Personal Finance

Is TFSA contribution room supposed to grow if you are a non resident?

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  • Mar 6th, 2020 6:44 pm
[OP]
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Dec 13, 2016
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Is TFSA contribution room supposed to grow if you are a non resident?

I have been a non resident for tax purposes for around 4 years yet when I log in to my CRA account I see that contribution room has grown substantially.

Is this normal?
13 replies
Deal Fanatic
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Jan 31, 2006
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Toronto
Did you notify CRA that you are no longer a resident?
Member
Feb 9, 2020
201 posts
127 upvotes
No, you do not accrue TFSA contribution room while you are a non-resident for tax purposes.
Member
Mar 26, 2012
461 posts
360 upvotes
TFSA Eligibility
As long as your over 18 years of age and you have a valid SIN number, you're perfectly eligible to open a TFSA. A person determined to be a non-resident of Canada for income tax purposes can hold a valid SIN and be allowed to open a TFSA. However, any contributions made by a non-resident are subject to a 1% tax for each month the contribution stays in the account.
Jr. Member
Jun 3, 2017
182 posts
142 upvotes
BiegeToyota wrote: I have been a non resident for tax purposes for around 4 years yet when I log in to my CRA account I see that contribution room has grown substantially.

Is this normal?
You didn't (properly) file an "exit" tax return; the tax return where you denote the date you become a non-resident. If you would've (properly) filed, your TFSA section of the MyCRA account would be completely blacked out with a message saying that you're not eligible for TFSA as a non-resident.

Ask me how I know.
[OP]
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Dec 13, 2016
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AnotherDesiredUsername wrote: You didn't (properly) file an "exit" tax return; the tax return where you denote the date you become a non-resident. If you would've (properly) filed, your TFSA section of the MyCRA account would be completely blacked out with a message saying that you're not eligible for TFSA as a non-resident.

Ask me how I know.
Every year I am doing a non resident tax return where government takes 25% of my rental profit.

So, will I have a problem once I get back to Canada?
Member
Jun 27, 2007
289 posts
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California
My TFSA contribution room has been frozen since I left Canada in 2015.
Jr. Member
Mar 16, 2009
176 posts
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Toronto
BiegeToyota wrote: Every year I am doing a non resident tax return where government takes 25% of my rental profit.

So, will I have a problem once I get back to Canada?
Yes, but did you do a "proper" departure tax return when you left the country, where you specifically indicated the date you ceased to be a resident?
Jr. Member
Jun 3, 2017
182 posts
142 upvotes
BiegeToyota wrote:
Every year I am doing a non resident tax return where government takes 25% of my rental profit.

So, will I have a problem once I get back to Canada?
profile wrote: I'm asking.
Story time. Some years ago, I accepted a lucrative job offer in another country and left Canada for a few years. Being young, reckless, and naive, I decided that I'll file my own non-resident tax return in that Turbo-Tax-Thingy that I've become accustomed to, despite warnings from others who have done the same thing before me to not do this. After returning to Canada years later, I quickly discovered that I should've listened to what others were saying.

You see, at the time, TurboTax asked me if I was a (non)resident as of December 31 of the tax year, to which I answered "no" (i.e. non resident). In actuality, the CRA form had a field for an explicit date to go along with that question, which was half way through the year in my case. That made a world of a difference, and resulted in nearly 3 years of audits and back and forth with both resident tax division of the CRA and Part XIII (non resident).

The End.

Will you have a problem if you ever come back to Canada and didn't (properly) file an exit tax? Well, YMMV, but I'm pretty sure the answer is yes.
Member
Dec 22, 2018
203 posts
78 upvotes
Markham
BiegeToyota wrote: Every year I am doing a non resident tax return where government takes 25% of my rental profit.

So, will I have a problem once I get back to Canada?
yes
Deal Addict
May 15, 2013
1971 posts
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Montreal
AnotherDesiredUsername wrote:
TurboTax asked me if I was a (non)resident as of December 31 of the tax year, to which I answered "no" (i.e. non resident).
Are you a non resident? YES, I am a not resident.
Your answer should have been YES
Jr. Member
Jun 3, 2017
182 posts
142 upvotes
iamthebest wrote: Are you a non resident? YES, I am a not resident.
Your answer should have been YES
I checked turbotax now, and the question is now broken down into "Residency changed", follow by questions like when, foreign income, etc. I'm going by memory, but back then, the question was a simple yes/no as of December 31. The answer at the time was correct. It's the fact that TurboTax didn't have support for the follow up questions what caused everything that followed.

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