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Oct
25

TFSA

Posted by: Peter Harasymchuk, CPA, CMA | Comments (0)

TFSA Over-contribution Rules

2009 was the first year in which TFSA contributions of up to $5,000 were allowed.  Many individuals did not understand the rules and thought they could withdrawal the amounts in 2009 and could re-contribute in 2009.  The TFSA rules are as follows, any withdrawals from the TFSA are added back to the contribution room, but not until the year following the year of withdrawal.  If you did re-contribute in 2009 you are subject to a penalty of 1% per month in which there is an over-contribution

Example: if you made a contribution of $5,000 in 2009 and withdrew the funds later in 2009, you cannot re-contribute the $5,000 until 2010.  If you did re-contribute in 2009 the re-contributed amount will be deemed as an over-contribution and subject to a penalty.

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Categories : TFSA
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