Death of a TFSA holder

After the holder of a TFSA dies, possible tax implications can vary depending on one or more of the following factors:

Depending on the factors that apply, the following can be affected:

Types of beneficiaries

The types of beneficiaries for TFSA purposes are:

Determining the type of beneficiary is the first important step. The type of beneficiary can be affected by:


If you want to change a prior beneficiary designation, contact your TFSA issuer.

Successor holder

In provinces or territories that recognize a TFSA beneficiary designation, the survivor can be designated as a successor holder in the TFSA contract or in the deceased holder's will.

A survivor can be named in the deceased holder's will as a successor holder to a TFSA, if the terms of the will state that the successor holder receives all of the holder's rights including the unconditional right to revoke any beneficiary designation, or similar direction imposed by the deceased holder under the arrangement or relating to property held in connection with the arrangement.

If named as the successor holder, the survivor will become the new holder of the TFSA immediately upon the death of the original holder.

Example – Successor holder

Ginette and her husband Paul lived in a province that recognizes a TFSA beneficiary designation. Ginette was the holder of a TFSA and designated Paul as the successor holder. Ginette died on February 15, 2024. The value of her TFSA on that date was $10,000. There was no excess TFSA amount in her account. Her estate was finally settled on September 1, 2024. By that time, an additional $200 of income had been earned.

Since Paul met all the conditions, he became the successor holder of Ginette’s TFSA as of the date of her death.

The fair market value (FMV) of $10,000 as of the date of death is not taxable to Paul. The $200 of income earned after the date of death (and any subsequent income earned) is also not taxable to Paul. No T4A slip would be issued and Form RC240, Designation of an Exempt Contribution –Tax‑Free Savings Account (TFSA), is not required in this situation.

This is because Ginette was a resident, at the time of her death, in a province that recognizes TFSA beneficiary designations.

This rule applies for all three types of TFSAs: deposit, annuity contract, and trust arrangement.

The deceased holder is not considered to have received an amount from the TFSA at the time of death if the holder named their survivor as the successor holder of the TFSA. In this situation, the TFSA continues to exist and the successor holder assumes ownership of the TFSA contract and all of its contents. However, where the TFSA contract is a trust arrangement, the trust continues to be the legal owner of the property held in the TFSA.

The TFSA continues to exist and both its value, at the date of the original holder’s death, and any income earned after that date continue to be sheltered from tax under the new successor holder.

Except in cases where an excess TFSA amount remained in the deceased holder's TFSA at the time of their death, the successor holder's unused TFSA contribution room is unaffected by their having assumed ownership of the deceased holder's account.

The issuer will notify us of this change in ownership.

The successor holder, after taking over ownership of the deceased holder’s TFSA, can make tax‑free withdrawals from that account. The successor holder can also make new contributions to that account, depending on their own unused TFSA contribution room.

If the successor holder already had their own TFSA, then they would be considered as the holder of two separate accounts. If they wish, they can directly transfer part or all of the value from one to the other (for example, to consolidate accounts). This would be considered as a qualifying transfer and would not affect available TFSA contribution room.

In certain cases, a survivor, designated as the successor holder of a TFSA, could not have a valid Canadian social insurance number (SIN), which is one of the eligibility requirements for opening a TFSA. If the survivor is a Canadian resident, they should apply to Service Canada to get a valid Canadian SIN.

If the survivor is a non-resident, they should ask for an individual tax number from the CRA by completing Form T1261, Application for a Canada Revenue Agency Individual Tax Number (ITN) for Non-Residents.

Excess TFSA amount at the time of death

If, at the time of death, there is an excess TFSA amount in the deceased holder's TFSA, a tax of 1% per month applies to the deceased holder on the highest excess TFSA amount for each month in which the excess stays in the TFSA, up to and including the month of death. The legal representative must file a Form RC243, Tax-Free Savings Account (TFSA) Return, and Form RC243-SCH-A, Schedule A – Excess TFSA Amounts, for that period.

Also, the successor holder is deemed to have made, at the beginning of the month following the date of death, a contribution to their TFSA equal to the amount by which the excess TFSA amount is more than the total FMV, at the date of the holder’s death, of all property under any arrangements that ceased to be a TFSA because of the holder’s death. If that contribution creates an excess TFSA amount in the successor holder’s TFSA, they will be subject to a tax of 1% per month on the highest amount for each month they have an excess contribution.

Example 1 – Excess TFSA amount at the time of death

Miriam and Pauline were a married couple. Each had available TFSA contribution room of $7,000 at the beginning of 2024. Miriam initially contributed $7,000 to her TFSA, and Pauline contributed $1,500 to hers. On June 12, 2024, Miriam contributed an additional $2,000 to her TFSA, bringing her total contributions for 2024 to $9,000.

As Miriam only had contribution room of $7,000 for 2024, she had an excess TFSA amount of $2,000. Miriam passed away on September 18, 2024, and the value of her TFSA on that date was $9,000. Miriam had named Pauline as the successor holder of her TFSA if she dies. As Pauline meets all the conditions to be considered a successor holder, she becomes the holder of the TFSA from September 18, 2024.

Since an excess TFSA amount remained in Miriam’s TFSA at the time of her death, Pauline is deemed to have made, on October 1, 2024, a $2,000 contribution to her TFSA (which is the excess amount in Miriam’s TFSA). As Pauline had only previously contributed $1,500 to her own TFSA, she still had unused TFSA contribution room for 2024 of $5,500. As a result, the $2,000 deemed contribution does not create an excess TFSA amount in her account.

Therefore, there are no tax consequences to Pauline based on this deemed contribution. Her unused contribution room for the rest of 2024 is $3,500. However, the legal representative of Miriam’s estate must file Form RC243, Tax‑Free Savings Account (TFSA) Return, and Form RC243‑SCH‑A, Schedule A – Excess TFSA Amounts, for the 2024 tax year reporting the excess in Miriam’s TFSA for the period from June up to and including September 2024.

Example 2 – Excess TFSA amount at the time of death

From the situation above, if Pauline had initially contributed $7,000 to her own TFSA on May 10, 2024, instead of the $1,500 previously noted, the $2,000 deemed contribution on October 1, 2024, would have resulted in total contributions to her TFSA in 2024 of $9,000.

Pauline’s TFSA contribution room at the beginning of 2024 was $7,000. As a result of the deemed contribution, she would be considered to have an excess TFSA amount of $2,000 ($9,000-$7,000). In this situation, Pauline would be subject to a tax of 1% per month on this excess TFSA amount for as long as it remained in her account.

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