Put more into your RRSP or TFSA than the Canada Revenue Agency (CRA) allows and a penalty tax of 1% a month starts to run, often before you know it. We work out what you owe, get the extra money out, file the T1-OVP (the RRSP form) or the TFSA return, and ask the CRA to cancel the tax where the mistake was reasonable.
Pick your account and type your numbers. Nothing is saved or sent.
It depends on the account. The T1-OVP is the RRSP form. A TFSA uses a different return with a different date, and some people need both.
Reports the 1% tax on an RRSP excess.
Reports the tax on excess TFSA amounts, with Schedule A.
Over-contributed to both? You file both, on their own dates. We keep the two straight.
| What to know | RRSP, PRPP and SPP | TFSA |
|---|---|---|
| The tax | 1% a month on unused contributions that are more than 2,000 dollars over your limit. | 1% a month on the highest excess in the account in each month it stays. |
| Where the limit comes from | Your latest notice of assessment or reassessment, or Form T1028. | Your TFSA room in your CRA account, checked against your bank’s records. |
| Return and date | T1-OVP, with payment, within 90 days of the end of the year. | RC243 with Schedule A, by June 30 of the next year. |
| Getting the excess out | Withdraw it. Form T3012A can avoid tax withheld, and Form T746 works out the deduction. | Withdraw it as soon as you can. Your institution sends the CRA proof. |
| Asking for relief | Form RC2503. | A letter, through Submit documents in your CRA account or by mail. No form. |
| If you disagree with the assessment | Object within 90 days of the notice. | Object within 90 days of the notice. |
Two different tests, and the RRSP one has a small cushion that the TFSA one does not.
Almost always by accident. These are the usual routes.
The RRSP limit sits on your notice of assessment and the TFSA room in your CRA account, and neither updates the moment you contribute.
The room only returns on January 1 of the next year, so re-contributing sooner can leave you over.
TFSAs at different institutions share one room, and your RRSP and a spousal plan share your single deduction limit.
Contributions to your spouse’s or common-law partner’s plan count against your own deduction limit.
Some employer plans take contributions you cannot change. Mandatory amounts that pass your limit can be taxed, and the T1-OVP reports them.
Contributions made while you are a non-resident carry their own 1% monthly tax, on top of any excess.
Small to start with, then it keeps adding up every month the excess stays. Here is the arithmetic, in the CRA’s own style.
Room for the year was 7,000 dollars. Contributions of 4,500 dollars in February and 4,600 dollars on October 30 came to 9,100 dollars.
The earlier it comes out, the less it costs21 dollars
The excess began at 2,200 dollars on June 3. A withdrawal on October 2 cut it to 1,400 dollars.
Total for the year138 dollars
Deduction limit 10,000 dollars. Unused contributions plus this year’s: 15,000 dollars. The person was over 18, so the 2,000 dollar buffer applies.
Plus any late-filing penalty and interest180 dollars
Deliberate over-contribution to a TFSA can be taxed at the 100% advantage rate instead. The CRA publishes the TFSA examples above; the RRSP one is our own illustration of the rule, and your own months decide the real figure.
In this order. The earlier the excess is out and the return is in, the less it costs.
Get your limit or room from the CRA and your exact months of contributions and withdrawals from your institution. RRSP receipts and T4RSP slips do not show the months, so we rebuild them.
For an RRSP, Form T3012A lets you withdraw without tax withheld when its conditions are met, and Form T746 works out the deduction. For a TFSA, withdraw it and your institution sends the proof.
The T1-OVP with payment within 90 days of the end of the year, or the TFSA return with Schedule A by June 30 of the next year. Withdrawing does not remove the need to file.
If it was a reasonable error and you are fixing it, the CRA can waive tax not yet assessed or cancel tax already assessed.
Excess taken out under the Home Buyers’ Plan or the Lifelong Learning Plan can still leave 1% tax on all of it, so we check that before anyone moves money.
Three routes, and they are not steps. Which one fits depends on what happened and what the notice says.
For an RRSP, Form RC2503 explains why the excess was a reasonable error and what you are doing to remove it. For a TFSA, a letter does the same. The CRA looks at whether it was a reasonable error, whether the same transaction caused another tax, and for a TFSA how much has been taken out.
If you think the assessment is wrong, you can file a notice of objection within 90 days of the date on the notice. The CRA strongly recommends calling or writing about a waiver first.
File the missing T1-OVP or TFSA return now, because interest keeps running. The Voluntary Disclosures Program can apply when the CRA has not started a review, and relief covers penalties and interest for the last 10 calendar years.
If a TFSA relief request is turned down, you can ask for a second review, and then apply to the Federal Court for judicial review within 30 days of the decision letter.
The 1% tax is only part of it. A late return adds more.
5% of the balance owing, plus 1% of it for each month late, up to 12 months. It can be higher if you were charged one on a T1-OVP in any of the three years before.
On unpaid tax and unpaid penalties, starting on the 91st day of the following year.
When the exact months are missing, the CRA can assess using January contributions, March for the rest and December for withdrawals, which may not match what really happened.
The CRA can cancel penalties and interest for periods ending in the last 10 calendar years when something outside your control caused them.
See how a taxpayer relief request works
The T1-OVP date is one of several key CRA deadlines. See them all →
These come up again and again, and each one is avoidable.
The CRA usually notices a TFSA excess months later, and the tax runs for every month in between.
