Getting dinged on TFSA contributions

I’m hearing from many people who are surprised to find they have to pay tax on contributions to a tax-free savings account.

If you withdraw money from a TFSA, you can replace it the next year without any tax consequences. But if you pay back what you withdrew from your TFSA in the same year, you’re making an overcontribution — and you have to pay 1 per cent of the amount to the Canada Revenue Agency.

There’s a pretty good explanation here. But because the TFSA is new, many of those complaining say they didn’t know how the rules worked.

Sometimes, it’s the financial institutions at fault. I heard from someone who transferred his TFSA from a TD Waterhouse brokerage account to a TD branch last year. The bank counted the transfer as a new contribution.

Check out the comments at this tax blog and the complaints I posted below. Have you been caught in the same trap?

Author: Ellen Roseman

Consumer advocate and personal finance author and instructor.

60 thoughts on “Getting dinged on TFSA contributions”

  1. I had the same situation where I transfer money from one bank to another. So I end up having to pay a TAX on the money that I paid TAX already.

    I don’t know what kind of bookkeeping will only count your deposit but not withdrawal for the same month or even same year.

    Not only did CRA tax you on the so called “over contribute portion.” The way they calculated it is compounded monthly. So if you’re over $1,000 in march, the $1,000 will be repeatedly taxed until December.

    I think this is so bad. It’s a way the government doing some non-conventional accounting to rip citizens off.

  2. I did the same thing….sort of. Last year, I bought a few TD mutual fund accounts and put them into a TFSA. The total purchase was $4997.00. I wasn’t happy with one of the funds so I transferred $600 from the fund I didn’t like into another fund that I already had within the TFSA. Basically, I was just moving my money around.

    A friend did a similar transaction and received a tax bill for $28.27. If I do get dinged by the government for moving my funds around, I will hit the roof.

  3. I agree strongly with these complaints – I heard about this problem and I will get dinged in 2010 for exactly the same issue.

    My question is – how do we get the attention of the politicians to fix this (hopefully) unintended tax grab?

    Please send messages like these to your MP !

    This is wrong. The 1% over-contribution penalty should only apply to balances, not aggregate contributions only.

    Bad policy needs to be highlighted and corrected. We could certainly get 3 of the 4 political parties in Ottawa to agree to something this blatently unfair.

  4. I told my wife when these first came out that, as time went on, they would become a nightmare. The first issue is that most banks promote as “accounts” when they really should be considered as “plans” like RRSPs. Traditionally, from the public’s perspective, “plans” have rules, savings accounts do not. Thus how quickly people are getting into trouble with temporary withdrawals/redeposits and the urge to rate chase when virtual Bank B offers x per cent more than virtual Bank A. No one is doing any “formal” transferring of their balances when they move their money around, required for RRSPs. Candidly, I have not looked into whether formal transfers are currently possible and what the money-losing institution is going to charge but I’m sure it will wipe out a lot of that tax-free interest. Perhaps someone is familiar with this aspect.
    On a personal note, I took out a 5 yr GIC in 2009 which pays its interest annually into a TF Savings account. Now I’m wondering if this will be treated as a new “contribution”. Sure hope not as I’ve already invested $5000. for 2010.
    Let me also just say that the CRA’s approach to all this to date seems unbelievably inflexible and quite sad. Hopefully, someone will be able to post a positive outcome from an appeal.
    Lastly, this is only going to get worse until the Finance Minister takes a close look at what is happening and modifies/clarifies the current approach. Somehow, I’m sure he can work it into the government’s Economic Action Plan. WARNING – Don’t get me started on that!!!

  5. I just wanted to mention that my husband opened a TFSA with ING in 2009. He accidentally transferred a couple of hundred from that account into another account at another bank. The ING website would not allow him to put the money back into his TFSA.

    The explanation was that it would be deemed an over-contribution, so at least ING has some safeguards in place.

  6. I too got dinged way more than I made in tax-free interest.

    I feel everyone (i.e. banks, the government) did a very poor job explaining (or not!) that withdrawal/deposits from one account to another would not be considered as legitimate transfers.

    Another thing I got screwed on was the timing. Calculations for overcontribution and the 1% tax are made by the calendar month.

    For example, you can make the overcontribution on May 30th, realize your mistake and withdraw on May 31st – I don’t think you’ll pay a penalty.

    But make the overcontribution on May 31st and withdraw after you realize your mistake on June 1st and you now have to pay that darn 1% tax!

