Frustration with CRA's TFSA Contribution Room

Readers have been sharing their stories of frustration with CRA's recent delays in displaying information on their TFSA contribution room on the My Account website. According to the Canada Revenue Agency, the delay resulted from the introduction of a new system where financial institutions submit data on behalf of clients who have TFSAs. However, this is not the first time CRA has struggled to update TFSA room numbers, with numbers reflecting contributions made during a calendar year typically not available until April of the following year.

Key Takeaways:

• The Canada Revenue Agency has introduced a new system where financial institutions submit data on behalf of clients who have TFSAs, causing delays in displaying information on contribution room on the My Account website.
• Readers have been sharing their stories of frustration with CRA's recent delays, with two themes emerging: long or futile waits to speak to CRA representatives on the phone, and the lack of information on how much accumulated contribution room an individual has for TFSAs.
• Advisers and planners should have a fix on an individual's contribution room for a calendar year by early January, reflecting total year-by-year contributions allowed by the government, the actual amount of contributions made to all TFSA accounts, withdrawals, and amounts re-contributed.
• The penalty for over-contributing to a TFSA is 1% of the excess amount per month, with the average cost to a taxpayer who over-contributed being almost $1,500.
• Good advisers earn their fees in all kinds of ways, including financial planning and tax minimization, and keeping clients from over-contributing to a TFSA is one of these services.
• Readers are advised to speak with an investment adviser or financial planner for quicker service and accurate information on their TFSA contribution room.

Statistics:

• Average cost to a taxpayer who over-contributed to a TFSA: $1,500
• Monthly penalty rate for over-contributing to a TFSA: 1%
• Usual time frame for CRA to update TFSA room numbers: April of the following year
• Typical wait time for advisers and planners to determine contribution room: early January

Sources:

• Canada Revenue Agency
• The Globe and Mail