If you are a successor holder of a TFSA
Quebec does not recognize the designation of successor holder for TFSAs. For more information, refer to Beneficiary designation in Quebec.
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What is a successor holder
A successor holder is the survivor of the deceased who is named as the new holder of the TFSA in either the TFSA contract or in the will of the deceased holder.
The successor holder immediately becomes the new holder and assumes ownership of the TFSA upon the death of the deceased holder. The value of the TFSA on the date of death and any income earned after that date are still sheltered from tax under the successor holder.
Because the TFSA continues to exist, the deceased holder is not considered to receive an amount from the TFSA upon their death.
If the TFSA contract is a trust arrangement, the trust continues to be the legal owner of the property held in the TFSA.
The TFSA issuer will inform the CRA of the change in ownership.
Example of a successor holder
Ginette and her husband Paul are both residents and live in a province that recognizes TFSA beneficiary designations. Ginette is the holder of a TFSA and has designated Paul as the successor holder.
Ginette dies on February 15, 2024. The fair market value (FMV) of her TFSA on that date is $10,000. There is no excess TFSA amount in her account. Her estate is finally settled on September 1, 2024. By that time, the TFSA had earned an additional $200 in interest.
Since Paul meets all the conditions, he becomes the successor holder of Ginette’s TFSA on the date of death.
The FMV of $10,000 on 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.
Because Ginette was a resident at the time of her death and lived in a province that recognizes TFSA beneficiary designations, the CRA will not issue a T4A slip and will not require a Designation of an Exempt Contribution – TFSA (Form RC240).
Holders must have a Social Insurance Number or Individual Tax Number
A survivor who is designated as a successor holder must have either a valid Social Insurance Number (SIN) or an Individual Tax Number (ITN).
Resident of Canada: Option 1
If the survivor is a resident, they should apply to Service Canada for a valid Canadian SIN.
Go to: Social Insurance Number (Service Canada)Non-resident of Canada: Option 2
If the survivor is a non-resident, they should apply for an ITN.
Go to: Non-resident successor holder
If the successor is named in the will
The successor holder may be named in the will of the deceased holder (instead of in the TFSA contract) if it states that the successor holds all the same rights as the original holder. This includes the right to cancel or change any beneficiary designation the deceased holder had chosen for the account or its assets.
How contribution room is affected
If the successor holder already has their own TFSA, they would be considered to hold two separate TFSAs.
The successor holder’s own available TFSA contribution room is not affected by becoming a successor holder as long as there is no excess amount in the deceased holder’s TFSA.
For more information: Excess amounts may be taxable
If the successor holder has multiple TFSAs, their available contribution room now applies to all accounts collectively. The successor holder does not gain the deceased holder’s unused contribution room, if there is any.
After taking over ownership of the deceased holder’s TFSA, the successor holder can make tax-free withdrawals from that account. They can also make new contributions to that account if they have available contribution room.
The successor holder may ask the TFSA issuer to directly transfer some or all of the value from one TFSA to the other and consolidate the accounts. This would be a qualifying transfer and would not affect their available TFSA contribution room.
For more information: Requesting a TFSA transfer
Excess amounts may be taxable
An excess amount can occur when a TFSA holder contributes more than their available contribution room allows. If the deceased holder’s TFSA contains an excess amount at the time of death, there may be tax implications.
Tax implications for the deceased holder
Any excess amount is taxable to the deceased holder at a rate of 1% per month for each month it stays in the account, up to and including the month of death.
The deceased holder’s legal representative must file the following forms for that period:
Tax implications for the successor holder
At the beginning of the month after the date of death, the successor holder is considered to make a contribution to their TFSA that is equal to the excess amount that was in the deceased holder’s account.
If that contribution creates an excess amount in the successor holder’s account, it is taxable at a rate of 1% per month for as long as the excess remains in the account.
Example: When an excess amount would not be taxable
Miriam and Pauline are a married couple. They both have TFSAs and have each designated the other as successor holder of their account.
2025
At the beginning of 2025, they each have an available TFSA contribution room of $7,000. Miriam contributes $7,000 to her TFSA, and Pauline contributes $1,500 to hers.
June 2025
On June 12, 2025, Miriam contributes an additional $2,000 to her TFSA, bringing her total contributions for 2025 to $9,000.
As Miriam only has contribution room of $7,000 for 2025, she now has an excess TFSA amount of $2,000.
Miriam’s contributions:
September 2025
Miriam passes away on September 18, 2025. The value of her TFSA on that date is $9,000. As Pauline meets all the conditions to be a successor holder, she becomes the new holder of the TFSA from September 18, 2025.
October 2025
Because there is an excess amount in Miriam’s TFSA at the time of her death, Pauline is deemed to make, on October 1, 2025, a $2,000 contribution to her TFSA (which is the excess amount in Miriam’s TFSA).
But because Pauline had previously only contributed $1,500 to her own TFSA, she still has $5,500 of unused contribution room available for 2025. As a result, the $2,000 deemed contribution does not create an excess TFSA amount in her account.
Pauline’s contributions:
Therefore, there are no tax consequences to Pauline based on this contribution. Her unused contribution room for the rest of 2025 is $3,500.
Example: When an excess amount would be taxable
In the example above, if Pauline had initially contributed $7,000 to her own TFSA in June 2025 (instead of the $1,500 previously noted), the $2,000 deemed contribution on October 1, 2025, would have resulted in a total 2025 contribution of $9,000.
Because Pauline’s TFSA contribution room at the beginning of 2025 was $7,000, the deemed contribution would result in an excess TFSA amount of $2,000.
Because of this excess amount in her TFSA, Pauline would be subject to a tax of 1% per month on this excess amount for as long as it remains in her account.
For more information: If you owe tax on excess amounts