Can non-residents have a TFSA?
March 14, 2023
When you become a non-resident of Canada, many things about your tax situation will become more complicated, including whether or not to contribute to an RRSP or TFSA.
First and foremost: everyone’s situation is different, and you should consult with tax professionals to determine the best action for you.
In general, you must be a resident of Canada to contribute to a TFSA without penalty. TFSA contribution room only accumulates while you are a resident. Even if you have enough TFSA room built up from previous years, if you are not currently a resident you will be charged 1% per month on the amount contributed while not in Canada.
Do you have to divest your TFSA if you move out of Canada?
If you already have a TFSA balance and then become a non-resident, your TFSA will still benefit from the exemption from Canadian tax. However, please bear in mind that this exemption only covers the tax treatment of the investment within Canada. The tax laws of the country you now reside in might not recognize the preferential tax-treatment of these plans in their jurisdiction, and therefore require you to pay tax on their side of the border.
Can you withdraw your TFSA if you don’t live in Canada anymore?
Yes, you can make a TFSA withdrawal from outside of Canada. However, remember the same point as above, that your new resident country may treat that withdrawal as taxable income. Seek the advice of professionals familiar with the laws of your new country.
Laws surrounding taxation across borders are constantly in flux. Where residency is concerned, there are many variables that determine your ties to Canada and whether the government deem you a resident or not. Both legal and tax advice is highly recommended for those who spend most of their time outside of Canada. If you are deemed non-resident, remember to take special care surrounding your investments.
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This Blog was written, designed, and produced by Natalie LeBlanc & David Moore, PFP, STI for the benefit of David Moore, PFP, STI who is an Investment Fund Advisor registered with Investia and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe are reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds, approved exempt market products and/or exchange-traded funds are offered through Investia Financial Services Inc.
