adrian2 wrote:WADR, I see nothing complicated about the current rules. What's the confusion about "if you withdraw some money, you don't get the rrom to put it back until the following year".
The "gift" that keeps on taking (and confusing and confounding everyone from taxpayers to financial institutions to CRA.) Issues pop up again and again
Finally, I’m reaching out to readers about a tax issue I wrote about before. Last June, Canada Revenue Agency sent letters demanding penalties from taxpayers who contributed too much to a tax-free savings account in 2009.
Some people had transferred a TFSA from one bank to another without doing the right paperwork. Some had taken money out of a TFSA and replaced it in weeks or months, not knowing they had to wait until the following year under the rules.
Because TFSAs were only introduced in 2009, the tax collector gave refunds when people asked for leniency. But the problems continue.
Hira Aggarwal filed a 2010 tax return and received an assessment notice, dated March 24. It showed her TFSA contribution room as $10,000.
“I suspected this wasn’t right since I’d contributed to the maximum in previous years and hadn’t withdrawn any TFSA funds,” Aggarwal said.
The CRA said she should ignore the $10,000 amount and go with $5,000, since its computer system had not been updated with 2010 contributions.
Has anyone else found a TFSA discrepancy on their assessment notices?
Noel Carisse, a CRA spokesman, said TFSA issuers had to send information to meet a Feb. 28 deadline. Because of the volume, processing could take a few weeks.
“Individuals should make sure the TFSA contribution room amount indicated on their assessment notice corresponds to their records,” he said.
IOW even if you abide by the contribution limits provided by CRA on a NoA and even if CRA admits that there numbers are out-of-date and may be incorrect, you're still penalized for exceeding your TFSA limits as a result of CRA's ineptitude. At least with installment payments, if you pay CRA what they request you won't be penalized even if it turns out that CRA's estimate was too low.
Why did Finance need to introduce such a convoluted, error-prone system for administrating TFSAs in the first place? (Note: I'm blaming Finance and CRA for this, not the CPC.)
And why were Steve and Jimbo so anxious to make a worthless promise to double TFSA contribution limits years from now, if ever, instead of getting Finance and CRA to simplify the convoluted, error-prone system? (Note: I am blaming Steve and Jimbo for that.)
Sedulously eschew obfuscatory hyperverbosity and prolixity.