  7. I don’t buy the argument that people didn’t know they couldn’t re-contribute in the same year. It is very clearly explained in every article, report and bank communication I’ve read that you can only re-contribute withdrawn amounts the year following the withdrawal. Very clearly, this means that if you withdraw money in 2009, you cannot re-contribute until 2010. I think a lot of people tried to take advantage of the benefits of a TFSA and they’re complaining now that they’re getting a big tax bill.

  8. I really hate it when someone says I don’t buy the argument that people didn’t know they couldn’t re-contribute in the same year.

    So for what hidden reason would a guy like me deposit and withdraw from this account every month, end up being charged $380 in taxes and earn tax FREE only $15? Is it because I like to torture myself?

    And why did the government do these tricks?

    My balance NEVER exceeded $5000, which is the limit that the guy at President’s Choice told me not to exceed.

    Even if the rules were clear, and they were not, why have these oppressive ripping rules anyway? Whose actuarial mind is behind it?

    Good way to collect back the 1% GST reduction and keep the election promise at the same time!

    It’s my account, and it’s called a saving account, not a plan. What’s wrong with depositing and withdrawing as much as I wish?

    I hope that one day we will not be taxed if our heartbeats exceed the number specified by the government!

    Anyway, I closed the “tax-free” account after it left me money-free. I received the message and I’ll not be deceived again by Shylock!!!

  9. Yes, I received my letter in the mail and now owe $200.

    I contributed $5000 in January into TFSA and as it wasn’t making any good returns, I called BMO and asked them to transfer it to a TFSA Investorline account. Well, they didn’t transfer. Instead they withdrew the money back into my bank account, then they opened a new TFSA.

    Of course, the CRA sees this as an additional $5000 contribution. I had purposely asked the bank if I could do this and they said it was alright.

    I might just take this bill over to my local branch. I mean if the banks are not up on the rules, how is ordinary Joe Citizen supposed to be?

    I too was told I could apply for administrative relief and have done so.

  10. I would place much (but not all) of the blame for these situations on the banks and the inconsistent advice from the banks’ own staff who do not fully understand how TFSA accounts and the rules work.

    I was very close to making a transaction that would, in the end, have resulted in a tax penalty. Prior to making the transaction, I called my bank’s telephone banking service to ask if I was allowed to make the transaction without penalty. The answer I got did not seem right to me, so I hung up and called back to ask someone else. Then I got an answer that did seem right, but just to be sure, I called again.

    I got three different answers. If I had listened to the advise from 2 of 3, it would have led to a tax penalty. Given the uncertainty and multiple answers, I just chose not to make the transaction to be safe.

    I do not think the rules on TFSA accounts are straightforward and I think the banks should be sure their staff really do understand the rules. I also think it would not be too much of a hardship for the bank to let people know when a transaction would lead to a penalty (assuming of course the transaction was not completed online, but even then, maybe there is a way to put forward a warning).

    While I feel much fault can be placed on the institutions, in the end there is not an excuse for an individual not educating themselves when there is a lot of information readily available.

  11. I can’t believe the people, here. The rules are quite clear and were widely available on tons of bank, gov’t and personal finance websites to anybody who cared to look. The CRA or banks aren’t at fault just because people didn’t do their own due diligence.

    For the record, you CAN transfer TFSAs between institutions without incurring a penalty (I’ve done so twice, myself). However, as many people seem to have learned, a withdrawl and re-deposit is NOT a transfer. You have to file the paperwork at the receiving institution and wait for them to initiate the process.

  12. Yes, my penalty is $480.63. I too put in $5,000, then wanted to give some money to my 3 grandchildren for graduation. I then saved and topped it up again.

    The porch was falling apart, so took out money again for that, then saved and topped off again.

    What a joke. I thought as long as I didn’t put any more than $5,000, I was okay. WRONG.

    I think truly they counted on this extra tax grab, so they could give the criminals their HST. What a joke. We have to be crooks to get money.

  13. In 2009, I deposited the max. amt with TD in a GIC. After 1 day, I rethought my decision & inquired with my TD representative if I could instead trade equities with my TFSA. She informed me that it was possible to trade equities in a TFSA & that I could do so, no problems, with no penalties.

    She proceeded to close my GIC accnt & opened a TD discount brokerage account for me. The funds from the GIC account were then transferred into the new TD discount trading account.

    She, like everyone else here, informed me that the rules were that I could withdraw my funds any time, so long as it was replaced within the same year. In my case, it was just a simple transfer to another type of account.

