Canada TFSA Over-Contribution Penalty Calculator

The tax comes from Income Tax Act s. 207.02 of the Income Tax Act, and it is one sentence long: if you have an excess TFSA amount at any time in a calendar month, you owe 1% of the highest such amount in that month. Everything else is bookkeeping around that sentence.

An excess TFSA amount is the part of your contributions sitting above the room available to you. Room is the sum of every annual dollar limit since you turned 18 or since 2009, whichever is later, plus anything you withdrew in earlier years, minus everything you have contributed. Someone eligible since 2009 who has never contributed has CA$109,000 of room in 2026.

Three details decide the answer, and all three are where the shortcut arithmetic found on forums goes wrong.

1. The month of the withdrawal is charged in full. The tax falls on the highest excess at any point in the month, not the balance at the end of it. Fix a $5,000 over-contribution on 20 July and July still costs $50, because the account was over by $5,000 for the first nineteen days. What the withdrawal buys you is every month after it.
2. 1 January resets the arithmetic.On the first day of each year your room grows by that year's dollar limit, plus everything you withdrew during the previous year. Both land before the month's high-water mark is measured, so a January that would have cost 1% may cost nothing. An excess of CA$7,000 or less at the end of December clears itself on 1 January — but every month up to then is still payable.
3. Withdrawing does not return the room until next year. Take $6,000 out in March to fix an over-contribution and you cannot put it back in July. The room returns on 1 January. Re-contributing before then stacks a second excess on top of the first, which is the usual way a small over-contribution becomes a large bill.

The calculator walks your excess month by month, applying withdrawals after each month's high-water mark and new contribution room before it. It then sums the monthly highest-excess column and applies 1% once — the order RC243-SCH-A uses — so the total matches the form to the cent rather than drifting by a few cents of per-month rounding.

Every calendar year with an excess needs its own form RC243, due 30 June of the following year, with the tax payable the same day. File late and the CRA adds 5% of the balance owing plus 1% for each complete month, to a maximum of 12 months, with compound daily interest running from 1 July.

Tax owed when the excess stays unchanged for the whole period — no withdrawal and no 1 January reset in the window. Use the calculator above when either of those applies, because this grid will overstate the answer.

Source: Income Tax Act s. 207.02. Figures are the tax only — late-filing penalties and arrears interest are extra once 30 June has passed.

• Income Tax Act, s. 207.02 — tax payable on excess TFSA amount
• Income Tax Act, s. 207.06(1) — waiver of tax payable
• CRA — If you owe tax on excess TFSA amounts
• CRA — Form RC243, Tax-Free Savings Account (TFSA) Return
• CRA — RC243-SCH-A, Schedule A: Excess TFSA Amounts
• CRA — Calculate your TFSA contribution room (annual dollar limits)

The rate, the annual dollar limits and the filing deadlines on this page were last cross-checked against these sources on 2026-08-13. The page is reviewed every January, when the CRA confirms the next year's TFSA dollar limit. This is general information, not tax advice — for a disputed assessment, speak to a Canadian tax professional.