Chris in the Commons: Tax-FREE savings accounts or tax-GRAB savings accounts?

Ms. Chris Charlton (Hamilton Mountain, NDP): Mr. Speaker, thousands of Canadian who opened a tax-free savings account have now found out that these accounts are anything but tax free. In fact they have become tax-grab savings accounts.

People are facing huge penalties for over-contributing because the rules are neither clear nor sensible. People who are simply replacing money they had withdrawn are now having their contributions double-counted, and they are hit with massive penalties.

Will the government admit that it screwed up, waive the penalties for people who contributed in good faith, and rewrite the rules to prevent this from happening in the future?

Hon. Keith Ashfield (Minister of National Revenue, Minister of the Atlantic Canada Opportunities Agency and Minister for the Atlantic Gateway, CPC): Mr. Speaker, it is nice to hear a reasonable question for a change.

Our government has built on our aggressive tax relief by reducing taxes on savings with the landmark tax-free savings account, the most important personal savings vehicle since RRSPs.

The vast majority of the 4.6 million Canadians who have opened a TFSA understood the rules and acted accordingly. Unfortunately, about 70,000 Canadians may have accidentally over-contributed to their TFSAs. We are not looking to unfairly punish those people.