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Email this10:37 pm
April 6, 2013
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Bill said
… If they can't and you withdraw asap then there will be little CRA effect and, in fact, you can probably successfully appeal it to CRA (when they assess you any penalty later) showing it was a mistake that was rectified asap.
CRA can waive the 1%/month TFSA overcontribution penalty in cases of "reasonable error".
Details in new thread Waivers of TFSA overcontribution tax.
12:03 am
April 14, 2021
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I called EQ and they said that it could have been fixed within the first 24 hours, but the 4-day delay makes it impossible. The contribution has already been reported to CRA.
I called CRA to asked if anything could be done and and how to pay it. No luck from that end, either. Thanks to Norman1 for the helpful forms. I think I figured out how to pay the $122; for a four-day transgression. 
If Norman is correct in that a warning letter will be the first step:
Norman1 said
CRA has the discretion to waive the TFSA overcontribution tax of 1% per month. This is from Spectrum Law: Gekas v. Canada…:It is the CRA’s policy to send a warning letter to a first-time over-contributor. If the excess amount is not removed, the CRA will assess the tax. Repeat over-contributors will be assessed without warning.[2] The CRA is aggressive in imposing TFSA over-contribution taxes.
"Reasonable error and removal of the excess contributions without delay are the two preconditions for relief.”
Then I might just wait until the letter appears. I have already withdrawn the over-contribution and was getting ready to send payment, until I saw Norman1's helpful advice.
Anyone see fault in this course of action?
I hope that I don't end up on CRA's black-/watch-list for this bungling, the way Loonie's mother did.
10:20 am
April 6, 2013
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If the TFSA overcontribution was made this month, one should wait until this taxation year is over.
According to the back of Form RC243, the overcontribution tax is due the following year:
Filing due date
If you are subject to TFSA tax at any time during the year, you have to file this return with a payment for any balance due no later than June 30 of the year following the end of the calendar year.
When an individual dies before the due date of a TFSA return, both the filing and the balance due dates will be the later of:
• June 30
• 6 months after the date of death
CRA may not be ready yet to process any returns for this current taxation year 2022.
11:30 am
April 14, 2021
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I did mention the 2022 taxation year to the CRA rep and she told me that it would be fine to file it as it currently stands. I thought it a bit odd, too, but she assured me that I could go ahead and deal with it now, rather than waiting until next year.
12:51 pm
August 23, 2022
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For explanation's sake let's assume I inititiate a direct transfer TFSA funds in late Nov. from FY#1
6 weeks later the funds are still not in the receiving acc.
Late Dec. I withdraw the money from TFSA into regular Sav. acc. (FY#1) in order to deposit again in Jan. at the receiving FI (FY#2), via e-transfer.
I don't think you can stop the request for transfer at this point (I tried actually and it was a big mess).
Q#1: What happens when the request arrives at last (or is seen by somebody) and there are no remaining funds in the TFSA acc. of the first FY (FY#1)?- which is the one responsible for the delay, anyway...
Q#2: how late can I withdraw the funds after the request for direct transfer? (in other words how long does the paperwork stays with FY#1, how long with Canada Post and how long with FY#2 before the funds are posted?)
1:06 pm
August 23, 2022
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HermanH said
I called EQ and they said that it could have been fixed within the first 24 hours, but the 4-day delay makes it impossible. The contribution has already been reported to CRA.I called CRA to asked if anything could be done and and how to pay it. No luck from that end, either. Thanks to Norman1 for the helpful forms. I think I figured out how to pay the $122; for a four-day transgression.
If Norman is correct in that a warning letter will be the first step:
Norman1 said
CRA has the discretion to waive the TFSA overcontribution tax of 1% per month. This is from Spectrum Law: Gekas v. Canada…:It is the CRA’s policy to send a warning letter to a first-time over-contributor. If the excess amount is not removed, the CRA will assess the tax. Repeat over-contributors will be assessed without warning.[2] The CRA is aggressive in imposing TFSA over-contribution taxes.
"Reasonable error and removal of the excess contributions without delay are the two preconditions for relief.”
Then I might just wait until the letter appears. I have already withdrawn the over-contribution and was getting ready to send payment, until I saw Norman1's helpful advice.
Anyone see fault in this course of action?
I hope that I don't end up on CRA's black-/watch-list for this bungling, the way Loonie's mother did.
