A new resident of Canada contributed $18,000 to a new TFSA in 2021 due to a misunderstanding of the rules (his contribution room was only $6,000). The shares of the company in which the TFSA invested became worthless.
CRA indicated that the monthly 1% tax under s. 207.03 on the excess amount continues to apply for each month that the excess amount remains and that, as here, the excess TFSA amount cannot be withdrawn, the excess will not be fully eliminated until January 1, 2023 as a result of the new contribution limits for 2022 and 2023.
The potential waiver of tax under s. 207.06(1) requires, inter alia, that he withdraw an amount from his TFSA sufficient to eliminate both the excess TFSA amount and any associated income and capital gains. Again, the individual cannot meet this condition.