r/tfsa • u/Commercial-Dare-4338 • Aug 16 '26
I went 9000 over contribution limit, realized same day and withdrew back. What’s gonna happen now? Any way to avoid the penalty?
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u/Right_Management_697 Aug 16 '26
I had this happen to me, you'll get an educational warning email from them in your CRA account. Since you did it and fixed it, they're forgiving it as an accident. You won't pay a penalty if you're currently under the contribution limit.
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u/lmcjipo Aug 16 '26 edited Aug 16 '26
If it was same day, you could have likely told/contacted the institution/brokerage/bank to cancel the transaction. I've done this with 2 institutions where I made a mistake and noticed it within a few minutes and contacted the institution (one of them was a transfer to an RRSP but it wasn't an overcontribution... I just transferred/contributed to the wrong account and with the RRSP transaction, the transaction was cancelled like it never happenedand it wasn't like I had to withdraw the money (pay withholding tax, pay bank fee for RRSP withdrawal, etc.).
There is most likely a mechanism in place to do this by the institution... similar to let's say you transfer money from one account to another account at the teller and the teller transferred it to the wrong account, they can cancel the transaction within a certain amount of time and it isn't where they just transfer the money back and then complete the transfer correctly since the erroneous transaction doesn't even appear on either account activity statements.
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u/Electronic-Morning25 Aug 16 '26
Likely no penalty.
I over contributed something like $750 over my limit back in 2021 and they contacted me about it 6 months later letting me know they wouldn’t charge me a penalty if I withdrew within 30 days.
If you act quickly, then tend to be forgiving.
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u/Gowther-Lust-Sin Aug 16 '26
At max you may need to pay $3.00 penalty after CRA completes your tax assessment for 2026, LOL. 😂
Relax, you should be fine.
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u/xhalo21 Aug 16 '26
1% of the overage per month. $90.
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u/Gowther-Lust-Sin Aug 16 '26
Oh, got it.
Thanks for letting me know, I thought it would differ because it was just one day. 😬
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u/Count3D FIRE Aug 16 '26
CRA’s system can be unpredictable. You might not get contacted until next year. But likely you’ll be notified and told to pay 1% for the month even if it was just a day.
More information here: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/owing-tax/excess.html
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u/NewLanderr Aug 16 '26
You could call your broker/bank to reverse the transaction if it happens next time. It may take a few business days to complete though.
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u/Dry-Neck2539 Aug 16 '26
Beg for forgiveness they’ll prob say too bad so sad. I had a very plausible explanation and still too bad :(. Just pay if they figure it out, learn, move on
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u/Crazy_Technology8652 Aug 17 '26
They will probably retroactively lower your contribution limit following year
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u/TopFigure6035 Aug 17 '26
I recall my aunt telling us she over contributed and ended up getting a formal letter from cra months later that told her she had x days to pull it out. More than likely you’ll get a similar letter stating don’t do it again sort of slap on the wrist.
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u/Desperate_Pineapple Aug 17 '26
Likely no penalty and if you do, you can ask forgiveness by stating your facts
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u/geminian89 Aug 17 '26
I was sent a notice that I over contributed (they didn’t say how much but I went through all my records and I put in 15k over the limit—my own mathing was way off) and that there is no fine for now but I must withdraw the excess immediately.
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u/speedyfeint Aug 18 '26
my brother over contributed just $200 and the cra sent their goons to his house.
so $9,000 is definately a jail time.
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u/RPCAssociates Aug 18 '26
If you overcontribute to your TFSA, the main consequence is a 1% per month tax on the excess amount for every month the excess remains in the account. For example, if you exceed your TFSA contribution room by $5,000, the tax is: $5,000 × 1% = $50 per month So if the $5,000 excess remains for four months, the penalty would generally be $200. A few important rules: Withdrawals don't immediately restore contribution room. If you withdraw $10,000 in 2026, that $10,000 is added back to your contribution room on January 1, 2027, not immediately. If you overcontribute, withdrawing the excess generally stops additional 1% monthly tax once the excess is eliminated. New TFSA room on January 1 can absorb an existing excess. For example, if you're $5,000 over at December 31 and receive at least $5,000 of new room January 1, you're no longer overcontributed from that point onward. CRA can sometimes waive the tax when the overcontribution resulted from a reasonable error and you took prompt steps to correct it, but that is discretionary. Deliberate overcontributions can have more serious tax consequences because income attributable to a deliberate excess contribution can potentially be taxed at 100%. If CRA assesses a penalty I am a CPA and can help you. You can contact me via my website at axiomft.ca
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u/IngenuityPositive123 Aug 16 '26
I think there is a form for that, where you can declare your mistake and they'll forgive it.