Income and gains on TFSA overcontributions can remain in account, CRA says

Canadians may keep income or gains earned from overcontributions to their TFSAs as long the overcontribution was not deliberate and they pay the 1% monthly penalty tax on the excess contribution, the Canada Revenue Agency (CRA) confirmed in a recent technical interpretation.

Allowing income and gains earned on overcontribution amounts to remain in TFSAs eases plan administration in cases where TFSA holders inadvertently contribute too much to their tax-free account, says Wilmot George, vice-president of tax, retirement and estate planning with Toronto-based CI Investments Inc.

Original Article Source Credits:   Advisor's Edge , https://www.advisor.ca/

Article Written By:  Rudy Mezzetta

Original Article Posted on:  November 2, 2020

Link to Original Article:  https://www.advisor.ca/tax/tax-news/income-and-gains-on-tfsa-overcontributions-can-remain-in-account-cra-says/