TFSA Over-Contributions

August 29th, 2014 by Potato

The stats on how many people got nastygrams from the CRA with penalties for over-contributing to their TFSAs this year have come out, and there’s a lot of shock over the fact that this keeps happening. Young recently made that mistake.

I will say it again: the onus is on you to track it yourself. The web portal is known to be dramatically out-of-date. IMHO the CRA should just take it down because it’s misleading and the opposite of helpful. Young suggests calling to get a more up-to-date reckoning. This may be more up-to-date than carbon dating the archeological evidence in the sedimentary layers of the web portal, but I can guarantee someone will be caught by this system also being out-of-date at some point. There is no getting around the fact that the CRA can’t give you an updated contribution limit if the banks haven’t sent them the information (and as an aside, it’s really weird to me that phoning will get you more up-to-date information than the computer system, like we live in an age where there’s a pile of paper forms on somebody’s desk that haven’t been entered into the computer yet). And the CRA will not accept responsibility for telling you that you have contribution room left when they later determine that you don’t.

I make tracking it simple on myself: I max it out in one call the first week of January, and then forget about it for the rest of the year. Now that’s only possible because I had non-registered savings and investments when the TFSA was launched, and continued to have non-registered funds every year, so I just have to call up TD, make an in-kind transfer of some shares, and contribute whatever cash is needed to round out to the limit (which I can then use to buy e-series with inside the TFSA).

But whether you have a simple system so you don’t screw it up (like contributing in one chunk, or an automatic monthly contribution that keeps you under the limit), track it religiously, or go through all your statements on an as-needed basis to forensically re-create the events in question, ultimately it’s up to you to not over-contribute.

One Response to “TFSA Over-Contributions”

  1. save. spend. splurge. Says:

    I did / do exactly what you do / did.. and they still managed to screw it up and NOT report it when I withdrew $15,000. I had to call, get them to update and re-send the information and get CRA to recalibrate.

    What a hot mess.

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