They are just too open to abuse. The example given clearly gets around the normal attribution rules for investment income.
This practice was perfectly legal, without attribution, before the existence of TFSA, and it remains perfectly legal, without attribution, now that TFSA has been introduced ... there is no reason that CRA should turn their attention toward it.Another example is the well-to-do person who is going to start "giving" each of his children $5k/yr to put in a TFSA as soon as they turn 18.
Once you strip out the gobbledy-gook it would appear to fit. The trick is, if there is no paper trail, how does CRA find out it was a loan and not reciprocal gifts that just happened to be coincidental? But others have stated on this site the burden of proof seems to be on the taxpayer, not on CRA in case of dispute.... have you considered the application of Subsection 56(4.1) of the ITA for this transaction.
From my read this is a loan, its non-arms length, and one of the main reasons for making the loan appears to be to reduce or avoid tax. This Subsection seems to fit.
Having a written contract leaves a paper trail making CRA's work easy.Hello I would like to rent some TFSA room. I will pay 4% per year regardless of what I do or earn in the account. You will get paid your 4% if I lose or make money on December 31st.
My lawyer will send you a contract.