How non-residency affects your TFSA
A Tax-free Savings Account (TFSA) holder who becomes a non-resident of Canada may continue to hold their TFSA. However, there are important rules and possible tax implications to consider.
On this page
- What is a non-resident
- Tax implications for non-resident TFSA holders
- If you are a non-resident beneficiary of a TFSA
What is a non-resident
You are a non-resident of Canada for income tax purposes if you meet either of the following conditions:
You normally, customarily, or routinely live in another country and are not considered a resident of Canada
You do not have residential ties in Canada and any of the following applies:
- You live outside Canada throughout the year
- You stay in Canada for less than 183 days in the tax year
Understanding your residency status will help you determine if you can contribute to your TFSA tax-free or if your contributions will have tax consequences.
Even if you no longer live in Canada, you may have residential ties in Canada that are enough for you to be considered a factual or deemed resident of Canada. In these cases, the regular rules for holding or opening a TFSA still apply.
Review residential ties to Canada
Residency status can only be determined on a case-by-case basis. However, to be considered a resident you must have significant residential ties to Canada. This may include:
- A home in Canada
- A spouse or common-law partner in Canada
- Dependants in Canada
Other secondary residential ties may also be considered collectively:
- Personal property in Canada
- Social or economic ties with Canada
- Landed immigrant status
- Hospitalization and medical insurance coverage from a province or territory of Canada
- A driver's license or vehicle registered in a province or territory in Canada
- A Canadian passport
- Membership in a Canadian union or professional organization
For more complete information about residential ties: Determining an Individual’s Residence (Income Tax Folio S5-F1-C1)
Tax implications for non-resident TFSA holders
You may keep your TFSA
If you become a non-resident, you are allowed to keep your existing TFSA. Any income you earn in your account, such as interest, dividends, or capital gains will not be taxed in Canada.
However, income you earn through your TFSA may be taxed in your country of residence. Verify the tax obligations in your country of residence.
You may withdraw from your TFSA
As a non-resident, you may withdraw funds from your TFSA without being taxed in Canada. However, you cannot re-contribute any amounts tax-free until you become a resident again.
Example: How non-resident withdrawals affect contribution room
2019 and 2020
Daniel turns 18 in 2019, the same year he receives an inheritance. Daniel decides to open a TFSA. He contributes the maximum amount he is allowed that year ($6,000) and does the same in 2020 ($6,000). In September 2020, he moves to the U.K. and becomes a non-resident of Canada.
Transactions:
(Daniel has $0 unused contribution room because he contributes the maximum he is allowed.)
2021
In 2021, he withdraws $5,000 from his TFSA. Because he isn’t a Canadian resident at the time, this amount will only be added back as available contribution room when he regains residency.
Transactions:
($0 unused contribution room)
2024
In 2024, while still abroad, he withdraws another $3,000. This second withdrawal will also only be added back as available contribution room when he regains residency.
Transactions:
($0 unused contribution room)
2025
In 2025, Daniel moves back to Canada and regains his Canadian residency. His TFSA contribution room is now available to him and reflects the withdrawals he made when he was a non-resident.
Contribution room:
TFSA withdrawals may be taxed in your country of residence. Verify the tax obligations in your country of residence.
You cannot contribute to your TFSA tax-free
Only residents of Canada may contribute to their TFSA tax-free. You can make tax-free contributions to your TFSA up to the date that you become a non-resident. But after that, any contribution to your TFSA is a taxable non-resident contribution.
You will not accumulate any new available contribution room for any year in which you are a non-resident for the entire year. However, if you are a resident for part of the year, you will receive the annual dollar limit as contribution room that year.
How non-resident contributions are taxed
Any non-resident contribution you make, except for a qualifying transfer or an exempt contribution, is subject to a 1% tax for each month the contribution remains in the account. This tax continues to apply until you withdraw the non-resident contribution or you become a resident of Canada again.
You will receive a TFSA notice of assessment (NOA) for any non-resident contribution you make.
If a non-resident contribution also exceeds your TFSA contribution room, you may be subject to an additional 1% monthly tax on the excess amount.
For more information: If you owe tax on non-resident contributions
If you are a non-resident beneficiary of a TFSA
If you are a non-resident and are named as a beneficiary to a TFSA when the holder dies, there may be tax implications in Canada. Earnings may also be taxable in your country of residence. We recommend you check the tax rules there.
There are two types of TFSA beneficiaries:
- Successor holder
- The survivor (spouse or common-law partner) of the deceased who is named as the new TFSA holder in the TFSA contract or will of the deceased holder
- Designated beneficiary
- A survivor (spouse or common-law partner) not named as successor holder, a family member or other person or organization that is named as a TFSA beneficiary in the TFSA contract or will of the deceased holder
Non-resident successor holder
Non-resident successor holders who do not have a Social Insurance Number (SIN) should apply for an Individual Tax Number (ITN).
To apply for an ITN: Application for a CRA Individual Tax Number (ITN) for Non-Residents (Form T1261).
Non-resident successor holders cannot make contributions to the TFSA while they are non-resident. However, they may withdraw funds at any time.
For more information on successor holders and possible tax implications: If you are a successor holder
Non-resident designated beneficiary
A non-resident designated beneficiary of a TFSA may receive a payment in cash or in-kind, depending on the type of TFSA, based on the fair market value (FMV) of the TFSA on the date of death. This amount is not taxable in Canada.
However, any amounts paid during the exempt period that are above the FMV at the time of death are subject to non-resident withholding tax.
You must report these amounts to the CRA by completing a Statement of Amounts Paid or Credited to Non-Residents of Canada (Form NR4).
For more information on designated beneficiaries and possible tax implications: If you are a designated beneficiary