CRA Collected $166.2M in TFSA Overcontribution Penalties in 2024

The Canada Revenue Agency (CRA) reported that penalties tied to tax-free savings account (TFSA) overcontributions climbed to $166.2 million in 2024, up from $130.8 million in the prior year, according to an email to Investment Executive.

TFSAs are subject to a monthly 1% tax on amounts that exceed the allowable contribution limit.

Out of 19.3 million TFSA holders, about 133,000 (0.7%) made excess contributions, with an average penalty of $1,252.22 per person. That’s an increase from 117,000 individuals in 2023, when the average penalty was $1,118.39.

Over the past decade, the growth in overcontributions has far exceeded overall TFSA adoption. Between 2015 and 2024, the number of TFSA account holders expanded by 52%, from 12.7 million to 19.3 million, but the number of those who overcontributed jumped fourfold, from 33,000 to 133,000.

Likewise, total excess TFSA taxes surged more than ten times, from $15.2 million in 2015 to $166.2 million in 2024. The average penalty also nearly tripled, rising from $457.75 in 2015 to $1,252.22 last year.

Registered retirement savings plans (RRSPs) also impose a 1% monthly tax on contributions above the deduction limit, though they allow for a $2,000 buffer. The CRA said it could not share data on RRSP overcontributions because of differences in how those contributions are tracked.

“This issue is generally within an individual’s control and typically arises when people neglect their RRSP investments and related tax responsibilities,” a CRA spokesperson noted.