TFSA Investors Take Note – The CRA Is Actively Watching for These Red Flags

A cautious TFSA strategy can still include stocks when the focus stays long term.

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Key Points
  • TFSA investors can reduce avoidable red flags by focusing on long-term ownership instead of frequent trading.
  • Metro (TSX:MRU) offers defensive exposure through food and pharmacy operations.
  • Emera (TSX:EMA) yields about 4% and is backed by regulated utility assets.

The Tax-Free Savings Account (TFSA) was mainly created to help Canadians build wealth over time, not necessarily to act as a platform for rapid-fire trading. In certain cases, the Canada Revenue Agency (CRA) may scrutinize accounts that appear to be operating more like a business than a personal investment portfolio.

That doesn’t mean investors should be afraid to use their TFSA. Instead, it highlights the value of owning businesses that could compound quietly over many years – exactly the way the Foolish Investing Philosophy teaches. Companies with stable earnings, dependable cash flow, and straightforward growth plans tend to fit naturally within a long-term TFSA investing strategy. They can also make it easier for you to stay invested instead of constantly chasing the next opportunity.

Let’s discuss two Canadian companies that could help TFSA investors focus on patience, stability, and tax-free growth over time.

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A defensive stock for patient TFSA investors

For investors trying to avoid unnecessary risk, a defensive business like Metro (TSX: MRU) could be a good starting point. It mainly operates food stores and pharmacies across Quebec and Ontario under banners such as Metro, Super C, Food Basics, Adonis, Jean Coutu, and Brunet.

At the time of writing, MRU stock traded at $91.65 per share, giving the company a market cap of $19.2 billion. Although the stock has slipped 13% over the last year and 7.2% year to date, it has gained nearly 5% over the last 20 sessions, showing early signs of a recovery. At this market price, it also offers a 1.8% dividend yield.

Metro’s defensive appeal comes from the essential nature of its business. Consumers may delay big-ticket purchases, but groceries and prescriptions remain everyday needs. That helps support steadier revenue than many cyclical businesses can offer.

In the second quarter of its fiscal year 2026 (ended on March 14), Metro’s sales climbed 4.1% year-over-year (YoY) to $5.1 billion. The company’s food same-store sales inched up by 1.8% YoY, while pharmacy same-store sales climbed 5.1%. As a result, its adjusted net profit rose 4.4% YoY to $236.5 million.

Moreover, Metro is expanding its discount network and growing online food sales, which were up 19.8% YoY in the latest quarter.

For TFSA investors, that combination of stability, dividends, and steady execution could make MRU stock a sensible long-term holding, especially for those who want less exposure to sudden swings in economic sentiment.

A utility stock with steadier income

Another attractive stock that fits a patient TFSA approach is Emera (TSX: EMA). This Halifax-based utility firm owns regulated electricity and gas assets across Canada, the United States, and the Caribbean, with a strategic focus on moving from high-carbon to lower-carbon energy sources.

After rising 21% over the last year, EMA stock now trades at $74.47 per share with a market cap of $22.9 billion. Its dividend yield currently sits near 4%.

In the March quarter, Emera’s adjusted earnings per share (EPS) rose 7% to $1.37 with the help of higher earnings from Emera Energy Services, Peoples Gas, and Tampa Electric, despite weakness at its Nova Scotia Power business and currency headwinds.

Longer term, Emera expects 5% to 7% average adjusted EPS growth through 2030, with the potential to exceed that range in 2026. Overall, its regulated asset base and disciplined capital plan give investors a clearer runway than many higher-risk stocks.

Foolish bottom line

Clearly, the CRA’s TFSA rules should push investors toward better habits, not scare them away from investing. A long-term approach built around fundamentally strong companies could reduce avoidable red flags while still leaving room for tax-free growth.

While investing in stocks like Metro and Emera may not make you rich overnight, they could help TFSA investors stay focused, patient, and aligned with the account’s long-term purpose. That matters when the CRA is watching for behaviour that looks too much like active trading.

Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool recommends Emera. The Motley Fool has a disclosure policy.

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