How to Calculate TFSA Contribution Room
March 14, 2012
The RC343 Worksheet for calculating the contribution room for Tax-Free Savings Account Plans (TFSAs) is now available in electronic form on the Canada Revenue Agency (CRA) website.
But you use the worksheet only if the CRA has incomplete information about your TFSA contributions. To find out what the CRA says about your contribution room you have three options: go online to www.cra.gc.ca/myaccount or www.cra.gc.ca/quickaccess or call the Tax Information Phone Service at 1-800-267-6999.
If your numbers and the CRA's numbers don't match, fill in the RC343 Worksheet.
Remember, you can contribute up to $5,000 a year and, if you miss contributing in a particular year or make withdrawals, the room accumulates in successive years.
But you must be wary of contributing more than your contribution room. As with RRSPs, the CRA charges a monthly penalty — a tax of 1% on your highest excess amount in that month. But unlike the RRSP, there is no $2,000 "grace” amount for the TFSA. The 1% tax applies from the first $1 of excess contributions.
So, if you unintentionally go over, withdraw the excess amount as quickly as possible. Even so, that 1% tax applies for the particular month in which you had an excess.
Also, now online is the
CRA's RC4018 Electronic Filers' Manual
for 2011 income tax returns. Chapter one deals with preparing electronic records while chapter two addresses how to
deal with errors when filing electronically.