TFSA over-contribution in 2026: what it costs and how to fix it
Enter the amount you put in over your room and the months before you take it out: the calculator applies the Canada Revenue Agency’s 1% monthly tax.
1% monthly tax
$180
$30 a month for 6 months.
| Highest excess in the month | $3,000 |
| Rate | 1% a month |
| After a year | $360 |
Income earned on the excess can be taxed separately; the CRA can waive the tax on request if the error is fixed quickly.
Prepared by Radif Partners · How we calculate · limits and tax tables read on canada.ca · estimates only, not a notice of assessment
A TFSA over-contribution costs 1% a month on the highest excess amount in each month, for as long as it stays in the account. A $3,000 excess left for six months costs $180; $7,000 left for a year costs $840. Unlike an RRSP, there is no cushion: the tax applies from the first dollar, and a whole month is charged even if you take the excess out a few days after putting it in. The way to stop it is to withdraw the extra amount; otherwise it melts away on the following January 1, when the new limit and that year's withdrawals are added to your room. The two most common causes are putting a withdrawal back in the same year and moving money between institutions yourself instead of by direct transfer. For any year in which the tax is owed, you must file Form RC243 and its Schedule A by June 30 of the following year.
How the tax is worked out
The Canada Revenue Agency defines the excess as the part of your contributions for the year that goes beyond your room at the start of the year, plus the part of any withdrawal that went to reduce an excess already created. Whenever an excess exists at any point in a month, you owe 1% of the highest excess in that month. The count runs month by month: if the excess shrinks along the way, the tax drops from the following month.
| Excess | 1 month | 3 months | 6 months | 12 months |
|---|---|---|---|---|
| $1,000 | $10 | $30 | $60 | $120 |
| $3,000 | $30 | $90 | $180 | $360 |
| $7,000 | $70 | $210 | $420 | $840 |
| $10,000 | $100 | $300 | $600 | $1,200 |
The month counts in full. Someone who creates a $2,500 excess on October 30 and takes it out on the 31st still owes $25 for October. On the other hand, nothing compounds: the tax is simple, in proportion to the amount and the number of months.
No cushion, unlike an RRSP
An RRSP tolerates a cumulative excess of $2,000 before its 1% monthly tax kicks in. A TFSA has nothing like that: the guide says the tax applies from the first dollar over. Going over by a few hundred dollars, because of a forgotten automatic transfer for instance, is taxed like any other excess. The FHSA works the same way, with its own 1% monthly tax on excess amounts.
Withdrawing to fix it
A withdrawal made after the excess was created reduces it by the same amount, until it is gone. If someone has had a $3,000 excess since May and takes it out in August, they pay four months, May to August: $120. Whatever part of the withdrawal goes beyond the excess does nothing that year: it cannot offset a new excess created later in the year. That part is simply added to your room on the following January 1.
Without a withdrawal, the excess stays until new room absorbs it. On January 1, the year's limit and the previous year's withdrawals are added; if together they cover the excess, the tax stops. If not, what is left keeps being taxed through the following year.
The mistakes that create an excess
Putting money back in the same year. This is the classic one. Someone who has already used up their room takes out $7,000 in February for an expense, changes their mind and puts it back in March. The withdrawal only turns into room on the next January 1, so in March it creates a $7,000 excess. Left until year end, it costs $700.
Switching institutions by hand. Only a direct transfer between institutions is neutral. Taking $20,000 out of a TFSA in June to deposit it in a TFSA elsewhere counts as a withdrawal followed by a contribution. With no free room, that contribution is a $20,000 excess: $1,400 from June to December.
Trusting the My Account figure in January. Institutions report a year's transactions at the end of February of the following year. On January 1, the figure shown therefore leaves out what you put in the year before. Several accounts at several institutions make it harder still: your room is shared across all your TFSAs.
Redo your room count
TFSA room available in 2026
$42,000
| Limits added up, 2009 to 2026 | $109,000 |
| Minus past contributions | -$60,000 |
| Plus past withdrawals | $0 |
| Room on January 1, 2026 | $49,000 |
Filing and paying
For any year in which the tax is owed, you fill out Form RC243, the TFSA return, with Schedule A (RC243-SCH-A) for excess amounts, and send it by June 30 of the following year, which is also when the tax must be paid. The Agency, for its part, sends an educational letter or a notice of assessment, usually the year after the excess, once it has the institutions' records. An excess can therefore run for months before you hear about it: keep your own record.
Asking for the tax to be waived
The Agency can waive or cancel the tax in whole or in part if it is fair to do so, looking in particular at whether there was a reasonable error and at withdrawals made to fix it. The request is a letter explaining why the excess happened and why relief would be fair. If you disagree with an assessment, an objection must be filed within 90 days, but the Agency recommends starting with the waiver request. A deliberate over-contribution is treated more harshly: the income it earns is an advantage taxed separately. To know how much you can safely put in, start from the TFSA contribution room page, and for how a withdrawal affects your room, the TFSA withdrawal page.