More than 70,000 Canadians have recently received letters reminding them of the strict rules surrounding overcontributions to their tax-free savings accounts.

The letters, sent by the Canada Revenue Agency, demand more tax be paid from those Canadians who broke the rules of the popular tax shelter.

Tax-free savings accounts, commonly referred to as TFSAs, allow Canadians to earn tax-free interest, growth and dividends on money invested within.

Even when money is withdrawn from the accounts, those who stayed within the limits will be sheltered from paying tax on capital gains.

Tax-free savings accounts became available on Jan. 1, 2009, with an annual maximum contribution room of $5,000.

Because contribution room accumulates yearly, regardless if you use it or not, that means that anyone who was 18-years or older at the start of 2009 should now have a total of $20,000 contribution room in their TFSA.

For more information on how much contribution room you have you can visit the CRA website and check your latest tax assessment.

When people contribute more than their allowance, they can be warned by the CRA and charged tax on the extra contribution growth.

This year, approximately 76,000 warnings were sent out, down from the 103,000 warnings sent last year but up from the 72,000 the year before.

Nearly 15,000 people who received warning letters this year also received them last year, showing they have not yet complied with the contribution limits.

Despite the cases of overcontribution, the CRA says the problem accounts are only a fraction of the total accounts opened by Canadians.

One point of confusion is often withdrawing funds from the TFSA. According to the rules, once you withdraw money you can’t re-contribute that amount until the next calendar year.

Anyone breaking this rule faces a tax hit for overcontribution, despite the fact that they are staying within their total limit.

The CRA says it will continue to be flexible for people who genuinely misunderstood the rule, in that case the tax may sometimes be waived.

More than $60 billion in Canadian assets are currently being held inside TFSAs, according to the CRA.

Once the federal deficit is eliminated, Prime Minister Stephen Harper has promised to double the annual TFSA contribution limit to $10,000.