Taxpayer learns ignorance isn't bliss when it comes to the CRA and TFSA rules

financialpost.com:

As we wade through tax season anxiously awaiting those final few T5 and T3 slips for 2023 to arrive, we should ensure we’ve taken full advantage of the contribution room available to us in all the various registered plans in order to minimize the amount of taxable investment income we’ll need to report in future years.

With the cumulative tax-free savings account (TFSA) contribution room potentially as high as $95,000 in 2024 (assuming you were 18 and a resident of Canada since 2009), and this year’s annual dollar limit set at $7,000, there’s really no excuse for anyone to have any non-registered taxable investments if you haven’t fully maximized your cumulative TFSA contributions.

You can check your TFSA contribution limit online by logging on to the Canada Revenue Agency’s online portal for individuals called My Account. But keep in mind your TFSA contribution and withdrawal information is not updated in real time and may be out of date. Check the “as of” date posted online alongside your TFSA room.

The reason for vigilance is to avoid the overcontribution penalty tax, which is equal to one per cent per month for each month you’re over your limit. A one per cent tax doesn’t seem like a lot, but the tax is one per cent per month for each month you’re over the limit until the overcontribution is withdrawn — that’s 12 per cent per year.

If you do get hit with a TFSA penalty tax, you can request the CRA to waive or cancel it, which the agency has the power to do if it can be established the tax arose “as a consequence of a reasonable error,” and the overcontribution is withdrawn from the TFSA “without delay.” If the CRA refuses to cancel the tax, you can take the matter to Federal Court, where a judge will determine