It happened to me twice: the FY reported a direct transfer as new funds (some $50K); I did NOT receive a letter of overfunding from CRA- I just noticed that I am over the limit accidentally online, in myaccount but it was about 6 months later; I wrote a message to CRA to clarify that this is a mistake (I called also and followed their suggestion to discuss the matter with the FY); the FY that did the mistake had to rectify the report to CRA; it took another few months to be all clear with CRA and actually they might not update your status online until the next assessment.
My conclusion is that I have to verify the reports for TFSA frequently, every year until all the accounts are updated to make sure there are no errors.
8:13 am
December 7, 2011
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ameoba said
For explanation's sake let's assume I inititiate a direct transfer TFSA funds in late Nov. from FY#1
6 weeks later the funds are still not in the receiving acc.
Late Dec. I withdraw the money from TFSA into regular Sav. acc. (FY#1) in order to deposit again in Jan. at the receiving FI (FY#2), via e-transfer.
I don't think you can stop the request for transfer at this point (I tried actually and it was a big mess).
Q#1: What happens when the request arrives at last (or is seen by somebody) and there are no remaining funds in the TFSA acc. of the first FY (FY#1)?- which is the one responsible for the delay, anyway...
Q#2: how late can I withdraw the funds after the request for direct transfer? (in other words how long does the paperwork stays with FY#1, how long with Canada Post and how long with FY#2 before the funds are posted?)
Q#2: In my personal experience, the paperwork remained with FI#1 from 1 day to 8 weeks (EQ was the worst).
You can safely do the funds withdrawal after request for direct transfer at any time, if you stated in your request form section "Amount to be transferred" as "All money", which means any amount including $0.
1:34 pm
September 30, 2017
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We are now in the final days for 2022 TFSA year-end withdraw. As a reminder - You need to know the cutoff time at the FI you're dealing with. Do not assume it is going to be Dec 31st. Do not assume it is midnight.
For example, there was a memo on TDDI earlier. Their deadline to submit de-registration requests by phone for the 2022 tax year is 2 pm ET on Friday, Dec 30 2022. However, you can request cash de-registration in TFSA accounts using WebBroker until 8 pm ET on Friday, Dec 30 2022.
Hope this helps.
4:10 pm
March 18, 2021
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LK said
Also see: https://www.highinterestsavings.ca/definition/tfsa-december-manoeuvre/
I wouldn't even dream of doing that as I've been penalized by Canada Revenue Agency for doing exactly what you said. It's when the Canada Revenue Agency receives notification from the bank, credit union or trust company from which you sold the GIC within a TFSA which can take upwards of a year not a week or so. If you're anywhere near the limit do not do this you'll be penalized by Revenue Canada monthly for excess funds in the TFSA.
8:07 pm
April 6, 2013
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TFSA withdrawals this year, including for this month (December 2022), have to be reported by end of February 2023.
Any TFSA contributions next month (January 2023) don't need to be reported until end of February 2024.
CRA won't learn of the contribution next month before it learns of the withdrawal this month.
6:30 am
December 7, 2011
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hwyc said
As a reminder - You need to know the cutoff time at the FI you're dealing with. Do not assume it is going to be Dec 31st. Do not assume it is midnight.For example, there was a memo on TDDI earlier. Their deadline to submit de-registration requests by phone for the 2022 tax year is 2 pm ET on Friday, Dec 30 2022. However, you can request cash de-registration in TFSA accounts using WebBroker until 8 pm ET on Friday, Dec 30 2022.
TFSA is different, than RRSP.
FI needs to provide to CRA only TFSA deposits and withdrawals.
FI don't need to collect and hold any amounts from TFSA and forward them to CRA later.
What is de-registration of TFSA?
Sounds silly to me.
I can make an withdrawal at 11:55 pm Dec 31st from my TFSA via online banking.
If some FI implemented silly TFSA de-registration rules, I simple refuse to deal with those FI.
6:49 am
October 27, 2013
Online
It does not make a lot of sense to tempt fate. Computer downtime, internet glitches, FI server maintenance, etc, etc. If I was doing a TFSA withdrawal this year, I'd do it today (29th) to allow one business day (30th) to fix any glitch. A few days of interest is nothing compared to signing on Jan 3rd (first business day of 2023) to find out a transaction did not go through in 2022.
8:05 am
April 6, 2013
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As well, financial institutions don't allow transactions for a day to be submitted up to 11:59:59 pm that day.
Some will cut the business day off as early as 6 pm.
This year, December 31 is a Saturday and not a business day. So, one can't complete a 2022 TFSA withdrawal even in the morning of December 31.
