Refund of taxes paid on non-qualified or prohibited investments

The TFSA holder could be entitled to a refund of the 50% tax on non-qualified investments or prohibited investments if the investment was disposed of, or ceased to be a non-qualified or prohibited investment, before the end of the calendar year after the year in which the tax arose (or such later time as is permitted by the Minister of National Revenue).

However, no refund will be issued if it is reasonable to expect that the holder knew, or should have known, that the investment was or would become a non-qualified or a prohibited investment.

The refund applies to the 50% tax on non-qualified or prohibited investments but not to the 100% tax on advantages.

How to claim a refund

To claim a refund, you must:

• send your request in writing (you can attach it to Form RC243 Tax-Free Savings Account (TFSA) Return)
• attach the appropriate documents detailing the information relating to the acquisition and disposition of the non-qualified or prohibited property (you can attach the written request and supporting documents to Form RC243)

• name and description of the property
• number of shares or units
• date the property was acquired or became non‑qualified or prohibited property
• date of the disposition or the date that the property became qualified or ceased to be prohibited

If the disposition took place in the same year as the acquisition, enter the refundable amount on the line in Section 2 of the TFSA return, and attach the documents to your return. If the property disposed of was acquired in a previous year, send your request and the documents to:

TFSA Processing Unit
Canada Revenue Agency
Sudbury Tax Centre
Post Office Box 20000, Station A
Sudbury ON  P3A 5C1

Or

TFSA Processing Unit
Canada Revenue Agency
Winnipeg Tax Centre
Post Office Box 14000, Station Main
Winnipeg MB  R3C 3M2

Forms and publications

•  RC243 Tax-Free Savings Account (TFSA) Return

Related links

• Tax payable on TFSAs