Wednesday, January 8, 2025

How does a spouse’s death impact your TFSA contribution room?

-


Available TFSA contribution room

Canadians aged 18 and older accumulate new tax-free savings account (TFSA) contribution room every year. The annual TFSA contribution limit has changed many times since the account was introduced in 2009. As of January 1, 2025, an individual born in 1991 or earlier (who was 18 years or older in 2009) who has never contributed to a TFSA may have as much as $102,000 of cumulative TFSA room.

Year Annual TFSA limit Cumulative TFSA limit
2009 $5,000 $5,000
2010 $5,000 $10,000
2011 $5,000 $15,000
2012 $5,000 $20,000
2013 $5,500 $25,500
2014 $5,500 $31,000
2015 $10,000 $41,000
2016 $5,500 $46,500
2017 $5,500 $52,000
2018 $5,500 $57,500
2019 $6,000 $63,500
2020 $6,000 $69,500
2021 $6,000 $75,500
2022 $6,000 $81,500
2023 $6,500 $88,000
2024 $7,000 $95,000
2025 $7,000 $102,000

In addition to year of birth, TFSA room is impacted by a couple of factors. Non-residents of Canada do not accumulate new TFSA room. And TFSA room adjustments are made based on prior contributions and withdrawals. When you contribute, your remaining TFSA room decreases. When you withdraw, your remaining TFSA room increases, but not until the following calendar year.

TFSA contribution room calculator

Find out how much you can contribute to your TFSA today using our calculator.

What happens when you inherit a TFSA?

When you inherit a TFSA, like you did, Roberta, the impact of contributing the funds to your own TFSA depends on your relationship to the deceased. When your spouse dies, you have up until December 31 of the year following their death to deposit funds from their TFSA to your own account without having to take up any your TFSA contribution room.

This applies when your spouse named you as beneficiary of their TFSA, but even if they did not, it can still apply if you are a beneficiary of their estate.

If you’re a non-spouse beneficiary of a TFSA, there’s no special treatment for the TFSA inheritance. You do not have the ability to add it to your own TFSA, at least not without using your own TFSA room.

Successor holder

If your late husband named you as successor holder, Roberta, you may be able to take over his TFSA. Only a spouse can be a TFSA successor holder. If you have your own TFSA, you may still want to combine the accounts.

One advantage of being a successor holder is that any income and/or growth earned after your spouse’s death is considered tax-free. Otherwise, if you are named as beneficiary, that income and growth is taxed as ordinary income. The entire account value can still be transferred to your own TFSA, however, subject to the same timeline of December 31 of the year after death.

Confirming your TFSA room

You can determine your TFSA room, Roberta, by contacting the Canada Revenue Agency (CRA). The CRA can confirm your TFSA room by phone or using CRA My Account online.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Related Stories