Be careful moving your TFSA — or the CRA might come knocking
I received my 2023 Notice of Assessment this week and it contained the full details of my tax assessment, an explanation of changes and other important information, along with a one-page detailed registered retirement savings plan (RRSP) deduction limit and available contribution room statement. What it did not contain, however, was a similar statement about my available tax-free savings account (TFSA) contribution room.
For this, you need to go online to the Canada Revenue Agency’s portal, My Account or phone the tax information phone service (TIPS) at 1-800-267-6999. Assuming you have the patience to hold (wait times this week were 1.5 to two hours), you can ask an agent for a TFSA Room Statement and a TFSA Transaction Summary, which show the information the CRA has received from your TFSA issuers about your contributions and withdrawals.
Each year, all TFSA issuers are required to electronically submit a TFSA record to the CRA for each individual who has a TFSA. Issuers must submit this information by the last day of February of the following year, and report all TFSA transactions you made on or before Dec. 31 of the prior year.
It’s important, however, to compare the TFSA transaction information the CRA has with your own records to ensure the information they have is correct and up to date. It’s possible that when you look online, especially in the first few months of the year, the CRA may not yet have received and processed the previous year’s transactions, meaning they’re not yet reflected in the TFSA amounts shown online. This could lead to an overcontribution.
The penalty for overcontributing is equal to one per cent per month for each month you’re over your limit. If you get assessed a TFSA penalty tax, you can
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