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TFSA over-contribution: how to fix it and limit the tax

A TFSA over-contribution is easy to make and easy to miss. Room reported in your CRA account can be months out of date, a replacement deposit can use room you do not have, and several accounts can hide a combined total. The tax is a monthly charge, so what you do in the first few weeks matters. This article walks through confirming the excess, removing it, reporting it and asking for relief, with the records to gather along the way.

Sora Accounting & Tax · General information · Editorial policy
Updated · 5 min read

Confirm, withdraw, report and ask for relief

Fixing a TFSA over-contribution follows four steps: confirm the excess from your own records, withdraw it, report it by June 30 and, where it fits, ask the CRA for relief.

Visual labels: Confirm your room; Withdraw the excess; File the TFSA Return; Request relief if fair.

See the sourced 2026 Ontario tax guide: rates, limits and deadlines →

What to take away

  • Check your own records first; your CRA account is updated only once a year and may not show recent activity.
  • Withdraw the excess as soon as you can, because the tax is 1% a month on the highest excess in each month.
  • You still file a TFSA Return by June 30 of the following year, even after the excess is gone.

How an excess usually happens

The CRA lists three common causes. You may miscalculate your available room and contribute too much. You may put back a withdrawal in the same calendar year without having unused room to cover it. Or you may contribute to more than one TFSA without tracking the combined total. Your room applies across every TFSA you hold, so a second account does not give you a second allowance.

Timing also catches people. Your financial institution reports a calendar year of transactions to the CRA by the end of February of the next year, so the room shown in your CRA account lags behind what you have actually done. The CRA says to rely on your own records rather than that figure, so compare your own statements with it before depositing anything.

Step one: confirm that you are actually over

Do not guess. Your available room is the current year’s dollar limit ($7,000 for 2026), plus unused room from earlier years, plus withdrawals made in the previous year, minus contributions already made this year. A contribution reduces your room immediately. A withdrawal does not restore room until January 1 of the next year. Qualifying transfers, exempt contributions and specified distributions generally do not change the calculation.

Use the CRA’s contribution room worksheet, Form RC343, or the calculator in your CRA account that lets you enter your own records. Gather statements from every TFSA issuer, with the date and amount of each deposit, withdrawal and transfer. If a figure in your CRA account disagrees with your records, the CRA says to contact the issuer, since the issuer must send an amended report if its earlier one was wrong.

Step two: withdraw the excess and understand the tax

If the excess is still in the account, take it out through your issuer. You do not need to phone the CRA first, because the issuer reports the withdrawal. The CRA also advises you not to wait for a notice, since the tax keeps running while the excess stays in the account.

The tax is 1% per month, calculated on the highest excess amount in the account in each month. Here is an illustration with round numbers. If you are $3,000 over in March and remove all of it in May, you owe 1% of $3,000 for each of March, April and May, or $90 in total. If you remove only $2,000 in April, the highest excess for April is still $3,000, so the full $30 applies for that month. Removing the whole excess earlier in a month does not erase that month’s tax, but it stops the next month from being charged.

Step three: file the TFSA Return by June 30

Withdrawing the excess stops the clock; it does not finish the paperwork. You must still report the excess on a TFSA Return, Form RC243, with Schedule A for excess TFSA amounts (RC243-SCH-A). The return and the payment are due by June 30 of the calendar year after the year the tax applies. An excess in 2026 would be reported by June 30, 2027.

You can submit the forms through “Submit documents” in your CRA account or mail them to the tax centre listed on the CRA page. Payment is made separately or with the mailed forms, using the CRA’s payment options. If you are not sure which tax year the excess belongs to, work that out before filing, because the deadline follows the year in which the tax arose.

What the CRA may send you, and what to do

The CRA may tell you about an excess through your CRA account or by mail, usually in late spring after the issuer has reported. A notice is not required before you act, and not receiving one does not remove the filing obligation. If you do not file, a TFSA notice of assessment may arrive later in the summer.

If you disagree with a TFSA notice of assessment, you can file a notice of objection within 90 days of the date on it, using Form T400A or a signed letter to the Chief of Appeals. Our article on how to dispute a CRA assessment covers the general process, but check the 90-day date on your own notice.

Asking the CRA to waive or cancel the tax

The CRA may waive or cancel all or part of the tax on a TFSA if it considers that fair. It looks at whether the tax came from a reasonable error, how far the same transaction triggers another tax, and how far you have withdrawn funds to correct the mistake. A prompt withdrawal therefore supports a request as well as limiting the tax.

Your request is a letter explaining how the situation happened and why relief would be fair, sent through “Submit documents” or by mail. Attach the timeline and the statements that show the correcting withdrawal. If the answer is no, you can ask for a second review. The CRA also notes that a deliberate over-contribution can carry additional tax consequences, so a request works best when the mistake was genuine and corrected quickly.

Avoiding a repeat, including for owner-managers

Keep a simple running ledger: opening room, each deposit and withdrawal with its date, and the January 1 additions. Do not replace a withdrawal in the same year unless you have unused room to cover it, and do not assume that a November withdrawal makes room in December. Our article on 2026 RRSP, TFSA and FHSA limits explains the difference between the annual limit and your available room.

If you own a corporation, a TFSA is a personal account, so money from the business has to reach you first as salary, a dividend or a repayment of a shareholder loan, each with its own tax and record treatment. Whatever the route, record how much left the business and on what date, so the TFSA deposit can be matched to it. Bring your issuer statements, your RC343 worksheet, any CRA letters and the source of the funds to your accountant, and ask which tax year the excess belongs to and whether a relief request makes sense.

Sources & editorial notes

Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.

Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.