9:13 am
December 12, 2009
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AltaRed said
It does not make a lot of sense to tempt fate. Computer downtime, internet glitches, FI server maintenance, etc, etc. If I was doing a TFSA withdrawal this year, I'd do it today (29th) to allow one business day (30th) to fix any glitch. A few days of interest is nothing compared to signing on Jan 3rd (first business day of 2023) to find out a transaction did not go through in 2022.
^ This. In addition, in cases of discount brokerages and managed investment accounts like Wealthsimple, some may have earlier arbitrary cut-off dates for TFSA contributions and withdrawals as they submit their annual TFSA returns to the CRA well before December 31st (they do not need to submit it on December 31st).
For that reason, I recommend withdrawing from a TFSA in early December, then re-contributing to another TFSA in early January.
Cheers,
Doug
9:16 am
September 30, 2017
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Winnie said
TFSA is different, than RRSP.
FI needs to provide to CRA only TFSA deposits and withdrawals.
FI don't need to collect and hold any amounts from TFSA and forward them to CRA later.
What is de-registration of TFSA?
Sounds silly to me.
I can make an withdrawal at 11:55 pm Dec 31st from my TFSA via online banking.
If some FI implemented silly TFSA de-registration rules, I simple refuse to deal with those FI.
Winne, I'm afraid I'll have to disagree on your comments. Both are categorized as registered accounts. The difference is the tax treatments on the funds into (register) and out of (deregister) these tax shelters. The transaction date matters.
9:45 am
October 17, 2018
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Winnie said
I can make an withdrawal at 11:55 pm Dec 31st from my TFSA via online banking.
I just noticed that isn't always an option. My TFSA savings account isn't in the list of accounts to transfer from. Had to make a phone call to get it done. I asked if account could be added to transfer list and was told that withdrawals/transfers from TFSA are not a self - serve option and can only be processed by contacting centre or branch. Contact centre closing early on New Year's eve. I would have been SOL if I waited until then.
9:59 am
September 7, 2018
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Now that the December manoeuvre is done (or almost done), which FI looks the most attractive to move those funds into in January 2023. I do not really see any good promos right now.
10:37 am
September 11, 2013
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I'm not sure but I have the impression in past years that the best TFSA options come out late February or so. I know it requires some discipline not to contribute right away. Maybe after Christmas, etc most (not on here) people have no money right away for TFSAs so the FIs wait a month or two to see how their TFSA inflows are going before a few ramp up the enticements. Or maybe my impression is just bogus, I don't know.
Tangerine's 5% until the end of April is pretty good for those on the promo, can always pull it out (deregister) for greener (taxable) pastures if their TFSA savings account rate in May is pitiful. Or else buy a TFSA GIC if they have a rate that pleases you.
11:49 am
December 12, 2009
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hwyc said
Winne, I'm afraid I'll have to disagree on your comments. Both are categorized as registered accounts. The difference is the tax treatments on the funds into (register) and out of (deregister) these tax shelters. The transaction date matters.
It matters, but only to the extent there's a dispute between you, your TFSA plan holder, and the CRA. The TFSA plan holder may set a cut-off date before December 31st around which they'll process contributions, withdrawals, and transfers for that plan year. Legally speaking, they might have to to process them in a given year, I'm not certain, and the CRA would consider that in any appeal/dispute you raise. If there's no dispute, though, the CRA will receive and input the TFSA annual return as filed by the FI. Thus why I recommend against waiting until the end of December and performing such transactions early in December. 
Winnie's in for a big, negative surprise if they wait until December 31st this year..as it's a Saturday, and the CRA may opt against waiving any over-contribution penalties since it may see that as a not a reasonable error (i.e., FIs don't operate on weekends).
Cheers,
Doug
11:51 am
December 12, 2009
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Bill said
I'm not sure but I have the impression in past years that the best TFSA options come out late February or so. I know it requires some discipline not to contribute right away. Maybe after Christmas, etc most (not on here) people have no money right away for TFSAs so the FIs wait a month or two to see how their TFSA inflows are going before a few ramp up the enticements. Or maybe my impression is just bogus, I don't know.Tangerine's 5% until the end of April is pretty good for those on the promo, can always pull it out (deregister) for greener (taxable) pastures if their TFSA savings account rate in May is pitiful. Or else buy a TFSA GIC if they have a rate that pleases you.
That's a good, cautious approach, Bill.
Cheers,
Doug
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