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

Here are some key steps to avoid penalties for over contributions:
 

Know your contribution room
 

Each year, the federal government sets a new annual limit (e.g. $7,000 for 2026).
 

Your total room includes unused amounts carried forward from previous years plus any withdrawals you made in prior years (which are added back the following calendar year).
 

You can check your exact contribution room through your CRA My Account.
 

Track contributions across all institutions
 

If you have multiple TFSAs at financial institutions, the CRA still treats them as one account. Contributions are cumulative, so you must keep a personal record to avoid exceeding the limit.
 

Withdraw excess funds quickly
 

If you accidentally contribute too much, withdraw the excess right away. Don’t wait for the CRA to notify you — the 1% monthly penalty applies as long as the excess remains.