The CRA charged a taxpayer penalties for a TFSA overcontribution and refused to provide relief, but a judge sided with the taxpayer.
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On Jan. 31, 2020, the taxpayer flew to the Dominican Republic expecting to be there for three months, but the global pandemic changed her plans and flights between the two countries were suspended. She was unable to return to Canada until June 25, 2021, where she had to quarantine for 14 days before returning to her home in Prince Edward Island.Article content
After finally opening the CRA’s educational letter in July 2021, the taxpayer immediately contacted her bank to understand what had occurred. A different financial adviser explained that the original adviser who told the taxpayer to contribute to the TFSA made a mistake in calculating her contribution room. The adviser had included three years when the taxpayer was not a resident of Canada, and thus had no TFSA contribution room for those years.
On July 20, 2021, the taxpayer was assessed the dreaded overcontribution penalty tax in the amount of $1,800, along with a penalty of $90 and arrears of interest of $5.18. She applied to the CRA for relief from the tax, penalty and interest, but her request was denied. She then requested an independent, second review of that decision, but relief was again denied, so she appealed to Federal Court.
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