## My TFSA balance is $200, and the CRA wants me to pay interest on $5700... wtf

Okay, I will admit I probably should have done more research on exactly how the TFSA worked when I opened it at the beginning of 2009, but here's the deal...

In 2009 I opened my TFSA with PCFinancial and treated it like a regular savings account. As a result of this, I frequently moved money in and out of the account (maybe once a month) and in total for 2009, I put $6740.39 into the account, but also withdrew $6556.00. My balance at the end of 2009 (and currently) is about $200. At any given time in 2009, the account balance never went above $4000. I was naive and thought the rule was that my balance couldn't be above $5000. Perhaps even more naive, I assumed PCFinancial would give me a notice or warning if I went over the limit.

Anyways, I just received a letter from the CRA that lists my net contributions ($6740.39) and my net withdrawals ($6556.00) and a few pages later, it says that the amount I owe, 1% of 5761.56, is $57.61

Can anyone explain to me how the hell they came up with this number, or if they made a mistake? I am absolutely perplexed as to how they got a number like $5700+ ... My net contribution was $6700, but they're not charging me 1% of $1700 which is how much I was over $5000 for the year... Also, I broke the $5000 limit at the end of August. So if they charged it per month, then it should be $1700*4 months = 1% of $6960.. even if it was 3 months, it's $5260, not 5761...

Also, As I understand the rules, you have to pay 1% on the highest excess TFSA amount in any given month, per month that you are in an excess contribution position... But that still doesn't seem right. Are they saying that if you put $6000 into your TFSA in January by accident, and take out the $1000 after it's in the account for 1 week, so at the end of January your balance is only $5000 but you contributed 6000, you still have to pay 1% of the $1000 you were over for each month of that year that you over contributed? i.e. you have to pay 1% of 12*$1000 = 0.1*$12000 = $1200 in penalties?!?!?!?!?!

I mean just look at me... they want me to pay $60 in taxes on an account that finished the year with a $200 balance, and only ever made $19.50 in interest. I'm paying anywhere from 30%-300% in taxes. Does that sound right?

*edit*

Sorry for the misleading/confusing title

In 2009 I opened my TFSA with PCFinancial and treated it like a regular savings account. As a result of this, I frequently moved money in and out of the account (maybe once a month) and in total for 2009, I put $6740.39 into the account, but also withdrew $6556.00. My balance at the end of 2009 (and currently) is about $200. At any given time in 2009, the account balance never went above $4000. I was naive and thought the rule was that my balance couldn't be above $5000. Perhaps even more naive, I assumed PCFinancial would give me a notice or warning if I went over the limit.

Anyways, I just received a letter from the CRA that lists my net contributions ($6740.39) and my net withdrawals ($6556.00) and a few pages later, it says that the amount I owe, 1% of 5761.56, is $57.61

Can anyone explain to me how the hell they came up with this number, or if they made a mistake? I am absolutely perplexed as to how they got a number like $5700+ ... My net contribution was $6700, but they're not charging me 1% of $1700 which is how much I was over $5000 for the year... Also, I broke the $5000 limit at the end of August. So if they charged it per month, then it should be $1700*4 months = 1% of $6960.. even if it was 3 months, it's $5260, not 5761...

Also, As I understand the rules, you have to pay 1% on the highest excess TFSA amount in any given month, per month that you are in an excess contribution position... But that still doesn't seem right. Are they saying that if you put $6000 into your TFSA in January by accident, and take out the $1000 after it's in the account for 1 week, so at the end of January your balance is only $5000 but you contributed 6000, you still have to pay 1% of the $1000 you were over for each month of that year that you over contributed? i.e. you have to pay 1% of 12*$1000 = 0.1*$12000 = $1200 in penalties?!?!?!?!?!

I mean just look at me... they want me to pay $60 in taxes on an account that finished the year with a $200 balance, and only ever made $19.50 in interest. I'm paying anywhere from 30%-300% in taxes. Does that sound right?

*edit*

Sorry for the misleading/confusing title

it took me 45 minutes to make this signature