About the TFSA Over-Contribution Penalty Calculator
If you put more into your Tax-Free Savings Account than your available contribution room, the Canada Revenue Agency charges a tax of 1% per month on the highest excess TFSA amount in each month the excess remains. This calculator works out that tax month by month, shows how much you save by withdrawing the excess straight away instead of waiting, and whether new room on 1 January will absorb it.
It suits anyone who has received a CRA TFSA excess letter, made a contribution after a withdrawal in the same year (withdrawals only restore room the following January), or simply lost track of room across several accounts. The annual TFSA dollar limit is $7,000 for 2024, 2025 and 2026, which is the default for next year’s new room until the CRA publishes the indexed 2027 figure.
The tax applies to every month in which any excess exists, including the month the over-contribution happens and the month it is removed, because it is based on the highest excess in the month. You report it on Form RC243, the TFSA return, due by 30 June of the following year. The calculator assumes a single excess amount that stays constant until it is withdrawn or absorbed.
With the default inputs, the tax on excess tfsa amount is $120.00. Change any value above to recalculate instantly.
How to use the tfsa over-contribution penalty calculator
- 1Enter your excess TFSA amount from CRA My Account or your own records.
- 2Choose the month in which the over-contribution happened.
- 3Choose whether you will withdraw the excess or wait for new room on 1 January.
- 4Read the total tax, the monthly cost and the saving from withdrawing early.
Formula and method
The CRA charges 1% of the highest excess TFSA amount in each calendar month in which an excess exists. Because the test uses the highest amount at any time in the month, both the month in which you over-contribute and the month in which you withdraw count as full months.
If you leave the excess in the account, it continues to be taxed every month until 1 January, when new contribution room is added; any room absorbs the excess and reduces what you can contribute that year. Withdrawals made to remove an excess reduce the excess immediately, but they do not create new room until the following year. Separate rules (a 100% tax) apply to deliberate over-contributions and to income earned on them.
- Excess
- Contributions above your available TFSA room
Worked examples
$3,000 excess from March, withdrawn in June
March, April, May and June each count, so the tax is 1% × $3,000 × 4 = $120. Leaving it until January would cost $300 for ten months.
CRA example: $2,100 excess from October, left in the account
An excess of $2,100 for October, November and December costs 1% × $2,100 × 3 = $63, matching the CRA’s own worked example. New room on 1 January absorbs it.
$10,000 excess in January, waiting for new room
Twelve months at $100 a month is $1,200. On 1 January the $7,000 of new room absorbs only part of it, so $3,000 would keep being taxed at $30 a month — withdrawing is clearly better.
Frequently asked questions
What is the penalty for over-contributing to a TFSA?+
The CRA charges a tax of 1% per month on the highest excess TFSA amount in each month the excess remains in your account. For example, a $5,000 excess left for six months costs $300.
Does withdrawing the excess give me back room?+
Withdrawing removes the excess, which stops the 1% tax from the next month. But withdrawals only add contribution room back on 1 January of the following year, so do not re-contribute the money in the same year.
How do I pay the TFSA over-contribution tax?+
You file Form RC243, Tax-Free Savings Account Return, and pay the tax by 30 June of the year after the excess. The CRA often sends a letter and a pre-filled return once it detects an excess.
Can the CRA waive the TFSA penalty?+
Yes. If the excess was due to a reasonable error and you withdrew it promptly once you knew, you can ask the CRA in writing to cancel or waive the tax, explaining the circumstances and providing supporting documents.
What is the TFSA limit for 2026?+
The annual TFSA dollar limit is $7,000 for 2026, the same as 2024 and 2025. Someone eligible every year since 2009 who has never contributed has $109,000 of cumulative room in 2026.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.