Successor Holder vs Designation of Beneficiary. Provincial trust laws recognize a "designation of beneficiary" under a TFSA. Provincial trust laws do not recognize a "successor holder appointment." If the spouse is the "appointed successor holder"only and is not the "designated beneficiary" and the spouse is not the residual beneficiary under the Will, the spouse is not automatically entitled to the TFSA funds. If a TFSA is automatically given to the spouse under a "successor holder appointment," the beneficiaries under the Will could contest this.
• Q11. What happens if a TFSA account was opened for someone under 18 and a contribution was made to the account? What are the consequences?
• Q12. Are monthly amendments reflected on the My Account information? If yes, is it safe to assume that it is updated as soon as the file shows as processed on the "Represent a Client" portal?

Q1. When will your system shut down this year for accepting amendments, and for how long?

A.1 Our system will shut down from December 6, 2011, to January 8, 2012. The system will be back up January 9, 2012.

Q2. Can the CRA provide any guidance about what financial institutions should and should not be amending?

A.2 We rely on the financial institutions to record TFSA transactions for their clients under normal bank accounting rules, and in the same way they record transactions for other investment vehicles or registered plans. With direct transfers, it is a question of fact and the records should properly reflect this information.

In some situations, the financial institution may need to determine if a transaction is the result of a bank or client error. We do not expect client-initiated errors to be retroactively reversed from their account. Amended records that show a deletion or significant reduction of a previously reported amount are subject to further review by the CRA.

If the client made an unintentional deposit into their TFSA putting them in an excess situation, they can ask the CRA to review their account for possible relief of tax.

In direct transfer situations, where one financial institution reports the transactions correctly and the other financial institution does not, contact will be made in order to determine if a direct transfer has actually taken place. If necessary, the institution determined to have submitted the incorrect record will be asked to submit an amended one in order to prevent an over-statement of a holder's future contribution room (due to the adding back of the withdrawal) or an incorrect excess tax amount. Failure to resolve the difference in reporting could result in further investigation by the Agency.

Q3. For example, if an individual is 17 in 2010, do they accumulate contribution room from 2009 or only from 2011, i.e. in the year they turn 18?

A.3 An individual will accumulate TFSA room only when they turn 18 years of age. In this example, the client in question would begin to accumulate TFSA contribution room of $5,000, as of 2011, the year they turn 18.

Q4. Is it the responsibility of the financial institution to issue any income tax slips if the TFSA is not properly registered due to missing/invalid personal required information?

A.4 The issuer should make all reasonable efforts to obtain the missing or invalid information and submit the appropriate amended TFSA records. However, if the financial institution is unable to resolve the issue with their client, appropriate income tax slips such as T3s or T5s should be submitted.

Q5. Can a non-resident open a TFSA?

A.5 Yes, technically, a non-resident can open a TFSA. However, they do not accrue any TFSA contribution room. If they contribute while they are a non-resident, they will be subject to the 1% per-month tax for each month the contribution stays in the account. The individual may also be subject to other taxes.

Q6. Can a TFSA be successed multiple times within a year?

A.6 It is possible. For example, one spouse dies and the successor remarries in the same year. In this type of situation, the new spouse can be named as a successor holder.

Of course, this will be contingent on the enactment of the proposed legislation amending the definition of "holder" to include subsequent successors.

Q7. What happens when an individual over-contributes an amount ($10,000), receives a proposed TFSA return, and then makes the subsequent withdrawal, but due to market fluctuations only has $9,000 to withdraw from their TFSA? Do they still have to pay the tax? What are the appropriate actions that need to be taken by the financial institution or the client?

A.7 Individuals who over-contribute to a TFSA in a year, may be subject to a tax equal to 1% of the highest excess TFSA amount in the month, for each month they are in an excess contribution position. In the situation you describe, an excess TFSA amount would continue to exist and tax would be payable. The individual has the option to write to the Agency to ask for a review of the situation if they feel that a relief of tax is warranted. The written request should include the full details and the reasons for the over-contribution. The circumstances of each request will be carefully reviewed.

The financial institution would be required to submit the record reflecting the total amount of contributions and withdrawals as normal.

Q8. If a Canadian resident contributes for two years ($5,000), becomes a non-resident in the third year, and continues the contribution that year as well, what would be the consequence?

A.8 If they leave Canada in the third year, they would accrue contribution room of the annual $5,000 amount. If they contribute that amount before they emigrate, there will be no tax consequences. However, if they make any contributions after they leave Canada, they would be required to pay the 1% per-month tax for each month on the non-resident contribution(s) until it is totally withdrawn.

Q9. If a client has made an over-contribution and it is subsequently withdrawn, is the withdrawal added to the individual's TFSA contribution room in the following year?

A.9 Generally speaking, yes. Amounts withdrawn from a TFSA are added to an individual's TFSA contribution room in the following year. However, if the CRA determines that the over-contribution was a deliberate over-contribution, the CRA may decide not to add the amount back to their room.

Q10. Successor Holder vs Designation of Beneficiary. Provincial trust laws recognize a "designation of beneficiary" under a TFSA. Provincial trust laws do not recognize a "successor holder appointment." If the spouse is the "appointed successor holder"only and is not the "designated beneficiary" and the spouse is not the residual beneficiary under the Will, the spouse is not automatically entitled to the TFSA funds. If a TFSA is automatically given to the spouse under a "successor holder appointment," the beneficiaries under the Will could contest this.

A.10 Any dispute over the validity of a successor or beneficiary designation must be resolved within the jurisdiction in which they arise. Once the dispute has been settled, TFSA legislation can be applied to properly treat the circumstances.

Q11. What happens if a TFSA account was opened for someone under 18 and a contribution was made to the account? What are the consequences?

A.11 Since this would not be considered a valid TFSA election, the investment would be considered to be held in a non-registered account. The financial institution should file a cancel record to negate the previously filed record.

Q12. Are monthly amendments reflected on the My Account information? If yes, is it safe to assume that it is updated as soon as the file shows as processed on the "Represent a Client" portal?

A.12 If amended records are submitted and they pass all of our system validities and are accepted, they will be updated in real time to "My Account" and be used in calculating the TFSA contribution room.