Form RC243 is the Tax-Free Savings Account (TFSA) Return. You file it if you owe any TFSA tax for the year: 1% a month on excess contributions or on contributions made while a non-resident, 50% on non-qualified or prohibited investments, or the tax on an advantage. It's due, with payment, by June 30 of the year after the calendar year the tax arose in.
Everything below comes from the CRA's Form RC243 E (26), which carries its own instructions, as of October 2026.
The five TFSA taxes
| Part | Tax on | Rate on the form |
|---|---|---|
| A | Excess TFSA amounts (over-contributions) | 1%, figured on Schedule A |
| B | Contributions made while a non-resident of Canada | 1%, figured on Schedule B |
| C | Non-qualified investments | 50% of fair market value |
| D | Prohibited investments | 50% of fair market value |
| E | An advantage | The fair market value of the benefit |
For excess amounts and non-resident contributions, the form sends you to separate schedules, RC243-SCH-A and RC243-SCH-B, to total the amounts, then applies the 1% rate. An investment that's both non-qualified and prohibited is reported in Part D only.
Over-contributing: how the 1% builds up
Part A applies if at any time during the year there were excess contributions in your TFSA, other than a qualifying transfer or an exempt contribution. The schedule tracks the excess month by month, so the tax keeps running for every month the excess stays in the account. The quickest fix is removing the excess, and checking your room against the CRA's record before contributing again; our TFSA contribution room guide covers how room is worked out.
Here's the insight people miss: the CRA's TFSA guide says withdrawals are only added back to your contribution room at the beginning of the following year, so re-contributing a withdrawal in the same year is the classic way to over-contribute by accident. And if a contribution was deliberate, the form's definitions make any income from it an advantage, which faces the special tax on advantages; the refund rules mention a 100% tax on advantages.
Non-qualified and prohibited investments
A non-qualified investment is anything that isn't a qualified investment for a TFSA trust. A prohibited investment is property you're closely connected to, such as your own debt, or shares or debt of a corporation, trust or partnership in which you have a significant interest, generally 10% or more. Both carry a 50% tax on fair market value when acquired or when the investment changed status.
That 50% can come back. If the investment is disposed of, or stops being non-qualified or prohibited, before the end of the calendar year after the year the tax arose, you may get a refund, unless it's reasonable to expect you knew or should have known it was a non-qualified or prohibited investment. If the tax and the refund entitlement arise in the same year, you don't have to remit the tax at all. Claim a refund in writing, with documents showing the acquisition and disposal, which you can attach to the RC243.
Contributions made while non-resident
Part B is easy to overlook if you've left Canada. Contributions made while you were a non-resident, other than a qualifying transfer or an exempt contribution, are taxed at 1% for each month, and the form says this tax keeps applying until the contributions are withdrawn in full or you become a resident of Canada again, whichever comes first. If an advantage is tied to the same contributions, Part E reduces the advantage tax by the Part A and Part B taxes, so you aren't taxed twice on the same amount.
Deadline, penalties and interest
| Item | Rule |
|---|---|
| Due date | June 30 of the year after the calendar year |
| If the holder dies before the due date | The later of June 30 and 6 months after the date of death |
| Late-filing penalty | 5% of the balance owing plus 1% for each full month late, up to 12 months; higher for repeat late filers |
| Interest | Compound daily from July 1 of the following year |
| Small balances | Generally no charge for a difference of $2 or less |
Mail the return to the TFSA Processing Unit at either the Sudbury Tax Centre, PO Box 20000, Station A, Sudbury ON P3A 5C1, or the Winnipeg Tax Centre, PO Box 14000, Station Main, Winnipeg MB R3C 3M2. Report all amounts in Canadian dollars and send documents supporting every transaction.
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Asking the CRA to waive the tax
The CRA may waive or cancel all or part of the taxes if it's fair to do so after reviewing all factors, including whether the tax arose from a reasonable error, whether the same transactions also triggered another tax under the Income Tax Act, and whether payments have been made from your TFSAs. A waiver request explains the mistake and shows it's been corrected. You can see the contributions and withdrawals the CRA has on record for your TFSAs in your CRA account, which is the quickest way to spot where the excess came from.
The verdict
If the CRA sends you a TFSA excess letter, remove the excess right away, file RC243 by June 30 with any tax owed, and ask for a waiver if it was an honest error. Don't wait for the deadline: the 1% runs every month the excess stays in. If you're also near your RRSP limit, check your RRSP deduction limit before moving savings around, because those rules are separate.
Frequently asked questions
What is Form RC243?
It's the Tax-Free Savings Account (TFSA) Return, filed by anyone who owes TFSA taxes for the year, such as the tax on excess contributions.
When is RC243 due?
By June 30 of the year after the calendar year the TFSA tax arose, with payment of any balance due.
What is the TFSA over-contribution penalty?
A tax of 1% on the highest excess TFSA amount in each month it stays in your account, worked out on Schedule A.
Can the CRA waive TFSA over-contribution tax?
Yes. The CRA may waive or cancel all or part of the taxes if it's fair, for example when the tax arose because of a reasonable error.
What is the tax on a non-qualified investment in a TFSA?
50% of the fair market value of the investment, which may be refunded if it's disposed of by the end of the following calendar year.