    I’ve been dinged by CRA for the max. amt of $598.99! This is such a joke. Perhaps this is how the government is proposing to pay for the supposed $1B G20 summit.

  14. Hello all, I have received a $1,300 tax bill due to some misunderstandings of this account.

    Being a C.A., I can vouch for the fact that CRA did a very poor job at explaining how overcontributions work and how they are calculated. The way they are calculated are fundamentally and completely improper, as it is onerous and can punish taxpayers where they have earned no benefit from the overcontribution.

    CRA needs to ask themselves whether this makes any sense. The calculation is also quite complex to the point where it’s too difficult to understand for a reasonable and common taxpayer until too late.

    I suggest that anybody with a tax bill should fight it with as much vigour as possible so that we can all be given some leniency in this first year. Giving leniency would be fair in this first year.
    Regards.

  15. I WAS ALSO TAKEN IN BY THE GOVERMENT TFSA FRAUD. IT SURE WAS NOT MADE CLEAR. NOW I OWE $2107.00 AND RECEIVED $50.00 INTEREST. HOW NICE.

  16. I cannot believe how many of us have been caught in this trap.

    I too deposited a lump sum amount of money that I took out (after 50 days) for my son’s education. But at the same time, I had my bank withdrawing a certain amount each month from another account to deposit in the TFSA.

    So when the amount I originally deposited and the monthly contribution equalled $5000 (about July of last year), I was taxed as overcontributing — when there was never more than $4700 in total (December) in the account! How unfair.

    I agree with Ellen Roseman that Ottawa should waive penalties for over-contributions made in error this first year. They were marketed as Savings Accounts and they really are different. I am sending my protest letter to Flaherty, Blackburn (Minister of National Revenue) and RBC, since the bank was knowledgeable of my plan and did not notify me.

  17. A comment about Lee’s comment: You must work for the goverment if you think this is fair to cheat people by misleading them. You should try getting a real job instead of a do nothing government job.

  18. TFSA accounts are meant to be savings vehicles. People have to understand that because they are not taxed, you cannot withdraw and recontribute in the same year.

    If someone has been penalized due to transferring their account, it is most likely because the institution either sending or receiving the funds reported them as a new contribution and not a transfer. Transfer of funds are not reported to CRA, only deposits and withdrawals.

  19. Some of the comments here and on the Star website regarding the TFSA are basic examples of people failing their grade school reading classes or expecting everyone else to hold their hand for them.

    It is well laid out about what to do, what not to do and the penalties for doing the wrong thing. Those that rely on institutional employees to ensure that transfers do not become withdrawals are again not reading what they are signing or/and not taking the time to understand the plain laid out rules.

    Contributions of $5000 a year, withdrawals cannot be replaced until Jan 1st in the following year. So hard.

    This is not just messing up a bank account that banks can easily fix within their own computers. You are dealing with the CRA and you better make sure you know exactly what is going on with your account, because it will be yours and no-one else’s head that will be under the guillotine. He said, she said, I could do this or that, just doesn’t cut it.

  20. Same problem here. I never went over my limit, just borrowed from the account then topped it back up. Now I ower $95.06, far more than the interest I earned in the account. What a waste of time and money.

  21. The problem appears to be that most of you folks failed to read the TFSA rules (or misunderstood what your bank told you, they never told you, or your bank never understood either).

    They’re all on the CRA website and aren’t that difficult to understand.

    http://www.cra-arc.gc.ca/tx/rgstrd/tfsa-celi/menu-eng.html

    The fact of the matter is you can’t just withdraw money from the account and put it in another TFSA somewhere else. Well, you could, but it’s NOT a transfer. That is a withdrawal and a re-contribution.

    Much like an RRSP, in order to properly transfer, you have to get the bank to do the transfer. This involves work on the bank’s end and why there’s a fee involved at many, many, institutions to transfer out of a TFSA. However, some receiving banks will refund the fee charged by your old TFSA bank.

  22. We transferred 20k$ in March this year from one TFSA to a better one by using cheque since I wasn’t aware there would be a direct way and now I am afraid this will be counted as over-contribution. Any ideas?

  23. This cannot be right!! I too got this nasty letter to send in $100. I had transferred my TFSA from one institution to another. I earned $50 in interest. What a joke our government is.

  24. Quote from mike “I never went over my limit, just borrowed from the account then topped it back up.”

    See, people cannot read, or is it a math problem. Yes, you did go over your limit.

    YOU ARE ONLY ALLOWED TO CONTRIBUTE $5000 PER YEAR.

