A TFSA-related test to see if your adviser is on the ball

The Canada Revenue Agency told me to try again later when I logged into its My Account website, looking for information on my TFSA contribution room.

That was in May, when I was researching a column headlined, “For the love of God, can someone please help CRA fix its website?” I checked several times since then and, finally, I found the information displayed on June 12.

For quicker service, try an investment adviser or financial planner. Keeping track of client contribution room for tax-free savings accounts, registered retirement savings plans, first home savings accounts, registered education savings plans and registered disability savings plans is advising 101 stuff. Advisers who can’t deliver this information are not earning their fees.

Readers have been sharing their stories of frustration with CRA lately, with two themes emerging. One is long or futile waits to speak to CRA representatives on the phone, and the other is the lack of information on how much accumulated contribution room an individual has for TFSAs. CRA said the delay in showing TFSA information resulted from the introduction of a new system where financial institutions submit data on behalf of clients who have TFSAs.

Use our TFSA Limit calculator to determine your annual contribution room limit

Let’s not judge people who lose track of their TFSA contribution room. It’s easily possible if you make a withdrawal, maintain multiple TFSAs or start and then stop or tweak a preauthorized contribution to a TFSA. Getting CRA’s official tally of your contribution room is how you avoid onerous penalties for over contributions.

The penalty works out to 1 per cent of the excess amount per month. I looked into TFSA penalties last year and found the average cost to a taxpayer who over-contributed was almost $1,500.

CRA has always been slow to update TFSA room – numbers reflecting contributions made during a calendar year are typically not available until April of the following year at the earliest. Advisers and planners should have a fix on your contribution room for a calendar year by early January. This isn’t a quickie calculation, by the way. Your accumulated room reflects total year-by-year contributions allowed by the government, the actual amount of contributions made to all your TFSA accounts, withdrawals and amounts you then re-contributed.

Good advisers earn their fees in all kinds of ways that go beyond managing your investments, including financial planning and tax minimization. Keeping you from over-contributing to a TFSA is not the least of these services.