For a TFSA, the tax is on the highest excess in each month, so a withdrawal part-way through still leaves that month’s bill.
A TFSA withdrawal does not end the filing duty, and an RRSP tax that arose still needs its T1-OVP.
It only removes the tax on that amount. The contributions stay unused and do not add to what you can deduct.
The CRA does not accept official receipts, T4RSP or T4RIF slips for a relief request, because they do not show exact months.
The T1-OVP is due earlier than most people expect, and interest and penalties start soon after.
Your RRSP limit and TFSA room confirmed from the CRA and your institutions, with the exact months rebuilt.
What you owe now, what each extra month adds, and whether the buffer or an exception applies.
Form T3012A and the Form T746 deduction prepared for an RRSP, and the withdrawal timed for a TFSA.
The T1-OVP or T1-OVP-S, or the TFSA return with Schedule A, filed on time or caught up for past years.
Form RC2503 or a TFSA letter that explains the reasonable error and the steps you took.
Replies to the CRA’s letters, and an objection filed in time if an assessment looks wrong.
The CRA decides whether the tax is waived or cancelled and how a return is assessed. No one can promise it will. What we promise is accurate numbers, a return filed correctly and on time, and a request that gives the CRA what it asks for.
Every case is different, so we quote each one individually, and you will know what we charge before we start. Here is what shapes the quote.
Prefer to talk it through first? Call us, or send a quote request.
Call (437) 421-7171 Request a QuoteMost of this work happens by phone, video and secure upload, and you are always welcome at one of our four offices.
The CRA rules are the same in every province, so we help people across Canada with RRSP and TFSA over-contributions.
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Straight answers to what people ask us after an RRSP or TFSA over-contribution.
An RRSP is a Registered Retirement Savings Plan and a TFSA is a Tax-Free Savings Account. Each has a yearly limit, and putting in more than the limit is an over-contribution. The T1-OVP is the form the Canada Revenue Agency uses to report and tax an RRSP over-contribution. A TFSA excess is reported on a different return, Form RC243.
It is the individual tax return for RRSP, PRPP and SPP excess contributions. You use it to report and pay the 1% monthly tax, and also for mandatory group RRSP or PRPP contributions that are subject to tax. The simplified T1-OVP-S covers RRSP excess made since January 1, 1991. A TFSA excess is not reported on it.
A tax of 1% per month on unused contributions that are more than 2,000 dollars over your RRSP deduction limit. The 2,000 dollars applies only if you were 18 or older at any time in the previous year, so an amount inside it is not taxed.
The excess is taxed at 1% per month on the highest amount of excess in your account in each month it stays there. Taking out part of it does not cut that month’s tax. A deliberate over-contribution may be taxed at the 100% advantage rate.
No later than 90 days after the end of the year the excess arose, with any tax. That is March 31 of the next year, or March 30 when February has 29 days. Interest on a late balance starts on the 91st day of the following year.
By June 30 of the calendar year after the year the tax applies. You file Form RC243 with Schedule A, Excess TFSA Amounts, online through Submit documents in your CRA account or by mail.
For a TFSA, yes. The CRA says you must still report the excess by filing the TFSA return. For an RRSP, you may not owe the tax on an excess withdrawn before the end of the month it arose, but excess that stayed longer is taxed and needs the T1-OVP.
File Form T3012A, which the CRA must approve, before the withdrawal. Without it, your institution withholds tax, which you claim back on your return. The offsetting deduction is worked out on Form T746 and needs conditions to be met, including that you have not already deducted the contributions.
It can, at its discretion. For an RRSP, both of these must be true: the excess came from a reasonable error and you are taking reasonable steps to remove it, and you ask on Form RC2503. A waiver comes before assessment and a cancellation after. No one can promise the outcome.
Write a letter that explains why the tax arose and why it would be fair to cancel or waive it. Send it through Submit documents in your CRA account or to the TFSA Processing Unit in Sudbury or Winnipeg. No form is required.
Your RRSP deduction limit is on your latest notice of assessment or reassessment and on Form T1028. Your TFSA room is in your CRA account, and the CRA suggests checking it against your institution’s records, because a year’s records are processed some months after it ends.
Yes. File a notice of objection within 90 days of the date on the notice of assessment. If you miss it, you can ask for more time no later than one year after the deadline. The CRA strongly recommends contacting it about a waiver first.
File the missing return now, because interest keeps running. If the CRA has not started a review, the Voluntary Disclosures Program may apply, and a relief request can cover penalties and interest for periods in the last 10 calendar years.
It can. The CRA says that if you withdrew excess amounts under the Home Buyers’ Plan or the Lifelong Learning Plan, you may still owe the 1% tax on all of the excess.
Contributions made while you are not a Canadian resident carry a separate 1% monthly tax, which can apply on top of any excess amount tax. The notice of assessment shows it.
We quote each case after a free consultation, because one small excess and several years of records are very different. You will know the cost before we start.
We confirm the rules on the CRA’s own pages. You can read them too:
Checked against these pages in October 2026. Rules, forms and limits change, so we confirm the current position for your situation before we start. This page is general information, not legal advice.
Disagree with an assessment? You have 90 days to object.
Learn moreAsk the CRA to cancel penalties and interest that weren’t your fault.
Learn moreRRSP and TFSA planning inside a correctly prepared T1 return.
Learn moreCome forward about a past mistake before the CRA finds it.
Learn moreFile the years you missed and get current.
Learn moreContributed to a TFSA while living abroad? We handle the return.
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