TFSA frequent trading

The CRA said it has been conducting TFSA audits since 2011 and has selected less than one per cent cent of accounts for review.

The audits have identified $75 million owed due to inappropriate use of TFSAs. The CRA said about 20 per cent of that amount came from audits which looked at TFSAs that were considered to be “carrying on a business,” such as day-trading stocks and other securities.

The rest of the money is owed due to “prohibited investments, swap transactions, and valuation concerns,” among other issues, the CRA said.

“The number is high. We know that there are people doing things with TFSAs that they maybe shouldn’t,” said Jamie Golombek, the managing director of tax and estate planning at the CIBC Wealth Strategies Group.

jullianwin wrote: ↑ Hello,


I read today that the CRA is auditing tfsa accounts. The criteria to define a tfsa that operates as a business are quit gray. Do you know anyone who was ever audited? how would the tax be applied ? I mean let's say you has 5 k in your account. Than you made it to 30 K on one stock, moved money to a different stock and ended up losing everything. Would you still owe tax money on the 25 k you made initially ? I am new to investing and was curious on how the whole system works.

rdx wrote: ↑ Good question. I agree the TFSA is kind of confusing. If we can take money out of the TFSA account at anytime and the account balance goes up and down (gain/loss), how do we track what is the taxable amount ?

zainchik wrote: ↑ Investment income earned by, and changes in the value of your TFSA investments will not affect your TFSA contribution room for current or future years. The TFSA limit is at $5,500 for 2018, the total room available in 2018 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009 is $57,500.

rdx wrote: ↑ Is it true that basically the only restriction is how much we can contribute into TFSA ? Whatever it grows in TFSA is tax free. If we take out $X amount from the TFSA, this $X will add back to the total contribution room that we can contribute later regardless how much your TFSA account has grown/lost ? And the loss in TFSA would be the same as the loss in RRSP account that you cannot claim as capital loss for tax return.

canoek wrote: ↑ Million $$ balance in TFSA? Please teach me this magic.

Crarfd2019 wrote: ↑ I am getting contradictory advice. A buddy who works for CRA told me be careful if you do lot of trading and don't mess too much with TFSa.

I know any money earned either via interest , dividends or capital gains on stocks/mutual funds won't be taxed inside TFSA or when I withdraw from it.

But I am told if I do frequent trading and earn a bit, CRA can get on my case. Not day trading per se, but frequent selling and buying of stocks, mostly penny stocks under TFSA.

Because according to them, that's not really the purpose o a TFSA - and I am trying to game the system and avoid paying capital gains tax on stocks.

Is that true? Will I have to pay either income tax or capital gains tax, if I play around in the TFSA?

Articles like this :

https://www.moneysense.ca/save/investin ... -unlikely/

Why the CRA is targeting some TFSA accounts in

https://www.moneysense.ca/save/investin ... nts-court/

UrbanPoet wrote: ↑ Most people arent successful enough at that type of trading to raise red flags.
Its the true geniuses that do.
Once your tfsa is double or triple the maximum limit, then you should worry.