If you over-contribute to a TFSA
If you over-contribute to your Tax-free Savings Account (TFSA) and the excess amount is still in your account, withdraw it as soon as possible. Do not wait for the CRA to inform you, as any excess amount in your TFSA is taxable at 1% per month for as long as it remains in your account. If the over-contribution is deliberate, there may be additional tax consequences.
After you withdraw the excess amount, you do not need to call the CRA, as your financial institution will send us proof of the withdrawal. However, you are still required to report the excess amount by filing a TFSA Return with the CRA.
For more information: Withdrawing from a TFSA
How we notify you of an excess amount
The CRA may notify you if you have over-contributed to your TFSA and advise you of the potential tax implications. We send this notification to some TFSA holders through their CRA account or by mail in late spring, after we are informed of the excess by the TFSA issuer.
Whether you receive a notification or not, you will be required to file a TFSA Return for the excess amount. If you do not file a TFSA Return, you may receive a TFSA notice of assessment (NOA) later in the summer.
How TFSA issuers update the CRA
TFSA issuers must submit a summary of all the transactions that a holder makes in a calendar year by the end of February of the next calendar year.
It is therefore possible for your TFSA to have an excess amount for several months before you are notified about it.
It is important to keep and maintain your own records, and to track your contributions closely. You should withdraw any excess amount as soon as possible to minimize penalties.
If you are a non-resident
The CRA will send TFSA holders who are non-residents a notice of assessment (NOA) that details the excess amount in their account. It will show when the excess amount began, how long it was in the account and the date we processed the NOA.
If applicable, the NOA will also provide a detailed calculation of the tax that you owe on contributions made to your TFSA while you were not a resident of Canada.
For more information:
How to report an excess amount
If you have an excess amount in your account, withdraw it as soon as possible and then file a TFSA Return.
For more information: How to file a TFSA Return