June 2, 2019

The swap scheme that led to a forty-fold increase in one woman’s TFSA

Almost as soon as the Canadian government set up rules for TFSAs (tax-free savings accounts) a decade ago, Canadian citizens have been looking for ways to exploit the rules to their advantage. In one instance, a woman used a series of swaps to turn an initial $5,000 contribution into more than $200K. The government took the woman to court, with the judge ruling that much (although not all) of her gains were subject to an “advantage tax,” which was passed to punish such gaming of the system.

“While most of us simply use our TFSA to save for retirement or, perhaps for shorter-term goals such as a down payment on a home, the opportunity for abuse of the tax-free nature of the TFSA has been there from Day One.”

Read more: https://business.financialpost.com/personal-finance/taxes/the-swap-scheme-that-led-to-a-forty-fold-increase-in-one-womans-tfsa

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