A colleague of mine got assessed penalties and interest on her contributions to TFSA in 2009, 2010, and 2011 claiming she was not a resident for tax purposes in Canada at that time. She moved to Canada from England and at the time had severed ties with her home country completely, working and living in Canada while applying for permanent residency, which she has obtained in 2012. Her Notice of Assessment has been received in May and she intends to formally dispute it since no answer to her informal inquiry letter followed to date. Has anyone ever run into this situation? How can CRA go back that far?
I had one that went back quite a way. The CRA had the wrong residency information so once I fixed that with the tax dept and pointed it out to the TFSA dept (took most of a year however) they fixed the penalties. If your client filed resident tax returns from 2009 onwards she should be okay but it is possible they have her date of entry in 2012 rather than 2009 even if she filed full returns but didn’t have a date of entry on the first one or did and the CRA didn’t catch it.
Got one on the go right now!
Similar…client left Canada in the '80s and returned…but CRA has both as N/R after they returned for a batch of years. As one is now deceased and the other has dementia, we have no physical proof of residency barring a few bank accounts. Alberta doesn’t keep voting records and the passports are nowhere to be found.
Not sure how to address it yet!! Maybe @laurie can provide info on how/what proof was provided to CRA successfully.
There wasn’t any proof per se other than the tax returns filed while resident - just a letter explaining where they were and when and asking the CRA to amend the initial date of entry return to include that date of entry. In this particular case the husband immigrated to Canada to marry the wife. They were here for several years then they both left and went to Italy for several years. They then came back to Canada after several more years. The CRA missed the original date of entry from Italy because I think the husband missed including it on his very first Canadian tax return but had the subsequent date of departure then the second re-entry. They thought he was non-resident up until the last date of re-entry which was about 3 or 4 years ago. Once the CRA had the right entry and departure dates in their system it was just a matter of asking the TFSA department to recalculate based on the dates in the system. He still ended up owing some as he was in fact actually over contributed but not by nearly as much as they initially thought.
Have a case similar yet different, as she always was resident but lived in the US a few years recently, were she did make off-side contributions, but they had her non-res way back to around 2012…Is sitting in Appeals.
I had a similar situation last year. Client and husband moved from Canada in late 2009. She made a $5K TFSA contribution before moving. She made a $10K contribution in 2010 while visiting. She parked it with the local CIBC and over the years from 2009 to 2024, it made about $1800. CRA assessed her in Aug '24 with $72,000 in penalties and interest. I appealed on the basis that the $5K was allowable and that the $10K was an error (they had no accountant in those years). I had her collapse the TFSA immediately. CRA cancelled all penalties and interest within six weeks.