A taxpayer over-contributes to his TFSA, and then the investments in the TFSA become worthless so that he cannot withdraw the excess. Is the taxpayer entitled to relief from the over-contribution penalty? The Federal Court recently held that the CRA cannot act because the withdrawal is a condition precedent to the relief. See Khan v AG of Canada, 2026 FC 160. The taxpayer must pay the penalty until his contribution room catches up with the over-contribution.
Justin Khairallah “Federal Court Rules on the Reduction of a Penalty for TFSA Overcontribution” Canadian Tax Focus 16:2 (May 2026)