    IF you put in $5000, removed $2000 and put the $2000 back in within the same year then you have contributed $5000+$2000= $7000 contribution.
    $7000 just happens to be over $5000 and is therefore an OVER contribution. Penalty time.

    What is so hard to understand?

    Marco, part quote: “We transferred 20k$ in March this year from one TFSA to a better one.”

    The TFSA program is only two (2) years old, so unless you made close to a 100% return in your original TFSA account, the most you could have in your TFSA is 10K + any gain.

    If you have not been lucky enough to acquire this 100% gain, it appears that you may have over contributed on an already over contribution.

    Good luck.

  25. I hope you don’t make this mistake, as I found I did in January (transferred from P.C to TD regular account, discovered error and transferred back exact amount to P.C.).

    I have cleared out all of our T.F.S.A. accounts to zero. I am awaiting my tax penalty for the 2010 tax year.

  26. This rule is clearly unfair. Consider this scenario of transferring to another institution.

    You transfer your $5K from Bank A to Bank B by first withdrawing your money from Bank A on, say, June 1, then transfer it on Bank B on June 5. This case will cause you to have an excess contribution of $5k for the rest of the year. The tax on that will be $5K x 7 months x 1% or $350.

    However, if you open the account in Bank B first then close/withdraw funds from Bank A after, then you only get charged for 1 month’s worth of excess contribution.

    That’s BS!

  27. I suffered same panelty.
    Jan 2009, I opend my TSFA by $5. Feb 2009, I put two $4995 (total $9990) to my TFSA by misunderstanding between me and the financial institute. I realized the mistake immediately and without all of $9990 in Feb 2009. After I comfirmed there was only $5 in my TSFA in march, and put $4995 to the account again because I didn’t realize there is no room for 2009. June 01, 2010, I received the $499.5 panelty letter. I was very surprised. So I went to the CRA’s website and spend a lot of time to check the rule carefully. Then I realized that the course is so expensive. I agree that it is fair to waive penalty for over-contribution made in error during the first year.

  28. I think it,s time for the government to step up and give us a break. There are so many people out there getting the letter of unfair penalties. I will not be voting for Harris now and with the look of it I will not be alone.

  29. Thank you for a timely column in the Star. I just received a notice for $249.94 — like one of your other readers, I opened an account, found a better rate and … well, we all know the outcome. So much for tax-free savings.

  30. After reading your article in the newspaper, which I forwarded to a number of people, I can see what happened regarding our own TFSAs.
    We have received an assessment notice from Canada Revenue Agency for what they deem is an excess TFSA deposit for 2009.

    Our financial institution, changed brokerage firms and so our TFSA investments were transferred from one firm to another without any cashing out on our part.

    I wonderd if this was the cause of the charges from CRA.

    We hope CRA and Minister Flaherty will review and change their assessment decisions for Canadians.

    Thanks for your work on this subject.
    Anne Gloger

  31. Why do people not accept responsibility for their own actions? The government is to blame! The banks are to blame! My financial planner is to blame! Never it’s my fault. Every person that over contributed did not learn the facts about the programme as offered. If someone received an over contribution because a transfer was reported incorrectly, that can be corrected.

    General Motors sold me my car. They didn’t tell me that I have to drive on the righthand side of the road. Even though their vechicles go faster than 100 km/h, they didn’t tell me that the speed limit on the 401 is that. By the logic put foward in some the commemts above, GM should pay for any ticket/fine I receive if they don’t explain the Highway Traffic Act to me OR if they allow any of their vechicles to exceed the maximum speed.

    Learn the rules people, there’s no-one to blame but yourself.

  32. I don’t disagree that ultimately the individual should take responsibility, but the Government and the financial institutions did not publicize the rules and penalties.

    In fact, they only marketed the benefits and were silent on the penalties and rules involved (except in the fine print).

    Aside from the lack of education by the government and institutions, the penalty is excessive; 1% per month is legalized extortion…12% for the year on accounts earning 1.5% to 2.5% annually makes no sense (other than a tax grab).

    This far exceeds any benefit an individual would receive for over contributing. Penalties should be waived for the first year at least.

  33. I got dinged $300 for 2009. It will probably be $500 for 2010. I made like $60 and i get charged $800 in penalty. My bank misinformed of the purpose of the tax-free savings account, they said “use it like you would any other savings account”. My bank also had no warnings in place. The only warning I got about the situation was from the CRA and it came in the form of a $800 tax grab. I feel sorry for the thousands of Canadians who were trapped into this situation. If the government doesn’t listen, I suggest voting for a new one that will.

