FHSA Overcontribution Penalty Calculator
Measure the cost of an FHSA contribution above available room and the benefit of correcting it sooner.
Estimated FHSA penalty tax
$2401% × 6 taxable months
Monthly taxable excess
$4,000No statutory cushion
CRA return
RC728Confirm the filing deadline and relief options
The 1% tax generally applies for every month in which an excess exists, including the contribution and removal months. This single-event estimate does not reconstruct multiple deposits, withdrawals or a CRA waiver.
What this estimate includes
FHSA room begins only after opening the first account. Transfers and designated withdrawals have their own issuer reporting requirements. For the full annual/lifetime limit, carryforward rules, and worked examples, see the 2026 and 2027 FHSA contribution limit pages.
Participation room is not the same as your deduction limit
The FHSA has two different "rooms" and mixing them up is the usual cause of an excess. Your participation room is the ceiling for what you may put in without creating an excess, and it counts contributions and direct transfers from your RRSPs together. In the year you open your first FHSA it is $8,000. In later years it is your unused re-participation room plus the lesser of two amounts: $8,000 plus your participation room carryforward minus any excess left at the end of the prior year, or your remaining $40,000 lifetime capacity worked out from prior-year contributions, transfers and designated amounts.
The consequence worth planning around is that an excess is not free even after it is cleaned up: an excess left at the end of a year is subtracted from the following year's participation room. In the CRA's example a $5,000 excess carried into a new year leaves only $3,000 of room for that year.
How the monthly tax is applied
The rate is 1% of the highest excess FHSA amount in each month, and it keeps running every month until the excess is gone — whether it is removed by you or absorbed by the new participation room on January 1. Because it tracks the monthly high-water mark, a same-month correction still costs one month of tax, and a contribution made in December still costs a full month even though it sat in the account for a few days.
Removing the excess: designated withdrawal or designated transfer
Two clean-up routes exist, and which one you may use depends on how the money got in. A designated withdrawal takes the amount out of the FHSA; a designated transfer moves it to your RRSP or RRIF. Neither is included in your income for the year, and a designated transfer does not use up RRSP deduction room. But if you only ever contributed to the FHSA, you may only make a designated withdrawal; if you only ever transferred in from an RRSP, you may only make a designated transfer; and where you did both, a designated withdrawal cannot exceed your total contributions to date less previous designated withdrawals, with the mirror-image cap for transfers. Either way the mechanism is Form RC727, given to your FHSA issuer, and the amounts show up in boxes 36 and 38 of your T4FHSA slip. A designated amount can never exceed the excess that exists at the moment you designate it.
You can also remove the money as an ordinary taxable withdrawal, which reduces the excess as well but has to be included in your income for the year received — worth avoiding when a designated route is open to you.
Questions this calculator answers
How is excess FHSA tax calculated?
CRA generally charges 1% per month on the highest excess FHSA amount in the month.
Can an excess be fixed by transfer?
A designated withdrawal or designated RRSP/RRIF transfer may reduce an excess, depending on the circumstances and reporting.
Do RRSP-to-FHSA transfers count against the same room?
Yes. Your FHSA participation room covers contributions and transfers from your RRSPs combined. In the year you open your first FHSA that room is $8,000, so transferring $8,000 from an RRSP and also contributing $8,000 creates an $8,000 excess, not a full year of extra saving.
Which return reports the tax, and when is it due?
Form RC728, First Home Savings Account (FHSA) Return, with Form RC728-SCH-A, Schedule A, Excess FHSA Amounts, which works the tax out month by month. Where an FHSA tax is payable, the return must be filed and the tax paid by June 30 of the year following the calendar year in which the tax arose. Form RC727 is a different document — it is the designation you give your issuer to remove the excess.
Does an excess disappear on its own in January?
It can, but at a price. Your excess is reduced by the new participation room that arrives on January 1, and the CRA gives the example of a $2,000 excess at the end of a year vanishing against the following year’s room. The catch is that it consumed that room: the participation room for the next year is reduced by the excess carried into it, and you still owe 1% for every month the excess existed.
Can the tax on an excess FHSA amount be waived?
The Minister may waive or cancel all or part of it where the excess arose from a reasonable error and you have taken, or are taking, immediate steps to remove it along with any income reasonably attributable to it. The request for excess-amount tax specifically is Form RC729, supported by FHSA transaction statements showing when the excess arose and when it was removed.
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