I recently read an article regarding the TFSA (Tax Free Savings Account) which suggests that forms 3520 and 3520A would not apply for TFSAs in Canada.
Is this really true?
Thank you Have a good dayMr. S.
Hello Mr. S.,
Thanks for the information.
For several years, there have been many different procedures and interpretations regarding the TFSA, but no government document or clear administrative position mentions the TFSA.
With regard to RRSPs, pension plans, etc., the positions are clear and the US government clearly answers the questions put to them.But not for the TFSA.
I have a client who took the position that we should not do it: for two years he has been contesting the penalties of $ 10,000 USD that he was billed.
Even if he wins, it will have cost him hours of headaches and thousands of dollars in accounting fees.
I regularly discuss this subject with colleagues from large accounting offices (Raymond Chabot, Deloitte, etc.) and the current consensus is not to take any chances and fill in the 3520-3520A.
Note that TFSA income is taxable, regardless of whether the TFSA was exempt from 3520-3520A. The 8938 does not exempt TFSAs either.
Nicolas Godbout, M. Fisc., Pl. Fin.