RE:Over-contributions to TFSAyou are smart cookie, Q. do you think the penalty would be greater if you get substantial gain from overcontribution?
Dreimer200 wrote: Last October, I drew attention to the TFSA regulations which specify the penalty for over-contributions at 1% of the over-contributed amount per month. On a $6,000 over-contribution in October – that would amount to $180.00 for the year.
My plan to make an over-contribution was greeted with skepticism; indeed, I thought that some – of an intrinsically puritanical nature – were outraged that anyone would defy the clear intent of the CRA – to spread sweetness and light among the citizenry – and use the regulations for personal gain.
My suspicion was that they would not be entirely displeased at the announcement of a public beheading – or failing that – a substantial jail term.
Neither – at this point – seems likely. The CRA has cashed my cheque in the amount of $174.30 – the penalty for the over-contribution.
The advantage of the little manoeuvre will not become evident until some unknown point in the future – when all my TFSA warrants have been disposed of. I made the transfer of 22,200 warrants at .135. At the beginning of January they were worth about .19. Assuming I would have made the transfer at that price – the number would have been 15,700. Thus – I was able to shelter an extra 6500 warrants. Not likely ever to represent a fortune in saved taxes – but hopefully something in excess of $174.30.
(Sometimes “winning“ is not about the amount -- but being right in principle.)