echnical problems with the Canada Revenue Agency’s (CRA) My Account platform earlier this year have highlighted long-standing issues with Tax-Free Savings Account (TFSA) contribution reporting. Financial professionals are now urging the CRA to provide leniency for Canadians who unintentionally overcontributed to their TFSAs due to inaccurate or delayed account information. With millions of TFSA holders and rising numbers of overcontributions, experts argue that timely updates and a grace period for minor overages could prevent unnecessary penalties.
My Account Glitches and Delayed TFSA Information
In 2025, many Canadians experienced delays in seeing updated TFSA contribution room on My Account. While the platform typically updates these figures by April, numerous account holders had to wait until June, and approximately 10% waited even longer.
This delay can have serious financial implications. TFSA holders are subject to a 1% tax per month on any overcontribution amounts. Inaccurate or late data on My Account increases the risk of penalties, particularly for those who do not consistently maximize their TFSA contributions each year.
Financial planners report that even experienced investors relying on My Account’s records have been caught off guard. Markus Muhs, a portfolio manager at Canaccord Genuity, shared that some clients saw inflated contribution room figures in January and February, leading to accidental overcontributions.
TFSA Growth and Overcontribution Trends
Between 2015 and 2024, the number of TFSA holders in Canada grew from 12.7 million to 19.3 million, a 52% increase. Over the same period, the number of account holders who overcontributed quadrupled, from 33,000 to 133,000.
The CRA assessed $166.2 million in excess TFSA taxes in 2024, up from $130.8 million in 2023. With technical difficulties impacting My Account this year, experts fear that overcontribution penalties could rise further.
Calls for Leniency and a Grace Period
Financial advisors are advocating for changes to how the CRA manages TFSA overcontributions. Markus Muhs suggests a $2,000 overcontribution grace, similar to the approach used for RRSPs, to protect taxpayers who are misled by system errors rather than engaging in deliberate abuse.
Other advisors stress the importance of timely notifications. Erin, a full-service broker in B.C., notes that taxpayers may face over $1,000 in fees for a $7,000 overcontribution before being notified. “At least let people know as soon as the CRA detects an overage,” she said.
Currently, TFSA contribution room is often not fully updated until April because financial institutions submit data to the CRA in December. Advisors argue that updating this information sooner would help Canadians avoid accidental overcontributions.
Challenges for Vulnerable Taxpayers
Financial planners warn that seniors, students, and low-income Canadians are disproportionately affected. For example, seniors may unknowingly make extra contributions after being advised by a bank teller, relying on My Account figures that do not reflect prior contributions.
Wade Van Bostelen, a financial planner in Burlington, Ont., points out that penalties can exceed any tax savings from the TFSA for vulnerable taxpayers. He suggests that educational letters should be sent and penalties waived in cases where there is no immediate tax advantage.
Maintaining Fair Penalties
While leniency is recommended for accidental overcontributions, experts agree that deliberate misuse should still be penalized. Advisors advocate a system that balances fairness with enforcement, protecting taxpayers affected by CRA system errors while ensuring integrity in the self-reporting tax system.
Brian Wruk, a tax planning specialist, notes that taxpayers should be allowed to correct errors promptly. “If the CRA isn’t providing clear information, they should ‘back off’ if taxpayers withdraw the excess within 90 days of being notified,” he said.
Recommendations for the CRA
Financial professionals are urging the CRA to implement several key changes:
- Grace period for minor overcontributions to protect taxpayers affected by inaccurate reporting.
- Timely notifications when overcontributions occur.
- Faster updates to My Account to reflect the most accurate contribution room.
- Educational outreach for vulnerable groups, including seniors and low-income taxpayers.
- Clearer guidance on correcting accidental overcontributions to minimize penalties.
These steps aim to prevent unnecessary financial hardship while maintaining penalties for deliberate abuse of the TFSA system.
Technical glitches and reporting delays on CRA’s My Account platform have exposed flaws in the management of TFSA contribution room. With growing TFSA participation and rising overcontribution cases, financial professionals are calling for leniency, timely notifications, and a small overcontribution grace period. Implementing these measures would help Canadians avoid unfair penalties while maintaining the integrity of the tax system, ensuring that TFSAs remain a reliable tool for long-term savings.