  34. No its not our self to blame, rules are not clear at all .
    why everyone did the same mistake on thinking that you deposit and withdraw unlimited transactions as long as the balance of the TFSA does not exceed 5000$.

  35. J’ai déposé 2000$ le premier janvier 2009 dans un CELI et je l’ai retiré le lendemain. J’ai acheté un nouveau CELI de 4999$ quelques jours plus tard croyant que la règle avait été respectée puisque je n’ai pas eu d’excédent durant une seule minute. Le gouvernement me réclame maintenant plus de 200$ que je dois payer très vite si je ne veux pas avoir à payer 5% d’intérêt sur je ne sais quel montant et je ne sais si ce taux est annuel ou mensuel. La règle n’est pas claire et la pénalité est exagérée.

    Please keep me informed if there’s any recours collectif about it. Thank you.

  36. I received my tax bill for $50. I opened and contributed $5000 to my TFSA in April of 2009. In September 2009 I mistakenly withdrew $5000 from this account. I noticed my mistake immediately and redeposited the $5000… on the same day. Both transactions occurred on September 9th and my daily balance in the account never exceeded $5000. Unfortunately Revenue Canada only sees that I contributed $10,000 to my TFSA. What a joke this is!

  37. I also treated my TFSA as a regular saving account and putting in and withdrawing. I got a nasty letter asking me to pay $370. This is outrageous.

  38. The TFSA contribution rules were indeed cristal clear. However, its name is misleading and its concept is counter intuitive. Kudos to those who read the rules carefully.

    It’s named as Tax Free Saving Account, but it’s not a saving account after all. It’s publicized as the best thing after RRSP with tax-free withdrawls, only we can’t borrow from TFSA like we can in RRSP. It has a contribution limit of 5000$, but the way over-contribution is calculated is by counting money that I actually don’t have. I have on my hand 5000$, I deposit 5,000$, withdraw 2000$, then deposit 2000$ back. But according to the rules, I actually have 7000$ because I over-contributed by 2000$. If goverment is willing to give me the virtual money that I’m being penalized upon, I’ll be happy to pay the fine/interest/penalty.

    Yes, I do blame myself for not reading the rules clearly and am kicking myself for assuming that goverment was providing a good tax free vehicle for my saving needs.

  39. I had the exact same thing happen to me. I treated my tax free savings account like a high-interest savings account because it was not made clear to me by my bank that I should not do so.

    I deposited $5000 initially, and then had to take some money out a few months later when my twins were born. Throughout the year, I replaced the withdrawn money in bits and pieces, always making sure to keep my contribution under the $5000 limit.

    I knew about the tax on contributions over $5000, but didn’t worry about it because I was being so conscientious – this wouldn’t apply to me, right? Imagine my dismay when I got a tax bill for $365 for my “over-contributions” of approximately $5000.

    Worse still, I had already put in $4000 for 2010 at the time I got the tax bill. My excess contributions from 2009 had already eaten up my new $5000 contribution limit!

    I called the federal tax phone line and was upset to learn that I have indeed unknowingly over-contributed for 2010 already and will receive ANOTHER tax bill at some point for the months of January to June 2010.

    I immediately withdrew all of my money out of the account to avoid paying any further taxes on the account for the rest of this year.

    It is very, very upsetting to find that in trying to be responsible and save my hard earned money in a “tax free” account, I am ultimately paying more tax than I would have if I’d left the money in a regular old savings account.

    I’m going to follow your recommendation from CBC radio this morning and complain to my MP and the finance minister.

    http://www.cbc.ca/money/moneytalks/2010/06/ellen-roseman-tfsas-and-the-perils-of-new-tax-shelters.html

    There should be some sort of leniency for all of the Canadians who made this type of mistake with these new accounts.

    If the bank staff didn’t give us the correct information about the deposit/withdrawal rules when we opened these accounts, how were we to know otherwise?

  40. This new ‘savings initiative does not even tax you on the interest you gained!!! This would be a good eye opener for us all. No! They tax you on your over-contribution!!!

    Could they not have hired a computer programmer to design a pop-up block to WARN you?

    “YOU HAVE EXCEEDED YOUR ANNUAL $5,000 CONTRIBUTION. THANK YOU. HAVE A GOOD DAY!”

    Then it would have logged you off! Could they not have done that?

