TFSA Overcontribution Penalty Calculator

This models one contribution and one removal. Multiple accounts still share one personal TFSA contribution limit.

How the 1% is measured

The tax is not charged on your December 31 balance and it is not pro-rated by days. The CRA applies 1% to the highest excess amount in the account during each calendar month, which is why the month the excess appeared and the month you removed it are both taxable months. Taking the money out on the 30th costs the same as taking it out on the 2nd; taking it out in June rather than September is what saves money.

Partial withdrawals only help from the following month. On the CRA's own example, a $6,000 excess in August cut to $2,000 in mid-September is still charged $60 for August and $60 for September, because $6,000 was the high-water mark in both months, and $20 for October on the $2,000 that stayed.

What creates an excess

Your room is every annual dollar limit since you turned 18 or since 2009, whichever is later, plus unused room carried forward, plus the withdrawals you made in earlier years. The 2026 dollar limit is $7,000, added to your room on January 1. Three patterns cause most excesses: re-contributing a withdrawal in the same calendar year without enough room left, adding up contributions across two or three institutions with no running total, and trusting the room figure shown in your CRA account.

Reporting and paying it

Excess-amount tax is not part of your T1. You file a separate TFSA Return, Form RC243, with Schedule A (RC243-SCH-A), and pay by June 30 of the year after the year the tax applies. Submit it through "Submit documents" in your CRA account, or by mail to the TFSA Processing Unit at the Sudbury or Winnipeg tax centre. File whether or not the CRA has contacted you: the notice it sends some holders in late spring is a courtesy, and skipping the return usually produces a TFSA notice of assessment later in the summer instead.

Correcting it, and asking for relief

Withdraw the full excess as soon as you find it, and keep your own dated transaction records — they are what a relief request is judged on. Two situations cost far more than 1% a month: a deliberate overcontribution can be taxed at the 100% advantage rate instead, and an excess that exists while you are a non-resident of Canada can attract a second, separate 1% monthly tax on top of this one. If you think the tax should not stand, the CRA can waive or cancel it, and you have 90 days from a TFSA notice of assessment to file a formal objection on Form T400A.