St. Thomas man gets $8K from the bank after TFSA snafu

Last year, Bob Birchmore went to thebank to make a large deposit, but he never thought that transaction would leave him more than $8,000 out of pocket.

In 2018, the retired teacherfrom St. Thomas, Ont., deposited two sizeable inheritance checks at his local TD Canada Trust branch. Themoney wasfrom his aunt who had passed away.

"I looked out for her. She was almost like my mother for many, many years," Birchmorerecalled.

Birchmoresays he hadthe money placed in an existing tax-free savings account (TFSA). Less than an year after making the deposit, he met with a financial planner to move the money toan investment group. He says his plannerreviewed the account and noticed he had exceededthe contribution limit. That's when his planner notified him that he would be taxed by the Canada Revenue Agency (CRA).

"It wasn't pleasant," he said.

TFSAswere established in 2009 as a way for people to save money without paying taxes on the interest.However, the accounts have an annual contribution limit set by the federal government. If a person exceeds thatamount, theyare subject to a 1per cent penaltytax on the overage amount per month, until the balance iswithdrawn.

Birchmore had opened the account 10 years ago and hadn't used it in the last five years. He thought it was a "safe deposit box" of sorts.

"The issue is [the bank]should've given me a warning [at the time of the deposit] that there would be a tax issue," he said.

"They didn't say a word. Nothing verbal, nothing written. I'm not stupid, I would've immediately said 'no, don't put it in that account,'but they never said anything," he continued.

Soon after Birchmore`s meeting with his planner, letters from the CRAstarted to arrive,saying that in total, between the two cheques and late filing fees, heowed $8,551.94.

What the bank is saying

CBC News reached out to TD Canada Trust to find out if the bank is responsible for notifying customers at the time of a deposit that their contribution willexceed the limit and, therefore, be subject to a penaltytax.

"TFSAcustomers are responsiblefor adhering to individual contribution limits and financial institutions are not aware of how much contribution room a customer may have at any given time," TD Canada Trust said in a written statement.

But the bank's website suggests procedures are in place to help customers navigate the rules.

"TD has defined procedures inplace to remind customers of TFSA contribution limits these details are reviewed with customers when a TFSA account is opened and are available on ourwebsite," it said.

While financial institutions may not be aware of how much contribution room a customer may have at any given time,inBirchmore's situationthe deposits far exceeded the cumulative annual limits allowed by the government, a limit of $57,500 in 2018.

Birchmore told CBC News that he tried to contact the bank for months to try and make sense of the occurrence, but he says very little progress had been made.

"After sending a letter, the customer service branchcalled me and said 'sorry, we can't do anything about it, but we'll give you $500,'" Birchmore said."But, they didn't say anything about being sorry [for not notifying me of the excess], or try and remedy the problem."

Birchmore didn't think the offer was appropriate, and while the bank said it would call to discuss the matter, the call never came.

A happy ending?

That's when Birchmore called CBC London. One day after a reporter contacted TD,Birchmore's phone rang.

"They phoned saying that, taking into consideration that I was along time customer, and it was a once in a lifetime error, they were ready to give me back the full $8,000," he said. "I feel terrific!"

Birchmore says that although he's getting the money back, he hopes his experience helps changethe way banks communicate with customers.

"Banks should notify customers in writingand verbally when they exceed the limit on TFSAs, so they don't run into this problem," he said.

"I will never put anything into a TFSAagain."