Case Details:

1. TFSA Over-Contributions: Malcolm significantly over-contributed to his Tax-Free Savings Account (TFSA) in 2020, using borrowed funds to invest in stocks within the TFSA.

2. CRA Reassessment and Penalty: In July 2021, the Canada Revenue Agency (CRA) issued a Notice of Reassessment to Malcolm, imposing a tax of $6,393.08 (excluding penalties and interest) due to his over-contributions.

3. Malcolm's Arguments: Malcolm, representing himself, argued he was unaware of TFSA rules, faced a substantial investment loss, and was in a difficult financial situation due to disability and family responsibilities. He requested a waiver of the penalty.

4. CRA's Decision and Judicial Review: The CRA dismissed Malcolm's request twice, citing non-compliance with the TFSA rules. Malcolm sought judicial review of the CRA's decision.

Key Legal Points:

• Income Tax Act Provisions: Section 207.02 imposes a tax on excess TFSA amounts, while subsection 207.06(1) allows for discretionary waiver or cancellation under specific conditions.

• Court's Analysis: The Court questioned whether Malcolm's over-contribution was a reasonable error and noted his failure to promptly withdraw the excess upon notification. The Court found the CRA’s decision reasonable and within the bounds of the Income Tax Act.

Conclusion:

• The Federal Court dismissed Malcolm's application for judicial review, ruling that the CRA's decision was justified and reasonable. Costs of $500 were awarded to the Respondent.