  41. So here’s why I think that EVERY CANADIAN CITIZEN should CLOSE their TFSA accounts TO SEND A MESSAGE TO THE GOVERNMENT. Rich or poor, we are all responsible for each other because with this TFSA, the POOR GET POORER!

    Here’s my rationale:

    The MAXIMUM TFSA contribution per annum is $5,000. With the low market right now between 1% to 3%, the maximum TAX-FREE INTEREST you will get is $150 (at a high 3% interest rate).

    Now, if you took that money and put it into another savings account, you will be charged interest within your tax bracket. That means that a person who makes $1 million will get taxed ~50%. That is a maximum of $75. This is nothing to a millionaire!!!

    Usually, millionaires have someone doing their finances and thus won’t make the mistake of OVER-CONTRIBUTION. So, the government will probably not gain anything from them.

    Now, for a poor person like myself, who is struggling to put bread on the table, who doesn’t have an accountant, who UNKNOWINGLY overcontributes $15,000, with a NET BALANCE of only $2,129, I have to pay over $150 in penalty. This is taxation on money that I have ALREADY been taxed on, not a measly $57 interest.

    Now imagine if other POOR individuals, who don’t have the time to read all the fine print, who are struggling to survive, who don’t have a minute to spend with their families, fall into this trap, how much they have to pay in penalties?!!!

    I want everyone to know that I COMPLETELY CLOSED OFF my TFSA!

    This is one of many ways I am going to let the government know how vile and unjust they are!

  42. I can write more about people who have had over $100,000 in OVERCONTRIBUTIONS. Yes, they might have made $3,000 interest last year, but they now have to pay $12,000 in “penalty” fees.

    That is $9,000 of their HARD EARNED money going to the government for NO REASON.

    It makes sense now why Steven Harper spent $1 billion dollars last month over the span of a two-week summit in Toronto.

  43. I just did a mistake by transferring 10,000 from my saving account to my tfsa instead of my chequing acct. Spent half an hour on the phone with the bank to try to cancel the transaction. I should have no problem with this.

    But after reading all these post, I see how revenue canada needs to control this so people don’t overcontribute. Maybe they should’ve made it like an RRSP, if you take your money out, you don’t get your RRSP room back. But that wouldn’t be as good for us. We just need to be more careful.

  44. I work for an investment brokerage and really do feel sorry for those who are unjustly being penalized for pseudo over contributing.

    The CRA needs to implement the same transferability of other registered plans in order to keep track of initial and catch-up contributions.

    Those in the industry are familiar with T2033’s for RRSPs and T2151’s for RPPs. All they need to do is create one more form (call it whatever number) and that will easily stop people from erroneously overcontributing because registration will not be institution specific, as it is now.

    A simple letter of administrative release ought to sort things out with the tax man.

    However, I’m stunned at a client who contributed $5,000 at each (yes, each) banking institution, totalling 8. That’s $40K he’s on the hook for in penalties!!

  45. My wife and I were also ripped off by this new wonderful way to save money.
    We took $5,000 each out in February to buy RRSPs. When the tax return came back in March, we put the money back in the TFSA.

    In October, we both get a letter saying we owed $300. I am assuming the deposit/withdrawal rules are there to prevent some sort of fraud, but for the life of me I can’t figure out how.

    The penalty is to charge 12% annual interest. I wish that my money could make me as much as it deos the gov’t.

    From what I have seen you have to a) pay them the money, b) ask for administrative relief due to stupid punitive rules, c) potentially get a refund if CRA decides to be nice to you.

  46. I just made a contribution to TFSA to buy stock and the stock price increased and now I have an over payment of $50 to my TFSA account.

    Should I sell some of the stock to cover the outage or pay the penalty for the 5 months?

  47. Hi Ellen, to cover for the difference in stock price I would either have to contribute an extra $50 into my TFSA account or sell some shares to cover the difference. If I make the additional payment, I would end up having an over-contribution.

    Would you suggest selling the stock to cover the difference or pay the penalty for the 5 months, as it’s not a large sum?

  48. All you idiots saying the government is trying to rip you off, you should know before you enter into an agreement what the stipulations are.

    Don’t flap your wings when you do what the rules SPECIFICALLY say you can’t!

    Ignorance is not bliss…

  49. I’m in the same boat. I had a TFSA with one bank and then moved to another. I requested a transfer of TFSA to a TFSA at another institution.

    Now the CRA says I over contributed by nearly $20k. You can imagine what the penalty on that is! And I deliberately under contributed this year due to other expenses!

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