Using the same Government analogy, I should be able to claim capital losses on CUU - not.

I wondered if they allowed this person to claim their losses.

I don't know how many people have gone through an audit but they always find something to grab and then threaten you with more unless you settle. This guy settled because he was told that he could pay capital gains or they would claim a penalty (and those are stiff, they could be 25%) and they would tax the amount as if it were income which is higher than capital gains.

It takes a strong person to stand up to an auditor when they have the bureaucracy on their side.

I had an audit in my business once and they established a certain amount of money that they said I had to pay because they disallowed a claim. So they reduced the amount by about half and said if I paid it right away they would close the books on my business tax file for the three years prior and close the books on my personal tax file just to be good sports. They came in, found a way to grab some money, threatened me with worse, and were out the door within the week. Job well done.

Somebody is going to challenge this in court so that we can have some clarity. They seem to have bungled the rules surrounding the TFSA since day one.

In terms of our investment in CUU though I think they would have a hard time claiming it is a business if you buy the shares and just leave them there.