TFSA over-contribution penalty calculator

Think you put too much into your TFSA? Estimate what the CRA’s 1%-per-month tax on the excess could cost - then fix it before it grows.

How the CRA calculates it

The tax is 1% of the highest excess amount in your account for each month the excess is there - not 1% of your balance, and not an annual rate. It keeps running every month until the excess is withdrawn or new January 1 room absorbs it. You report it on form RC243, and the CRA can add interest and penalties on top if you file late.

A worked example: a $2,000 excess left in place for 3 months is 3 × 1% × $2,000 = a $60 tax. Leave it a full year and it’s $240 - on money that was never supposed to be in the account. The tax is charged even if your investments lost money, because it’s based on the excess contribution, not on growth.

What to do now

Withdraw the excess amount (not the whole account) as soon as you discover it - that stops the clock at the end of the current month. Then file RC243 for each year the excess existed. If your excess is smaller than next year’s new annual room, January 1 may absorb it without a withdrawal, but the tax still applies to every month before that.

Not sure whether you’re actually over? Work it out with the TFSA contribution room calculator first - most “over-contributions” turn out to be a withdrawal that hadn’t come back yet, or a second account someone forgot they had.