dreamerman's picture

dreamerman

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TFSA Beware!

The Conservative government introduced the Tax Free Savings Account a few years back. You can contribute a max of $5000 a year in a TFSA but if you exceed this amount you are charged a substancial penalty. I know someone who put in $3000 more than they were allowed to put in and they were charged 1% on the $3000 every month that it was over the allowable limit. So for the nine months that they were over the limit they were charged 1% x $3000=$30x9= $270 in taxes owed to the CRA. He said it was one of the big banks that put the money in the TFSA which he thought was no problem at the time but is now on the hook for the $270.. I guess the government must think the $3000 was put in the highest risk mutual fund to get that kind of interest even though it was put in a GIC.

So does anyone else know about this kind of penalty you get if you exceed the TFSA limit? Apparently if you have online banking you can put in as much money as you want in a TFSA. You could exceed your allowable amount by $20,000 and be on the hook for $2400 come tax time.

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chemgal's picture

chemgal

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The TFSA limit is now $5500 per year, it went up to that in 2013.  There are similar penalities for RRSPs.  I don't think the banks are to blame most of the time.  I took a fair bit out to buy a house, so I can put a fair bit back in.  It's not the bank's job to track that, especially since it wasn't all sitting in one bank to start with.

 

The CRA shows the limit.  My biggest complaint is that they are very slow to update that.

mrs.anteater's picture

mrs.anteater

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The problem is, that it s not that someone has to put in $8000to be over the limit. If you put in your $5500 at the beginning of the year, than take $3000 out to pay a bill and than later on want to replenish it again to the original amount, you have put in too much by just topping it up again. if you take it out, you cant put it back in until the next year. (Unless you haven't maxed out the $5500).

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