TFSA Over-contributions

According to a Rob Carrick article in the Globe & Mail today, Canada Revenue Agency has sent notices to 70,000 Canadians charging them over-contribution penalty taxes. The link to the article his here:

There is one misleading point in the article that does require clarification. You can transfer monies from one TFSA account to another without it effecting your contribution room. You cannot withdraw, and re-deposit though.

Here at Craig & Taylor we have come across two cases so far. In the first case, the individual had a TFSA account with their bank, contributed money, withdrew money, and re-contributed all in the same tax year. In this case, it is too bad that the individual didn’t get better advise from their bank.

In the second case though, a direct transfer was made from one financial institution to the other, and the receiving institution erroneously treated the incoming money as a contribution. CRA has sent a notice demanding over-contribution penalty tax, but this is in error.

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