If you over-contribute to your TFSA, the excess is taxed at 1% per month. The fix is to withdraw the excess as soon as possible.
Step by step
- Work out the excess: contributions this year minus your available room.
- Withdraw that amount as soon as possible.
- File the TFSA Return (Form RC243) with Schedule A and pay the tax by June 30 of the following year.
- If it was a genuine error, you can ask the CRA to waive or cancel the tax.
How it usually happens
- Contributions spread across several banks or brokers.
- Re-contributing money withdrawn this year (it only comes back on January 1).
- Relying on CRA My Account before banks have reported (they file by the end of February).
FAQs
What is the TFSA over-contribution penalty?
1% per month on the highest excess amount in each month it stays in the account.
How do I stop the penalty?
Withdraw the excess as soon as possible.
Which form do I file?
The TFSA Return (Form RC243) with Schedule A, by June 30 of the following year.
Plan it in minutes
The tracker shows room left across every institution and flags an over-contribution in red, with the monthly penalty, before it happens.
