OTTAWA, ON, July 24, 2025 /CNW/ - Canadians have been contributing to tax-free savings accounts (TFSA) since 2009, enjoying tax-free investment growth. Did you know that it's possible to overcontribute and be subject to tax?
Excess contributions can occur, for example, when your TFSA is set up for pre-authorized contributions and you make additional contributions without verifying the amount of room you have available. This can also be the case when you have multiple TFSAs with different financial institutions and you are not tracking the contributions you are making to all accounts. You can avoid taxes by staying within the TFSA contribution room available to you.
Your TFSA contribution room is made up of three things:
- the annual TFSA dollar limit
- any unused contribution room from previous years
- any withdrawals you made during previous years (excluding direct transfers)
The annual TFSA dollar limit for 2024 was $7,000. For 2025, the limit is also $7,000.
Tracking contribution room
You can track your TFSA contribution room using a CRA account. Log in and you'll be able to:
- check your TFSA contribution room
- make sure your TFSA is registered with the CRA
- review any transactions within your TFSA
Although it's your responsibility to manage your TFSA contributions and withdrawals, your financial institution can help you to track your contribution limit. It's prudent to keep track of your TFSA transactions to avoid overcontributing.
Overcontribution to your TFSA
The CRA charges a tax of 1% for every month that the excess contributions stay in your account(s). You will receive an educational letter or notice of assessment through your CRA account identifying your excess contribution situation. If you don't have a CRA account, it will come by mail.
An indirect transfer from one TFSA to another is also considered a contribution. Be careful to stay within your contribution room!
Fixing an overcontribution
The CRA may send you a letter by mail or through your CRA account if you've exceeded your contribution room for the year. You might have to pay tax on the excess amount. Withdrawing your excess contributions as soon as possible will help reduce the tax you have to pay. Learn about the TFSA rules and guidelines and follow them, to help save you time and money!
Waiver or cancellation of the TFSA taxes
The CRA can waive or cancel all or part of the taxes if we determine it is fair to do so after reviewing all factors. To consider your request, we need a letter that explains why the tax liability arose, and why it would be fair to cancel or waive all or part of the tax. Learn more about TFSA excess amounts.
Contacts
Media Relations
Canada Revenue Agency
613-948-8366
[email protected]
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SOURCE Canada Revenue Agency
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