TFSA Over-Contribution Penalty Calculator Canada

What a TFSA over-contribution costs

Any amount in a TFSA above the room the CRA says you have is taxed at 1% of the highest excess in each month, for every month or part month it remains, until you take it out or new room opens. Enter the room you had on 1 January, your contributions this year and how long the excess has been there; the advanced fields cover withdrawals and amounts put back. The calculator reports the excess, the monthly charge, the penalty so far, the penalty still to come and how much the new January room will absorb.

A worked example

You had $12,000 of room and contributed $18,000, a $6,000 excess, charged $60 a month. After five months the penalty is $300. Leave it two more months, to the year end, and the total is $420. Withdraw now and you still pay for the current month, $360 in all, saving $60. On 1 January the $7,000 annual limit would absorb the whole $6,000 excess.

There is no cushion, unlike the RRSP

The RRSP rules ignore part of an excess before the penalty starts; the TFSA does not. Every dollar above the limit is charged from the month it goes in, and the tax is based on the highest excess reached in each month, so paying it down mid-month does not help that month. The charge is not prorated, so one day in a month counts as a whole month. That is why fixing the excess today still costs the current month but stops every month after.

The re-contribution trap

Money withdrawn from a TFSA returns to your room on 1 January of the following year. A saver who has used all their room, withdraws $5,000 in June for a car repair and puts it back in October has made a new $5,000 contribution against zero room, charged at 1% every month from October. The balance looks unchanged; the tax bill is not.

The advanced fields model this. Enter what you withdrew and what you put back, and the calculator separates withdrawals that removed an excess from withdrawals that only freed room you cannot use until next year. Automatic monthly contributions that keep running after you hit the limit cause the same problem, a small excess that grows each month unnoticed until the CRA writes.

What 1 January does for you

The new annual limit is added to your room and everything you withdrew during the previous year is added back, which often absorbs the excess and stops the charge. The calculator reports the excess left after that. If it is zero, waiting through the last month or two of the year is defensible, though you pay for every month to 31 December. If not, only withdrawing stops the charge.

Timing near year end matters: withdrawing in December costs that month’s charge and the room returns on 1 January; withdrawing the same excess in January costs another month and the room does not return until the following January.

Reporting it

The penalty is self-assessed on form RC243 with schedule RC243-SCH-A, due 30 June of the following year. The CRA often gets there first with a proposed assessment based on issuers’ annual TFSA records. If the excess came from a genuine error and you withdrew it promptly, you can ask in writing for the tax to be cancelled or waived, at the CRA’s discretion.

A separate 100% advantage tax applies to income from a deliberate over-contribution, aimed at people who over-contribute to shelter more growth. This calculator prices only the monthly penalty. The penalty rate and annual limit are maintained parameters sourced from the CRA.

All results are estimates that assume your room is stated correctly on your notice of assessment or in My Account; it can differ if earlier contributions were reported late. This is general information, not tax advice. Have a qualified Canadian tax professional review anything material before you file RC243 or ask for a waiver.

About This Tool: TFSA Over-Contribution

TFSA over-contribution: use this tool to get an instant, accurate estimate. The figures follow official CRA guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.