⚠️ No $2,000 Overcontribution Buffer:
Unlike RRSPs, which offer a lifetime $2,000 overcontribution buffer, the FHSA **does not have any buffer**. The 1% monthly penalty tax is charged immediately on the very first dollar you contribute over your available room.
FHSA Excess Tax Calculator
Input your contributions and available room to calculate potential CRA monthly penalties:
How to Resolve an FHSA Overcontribution
To stop the 1% monthly penalty tax from compounding, you must take active correction steps:
- Submit Form RC727: Complete and submit Form RC727 to your FHSA issuer (bank or broker) to designate the excess amount as a withdrawal or a transfer. The designated withdrawal must be made directly to you as a tax-free withdrawal of the excess amount.
- Absorbing Excess with New Room: You can also leave the excess in the account if you expect to receive new participation room in the subsequent calendar year. The penalty tax will apply monthly until January 1, when the new $8,000 room absorbs the excess.
- File Form RC728: You are legally required to report the overcontribution to the CRA by filing **Form RC728** (*FHSA Return*) and pay any taxes owed by **June 30** of the year following the calendar year of overcontribution.
FHSA Limits
Annual Contribution Limit$8,000 CAD
Lifetime Contribution Limit$40,000 CAD
Overcontribution Tax Rate1.0% / month
Designated Return FormForm RC728