# Do you get TFSA room back as returning resident?



## james4beach (Nov 15, 2012)

Here's my situation briefly: I'm a dual tax resident in both US & Canada. Under the tax treaty I've determined that my tax residency home is in Canada, and I file two returns: Canada as resident, US as non-resident.

So my TFSA space currently grows normally. Due to complications imposed by US laws, I withdrew my TFSA amounts. Currently I have something like 45K to 50K of contribution space.

My mouth waters over what I will do with that 50K of shelter when I'm living back in Canada.

Obviously if my tax residency situation remains as it does today, that TFSA room will keep growing. But what happens if I declare a tax departure from Canada and become a non-resident? The room stops growing, I know. But when I re-establish tax residency in Canada, then what happens? Am I knocked back down to 0 contribution room? Or does it resume at my current 50K?


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## Eclectic12 (Oct 20, 2010)

I'll have to find the CRA link again.

My understanding is that becoming a NR means that that you stop accruing TFSA contribution room and that you can only make withdrawals. The withdrawal amount becomes TFSA contribution as per usual but as a NR, you can't make a contribution.

When you re-establish tax residency in Canada, any existing TFSA contribution (unused or withdrawals being re-added) are available for use. The annual allotment is granted as per the date of arrival, for the full year. For example, re-establish tax residency on Dec 2017 means the full 2017 allotment is granted to you.

If you had $50K TFSA contribution room when you became a NR, you will at minimum have $50K TFSA contribution room available for immediate use on becoming a tax resident again.


Cheers

*PS*

If the country one becomes a tax resident of does not give a tax exempt status to the TFSA (ex. USA) then one has to adjust one's plans accordingly. 

The suggestion is that if one is moving to a country that does grant a tax exempt status - use up all the TFSA contribution room before changing one's tax residency status. If not, then look into other places to park that money and/or whether draining at a specific time is helpful.


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## Eclectic12 (Oct 20, 2010)

> *Non-residents of Canada*
> 
> If you become a non-resident of Canada, or are considered to be a non-resident for income tax purposes:
> - you will be allowed to keep your TFSA and you will not be taxed in Canada on any earnings in the account or on withdrawals from it;
> ...


http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/lgbl-eng.html#tsvsnnrsdnt


Cheers


*PS*
Technically, one does not lose the TFSA contribution room, one is barred from making use of it by making a contribution.


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## james4beach (Nov 15, 2012)

OK thanks this is good to know. US imposes various reporting burdens so it's prohibitive to keep a TFSA for now. I will resume using the TFSA when I move back and I just didn't want to forfeit that 50K of space.

RRSP is currently my only usable shelter as it's written into the Tax Treaty and enjoys many protections. My RRSP is the only place I can hold Canadian ETFs. Thank goodness for Jimmy Carter - this is a good tax treaty that we enjoy.


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