The Most Common TFSA Mistake
$166 Million in TFSA Penalties
I came across a statistic this week that made me stop and think about how many people get TFSA rules mixed up.
According to recent data, the CRA (Canada Revenue Agency) fined over $166 million in penalties due to TFSA over-contributions in just one year.
That represents over 133,000 Canadians who ended up with a surprise tax bill, averaging to about $1,250 per person.
Here are two of the most common TFSA traps:
The "Replacement" Trap: You withdraw $5,000 for something unexpected, like a home repair. A few months later in the same calendar year, you put the money back once things settle down.
To you, it feels like replacing what you took out.
To the CRA, that’s a new contribution, and if you’re already at your limit, a 1% penalty starts applying every month.The Day-Trading Risk: “Tax-Free” doesn’t mean “tax-free no matter what.” If the CRA decides your TFSA activity looks too frequent or business-like, they can tax 100% of your gains.
📚 If You Want a Deeper Breakdown
This is one of the reasons I put together the Canadian Investing Accounts Guide.
It’s a simple, plain-English walkthrough of how accounts like the TFSA, RRSP, FHSA, RESP, and more actually work, so you can make investing decisions confidently and avoid costly surprises.
Inside, I break down:
How contributions, withdrawals, and tax rules actually work
Which account to prioritize based on your income
How to use all 8 accounts for long-term growth,
If you want a clear reference you can come back to anytime, you can find the guide here: