How do I avoid being charged a penalty for over-contributing to my Tax Free Savings Account (TFSA)?

Be aware of your contribution limit - As of January 1, 2016, all Canadian residents who are at least 18 years of age can contribute up to $5,500 annually* (for all combined TFSAs, at any institution). Up to $10,000 of unused contributions can be carried over from 2015, up to $5,500 per year from 2013-2014, and up to $5,000 per year from 2009-2012. This contribution limit is not to be confused with the balance of the Account.

Wait until next year before putting back money that you've withdrawn from your TFSA this year. - For example, if you contributed $46,500 to your TFSA between 2009 and 2016, then you can contribute up to $5,500 in 2017. If you withdraw $1,000 later in 2017, then you'll need to wait until 2018 to put that $1,000 back in your TFSA, in addition to your 2018 contribution. Repeatedly depositing and withdrawing money from your TFSA in the same year will use up your contribution room and may put you in a position where you may be charged penalties for exceeding your annual contribution limit.

Remember, your TFSA contribution limit applies across all financial institutions - The per-person annual limit is $5,500*, regardless of whether your money is invested at one or more financial institution(s).If you have TFSAs with more than one financial institution, ensure that the total of all your contributions does not exceed your available limit.