On April 29, 2025, the French Federal Court reviewed a taxpayer’s application for judicial review of the Canada Revenue Agency (CRA) decision denying a waiver of interest and penalties on excess Tax-Free Savings Account (TFSA) contributions for the 2021 and 2022 taxation years. These penalties accrue at 1% per month for the duration the excess remains in the TFSA.

Background of the Case

• July 26, 2022: CRA issued a notice of assessment detailing the excess contributions. The notice was posted to the taxpayer’s CRA My Account.
• The taxpayer did not see this notice until February 2023, when she logged in to apply for Employment Insurance sickness benefits. She withdrew the excess funds within days of discovering the issue.
• The taxpayer argued:
  • She had forgotten that she switched her communication preference from paper to electronic.
  • She lacked technological expertise and had not linked her email to receive CRA notifications.

CRA’s Position

CRA denied relief under its discretionary authority, citing that excess contributions must be withdrawn “without delay” for relief to be considered. CRA defines “without delay” as within 30 days of being informed of the excess contribution.

CRA considered the taxpayer “informed” on July 26, 2022, when the notice was posted online. Since the withdrawal occurred more than six months later, CRA concluded the taxpayer did not act promptly.

Court’s Decision

The Court sided with CRA, finding the denial reasonable.

• Taxpayers who opt for electronic communication must regularly check their accounts.
• CRA is not required to prove receipt of mail—only that the notice was posted.
• Forgetting to update email notifications or lacking tech skills does not excuse non-compliance.

Key Takeaways for Taxpayers

1. Monitor Your CRA My Account: If you choose electronic communication, check your account frequently.
2. Link Your Email for Alerts: Ensure notifications are enabled to avoid missing critical updates.
3. Act Quickly on Excess Contributions: CRA expects withdrawals within 30 days of notification.
4. Discretionary Relief Is Limited: Courts generally uphold CRA’s administrative definitions and timelines.