Does a TFSA specimen plan (respecting a deposit with a bank) that give the issuer the right to apply a positive balance from the account to satisfy any debts owing by the holder to the issuer or any of its affiliates comply with the conditions in ss. 146.2(2)(a) and (b) and, if not, would the ss. 146.2(3) and (4) exceptions apply? After noting that this “arrangement benefits the issuer and its affiliates,” and before concluding that “the plan would not qualify as a TFSA,” CRA indicated that, respecting s. 146.2 (2)(a), “arrangement benefits the issuer and its affiliates,” so that it was not for the exclusive benefit of the TFSA holder. S. 146.2 (2)(b) was not complied with because the issuer’s affiliate had set-off rights. CRA then stated:
The terms are not saved from offending the conditions in paragraphs 146.2(2)(a) and (b) by subsections 146.2(3) and (4) because the right of setoff does not confer a property interest on the issuer or its affiliates and so does not rise to the level of security.
…[I]t is likely that most rights of setoff that are expressly contained in an account agreement would fall offside of the TFSA rules.