mudcat

Hi All,

With tax season coming round again I started reading up on the TFSA and it seems I have over-contributed. When I initially investigated last year I thought I was entitled to the full contribution room since it launched in 2009 (total $25,500 - and as of this year $31,000) even though I didn't move here until mid 2012. Now I re-read the details I think my contribution accumulates from 2012 only ( $5000 + $5500 + $5500 ).

Can anyone confirm this?

FYI the CRA published my contribution in My Account as $25,500 last year however I'm betting they didn't take in to account my lack of residency status until 2012.

Next question - how do I deal with the over-contribution? I'm guessing the CRA won't catch it (they do catch yearly over-contributions based on depositing-withdrawing-depositing too much) - Should I call the CRA and explain?

Thanks!

yzf.shaun

You need to call the CRA. They will assess you tax on the over contribution which I believe runs at 1% a month. If you can get them to believe it was a lack of understanding they may cut you some slack but I wouldn't expect that.

You are correct in that you have

2012 $5000
2013 $5500
2014 $5500

JamesM

+1. You have over contributed.

Steve_

TFSAs are a right pain in the ass.

The main thing that annoys me is that you can't claim back the contribution room until the following year which means if you've invested in something illiquid then you can't really sell it until December because you can't re-invest it in a TFSA.

Also have the other problem that the CAD is a bit of a crap currency so I find myself now in the situation of wanting to move into USD securities, but by the time I get them into the TFSA the CAD will have gone down, which also degrades the contribution room into the TFSA.

JonboyE

So the first thing to do is to get the overcontributed funds out of the TFSA.

mec

Just a bump to this thread... as I just filed my first tax return (moved last year) and saw my contribution room at $31k and thought I was in luck, but wisely searched the forum before adding more!

I've not over contributed as I figured it would only accrue since I moved here, but MyCRA website overstating it is dangerous and could catch people out.

mudcat

Thanks for the feedback.

My TFSA was in over contributed status for a period of about 6 weeks up until Dec 31st 2013 - at the turn of the year, with the additional 2014 headroom, I was under again. I didn't bother contacting the CRA or taking any money out and from now on am sticking to they yearly headroom (from 2012, my year of landing, onwards, and not as per CRA my account which I believe does not take residency status in to account when calculating headroom)

If anyone who hasn't over contributed feels like calling the CRA to discuss and updating the thread that would be great.