TFSA Over-Contribution Penalty Calculator and RC243 Return (2026)

This calculator works out the tax the CRA charges on a TFSA over-contribution: 1% of the highest excess in each month, for each month the excess stays in your TFSAs. It works from your room at the start of the year and your contributions and withdrawals, counting your TFSAs together, since they share one room figure. The tax goes on the TFSA return, Form RC243, with Schedule A, due by June 30 of the following year. The TFSA contribution room calculator works out your room, and other guides are on the TFSA hub.

How does the CRA count the tax?

• The tax is 1% of the highest excess amount in the month.
• It applies for each month the excess stays in the account, until it is withdrawn or absorbed by new room.
• There is no buffer: the tax starts with the first dollar over your room.
• The excess is measured across all your TFSAs combined.

The month the excess appears and the month you take it out both count: in the CRA’s example, a $2,000 excess put in and taken out in the same June still costs $20. Taking out part of the excess lowers the tax from the next month on, not in the month you take it out, because each month is taxed on its highest excess.

An excess still there at the end of the year carries into the next one, because the Income Tax Act lets your unused room at the end of a year be negative. On January 1 a holder who is 18 or older and resident in Canada at some time in the year gets the new dollar limit, and most of last year’s withdrawals are added back, which can absorb the excess; any part left over is still taxed.

An RRSP excess is generally what goes over its deduction limit plus $2,000 (RRSP over-contributions), while the TFSA tax applies to the highest excess in a month whatever its size.

The calculator’s estimate leaves out the penalties and interest a notice of assessment can add, and the other taxes on the same return.

How do I stop the tax?

The CRA says to withdraw the full excess as soon as possible, since it is taxed each month it stays in the account. There’s no need to call the CRA afterwards, because your financial institution reports the withdrawal, but the TFSA return is still required. Otherwise it stays taxed until new room absorbs it.

Putting the withdrawn money back in the same year without enough room creates an excess again. A withdrawal is added back to your TFSA contribution room on January 1 of the following year, not right away, so putting it back sooner uses other unused room. The TFSA withdrawal rules explain when room comes back.

Filing the TFSA return (RC243)

The CRA writes to people who over-contributed with an educational letter or a notice of assessment, usually in the year after the excess arose. An educational letter asks nothing more if the excess is already out; a notice of assessment works out the tax and shows when the excess arose and how long it stayed.

The return is required whether or not a letter arrives; if it isn’t filed, the CRA may send a notice of assessment later in the summer. Form RC243, the TFSA Return, and the payment are due by June 30 of the year after the year the tax applies.

Schedule A (RC243-SCH-A) is where the excess is worked out: it starts from your room at the beginning of the year and takes each contribution and withdrawal by date, month by month. Its total, the excesses that are subject to the 1% tax, goes on line 1 of Part A of RC243.

You can send the forms through “Submit documents” in your CRA account or by mail to the CRA’s TFSA processing units, and a mailed return can include the payment.

Can the CRA cancel the tax?

Under the Income Tax Act, the CRA may waive or cancel all or part of the tax on an excess if you show it came from a reasonable error and you withdrew it, plus the income it earned, without delay.

How do I ask for a waiver?

The request is a letter to the CRA explaining why the excess happened and why waiving or cancelling the tax would be fair, sent through “Submit documents” in your CRA account or by mail to one of the addresses the CRA lists.

What if I disagree?

If the CRA turns down a waiver request, you can ask for a second review. If you think the notice of assessment itself is wrong, you can object within 90 days of its date, on Form T400A or in a signed letter to the Chief of Appeals. The CRA recommends asking for a waiver before objecting.

What causes an over-contribution?

The CRA lists three ways an excess can happen:

• working out your room wrongly and putting in too much;
• putting a withdrawal back in the same year without enough room (when room comes back);
• contributing to several TFSAs without keeping a total (more than one TFSA).

Moving money between TFSAs by withdrawing it yourself counts as a new contribution, unlike a direct transfer. The room shown in your CRA account is updated only once a year, in the spring, with the previous year’s transactions (is my TFSA full, or over?).

What other taxes go on the same return?

Contributions made while you are a non-resident are taxed at 1% a month, reported on Schedule B, and can be taxed on top of the excess tax (non-residents). If an over-contribution was deliberate, the CRA may tax the income it earns as an advantage, at 100%. Prohibited and non-qualified investments are taxed as well, and are reported on the same return (what a TFSA can’t hold).