TFSA for Non-Residents: What Changes When You Leave Canada
Canada still shelters it, no new room accrues, the 1 percent tax, and why the U.S. doesn't recognize it
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
A non-resident of Canada can keep a tax-free savings account, and Canada won't tax its income or withdrawals. But no new room accrues while non-resident, contributions made then are taxed at 1 percent a month, and the United States doesn't recognize the TFSA, taxing its income. Most people moving to the U.S. withdraw first.
On this page
What changes
| Item | While non-resident |
|---|---|
| Canadian tax on income and withdrawals | None |
| New contribution room | None for any year you are non-resident for the entire year; the full annual limit (C$7,000 for 2026) still accrues for the year of departure, and again for the year you return |
| Contributions | Taxed at 1 percent per month until withdrawn or until the person becomes resident again — plus a separate 1 percent monthly tax on any part that also exceeds available room |
| Withdrawals | Allowed and tax-free in Canada; the amount is added back as usable contribution room only once the person becomes resident again (no earlier than the following year) |
| U.S. treatment | Not recognized — income is U.S.-taxable annually; Canadian funds inside are PFICs (Form 8621); FBAR and Form 8938 apply; Forms 3520/3520-A are possible if it's treated as a foreign trust, because Rev. Proc. 2020-17's exemption (retirement, medical, disability, or education trusts) doesn't fit a general-purpose TFSA |
Before moving to the U.S.
Withdraw the TFSA before becoming a U.S. resident (the withdrawal is tax-free in Canada, and nothing has accrued yet in the U.S.), so the U.S. return never sees it. Holding it into U.S. residency means annual U.S. tax on its income, Canadian mutual funds inside as PFICs, and possible Form 3520 reporting (the TFSA vs Roth guide).
Frequently asked questions
Can I keep my TFSA if I move to the U.S.?
Yes, Canada allows it — but the U.S. taxes its income and may require complex reporting.
Can I contribute to my TFSA as a non-resident?
You can, but the contribution is taxed at 1 percent per month until you withdraw it or become a Canadian resident again.
Do withdrawals as a non-resident restore room?
Only once you become a Canadian resident again — the withdrawn amounts are then added back as contribution room.
Should I close my TFSA before moving?
Usually yes — withdraw before becoming a U.S. resident to avoid U.S. tax and reporting.
Official sources
The CRA explains: “If you become a non-resident, you are allowed to keep your existing TFSA. Any income you earn in your account, such as interest, dividends, or capital gains will not be taxed in Canada.” — Canada Revenue Agency, How non-residency affects your TFSA, https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/non-resident.html
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk and Canadian Tax Desk handle TFSA planning around a move, non-resident contribution corrections, and U.S. reporting for TFSAs kept after a move. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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