TFSA’s and Non-residents of Canada
One of the things you need to open a TFSA is a valid Canadian social insurance number. But there’s nothing that says you actually have to be living in Canada, or that dual-citizens can’t hold TFSAs as well. You can, it’s just a bit more complicated.
Are you a Canadian but a non-resident?
- If you live outside Canada full-time, you are a non-resident
- If you live outside Canada at least 6 months out of every year but have a Canadian spouse or common-law partner, children, or a house in Canada, you are a Canadian resident.
- If you live outside Canada at least 6 months out of every year and don’t have a Canadian spouse or common-law partner, children, a house in Canada, or any other significant social ties, you are a non-resident
So, if you are a non-resident, what can you do? You can still have a TFSA, but there are tax consequences. You will have to pay a tax of 1% per month on anything you contribute while a non-resident (there are some exceptions such as contributions transferring over from deceased holder’s TFSA). And you’ll continue to get dinged with this 1% tax until you withdraw everything from the TFSA, or you become a Canadian resident.
Fortunately, non-residents can enjoy the same perks as Canadian residents when it comes to the tax-free status of the account. Just like Canadian residents, non-residents can enjoy your earnings tax-free, and make withdrawals without it counting as income. But this only applies to Canadian taxes…if you are a dual citizen you could get taxed by your other country of citizenship for having foreign (to them) income!
Also, as a non-resident you aren’t allowed to accumulate contribution room like Canadian residents can. If you make regular contributions while a non-resident, chances are you’ll reach your contribution limit quickly and end up over-contributing. At that point you’ll have to pay the 1% over-contribution penalty in addition to the 1% non-resident tax. So if you are a non-resident, it could cost you a lot to maintain a TFSA, and may not be worth it if the penalties are a significant fraction of your funds!
Hi, I am a Canadian citizen and resident.
I am planning to move abroad sometime in 2023.
Can I contribute to the TFSA room that will accrue in January 1, 2023?
Thanks for your help!
Your annual contribution room for the year is in effect as of January 1st of that year. So to answer your question, yes, you can contribute 2023’s contribution limit of $6,500 assuming you were still residing in Canada on January 1, 2023.
Good luck calling CRA. I’ve spent 7+ hours on hold since just trying to get to the department to change my status for TFSA, then that’s using more hours on hold — and then the call gets disconnected or my phone battery dies. Entirely frustrating.
For others, try different times of the day. Also now CRA can tell you approximate hold times on their website. It should be somewhere in Contact Us. Also maybe try social media. They’re on Facebook but without a Message button. You can leave a comment though that might get read. https://www.facebook.com/canrevagency
I became a permanent resident in 2016, but I did a soft landing and went back to my home country. I came back in 2018 to Canada & started working.
The CRA website shows me an available contribution room for 2016, 2017, 2018, 2019 & 2020.
What is my available room for 2020?
You’ll have to call CRA to be sure. However, if you didn’t have residential ties in Canada during the time you were away and you lived outside Canada throughout the tax year/you stayed in Canada for less than 183 days in the tax year, it’s unlikely you can claim contribution room for the period you were away.
Best to call CRA directly to discuss your unique situation: 1-800-959-8281.
I have a pretty much similar situation. Were you able to get any answers from CRA? Could you please share?
Hi, my age is 29+ and I’m a new immigrant in Canada starting from this year 2020. What’s my TFSA Contribution limit as of now. Is it just $6000 total or $66,900 available contribution including all the previous years since 2009?
Congratulations on becoming a new Canadian citizen!
Your contribution limit would be $6,000. Your limit increases for every year that you are a Canadian citizen as, unfortunately, amounts for previous years are not retroactive for new immigrants.
When we fill the tax return, should we mention how much we have in our TFSA(GICs, Mutual funds)?
Because TFSAs are registered accounts (they are given tax-deferred or tax-sheltered status by the government), CRA already knows how much you have in your account, including your holdings. There is no need to make mention of your TFSA balance or holdings when filing your tax return.
Hi, thanks for the info.
I am on a working holiday visa and have been in Canada for over 2.5 years now. Am I still a non resident? If so is it worth me having a TFSA? I’m confused if its worthwhile or not. I currently have one with $2000 in it. And planned on adding more but was trying to find out what my limit is….Do you know? Any advice or help would be greatly appreciated. Adam
As far as we know, you are not eligible to set up a TFSA unless you are a permanent resident or a citizen of Canada. Unfortunately, your working holiday visa does not appear to fall into this category.