Avoid TFSA Over-Contribution Penalties in 2025: CRA Glitch Warning
The Tax-Free Savings Account (TFSA) is one of Canada’s most powerful savings tools. But this year, a system failure at the Canada Revenue Agency (CRA) is putting even careful savers at risk. If you’re relying on your CRA My Account for TFSA contribution limits, you could be flying blind.
What Is a TFSA and Why Does Contribution Room Matter?
The TFSA was introduced in 2009 to help Canadians grow their savings tax-free. For 2025, the annual limit is $7,000, with cumulative limits for long-time contributors exceeding $90,000.
Key TFSA Features
- Tax-free investment growth
- Withdrawals that don’t count as income (not taxed)
- Contribution room reinstated annually after withdrawals
Normally, Canadians can check their TFSA contribution room by logging into their CRA “My Account”. This is essential for anyone who has contributed and/or made withdrawals in the past, as the calculation of available room can be complex, factoring in annual limits, unused room, and prior year withdrawals.
Accurately tracking your available room is crucial. Over-contributions can trigger harsh penalties, even if the mistake stems from CRA system errors.
Why Is My CRA TFSA Contribution Room Missing?
CRA TFSA Contribution Room Still Unavailable for Many in May 2025
As of the third week of May 2025, thousands of Canadians still cannot see updated TFSA contribution room in their CRA My Account portal, nearly three weeks after the agency’s annual post-tax-season update. For many users, the TFSA section is either blank or displaying outdated numbers that don’t reflect recent contributions or withdrawals.
This ongoing glitch is the direct result of delays in the CRA’s internal data refresh. Typically, contribution room is recalculated and posted by early May. But in 2025, those updates have been significantly delayed, leaving taxpayers with no reliable way to confirm how much they can safely contribute without triggering a TFSA over-contribution penalty.
Until the CRA resolves the issue, Canadians are effectively flying blind, and every new dollar deposited into a TFSA carries unnecessary risk.
What’s Affected?
- TFSA contribution room (blank or inaccurate)
- Potential for accidental over-contributions
- CRA’s data reliability
No official resolution timeline has been issued. Canadians are left to self-calculate or risk costly mistakes.
What Happens If You Over-Contribute to a TFSA?
Understanding the TFSA Penalty Tax
If you exceed your TFSA limit, even accidentally, you’ll be hit with a 1% penalty per month on the highest excess amount.
“If you contribute more than your contribution limit in the current year, you may be subject to a TFSA over-contribution penalty tax of 1% per month, every month the excess amount stays in your account.”
-CRA
You can view the official CRA guidance here.
Even if the CRA data was missing or incorrect, there is no automatic exemption. You are responsible.
H2: How to Protect Yourself: TFSA Contribution Strategies in 2025
1. Pause New Contributions
If you’re unsure of your room, don’t contribute. Especially if you’ve had withdrawals or multiple deposits in recent years.
2. Call the CRA Directly
Use CRA’s individual inquiries line: 1-800-959-8281. Expect delays, but it’s more reliable than guessing.
3. Maintain Personal Contribution Records
Track all contributions and withdrawals in a personal spreadsheet. CRA data is often outdated, even when systems work.
4. Monitor CRA Updates
Follow CRA’s newsroom or social accounts for restoration updates.
5. Already Over-Contributed?
- Remove excess funds immediately
- Submit a request relief
- Document everything
Real-Life Example: TFSA Mistakes Add Up Quickly
You contribute $6,000 in January 2025 and $4,000 more in May. But your actual available room was only $8,000 due to a 2024 withdrawal.
Now you’re over-contributed by $2,000:
- $20/month in penalties from the month you become in an over contribution position, which would be May 2025
- $240/year if left untouched for 12 months
- Possible CRA-issued TFSA return and payment demand
This is why double-checking your contribution room is more critical than ever.
Will CRA Forgive TFSA Over-Contributions Due to System Errors?
Not automatically.
Relief is reviewed case-by-case. You’ll need:
- Prompt correction
- Form a taxpayers relief submission
- Supporting documents (e.g., bank records, screenshots)
Even then, resolution can take months. Don’t count on a waiver.
Not Sure Where You Stand? Let’s Talk
If you’re uncertain about your TFSA room or have already over-contributed, don’t wait for CRA systems to catch up. Book a consultation with Boyer & Boyer, CPA. Our tax professionals can help you:
- Confirm your real TFSA position
- Navigate CRA errors
- Maximize your tax-free savings
Contact us today and avoid costly surprises.
Stay Vigilant With TFSA Contributions in 2025
Until the CRA systems are restored, relying on My Account for contribution info is risky. Your best defence?
- ✅ Pause new contributions
- ✅ Keep your own records
- ✅ Monitor official updates
- ✅ Act immediately if you’ve made an error
And if you need guidance, don’t go it alone. Speak to a qualified accountant who can help protect your investments from unnecessary penalties.
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