Do I need to file a T3 return for a TFSA after the holder dies in Canada?

This answer covers Canadian federal tax law, which applies in every province.

It depends on how the TFSA is set up. If a trust TFSA still exists after the exempt period, it becomes a taxable trust and must file a T3 Trust Income Tax and Information Return (T3RET) every tax year it continues, and issue T3 slips for taxable distributions. The exempt period ends at the earlier of the end of the year following the year of death or when the trust ceases to exist.

During the exempt period, a trust TFSA keeps limited TFSA treatment. Its first taxable year after that includes any post-death income or gains that were not paid out during the exempt period. If a successor holder takes over, the deceased is not considered to receive an amount from the TFSA on death, and the account continues as a TFSA with its tax-free status intact.

Income earned during the exempt period and paid to beneficiaries is taxable income to them, and the issuer reports it on a T4A for Canadian-resident beneficiaries. For non-resident beneficiaries, an NR4 is used and the issuer must withhold and remit non-resident withholding tax. Whether a T3 applies to your situation depends on the type of account and the facts, so confirm with a lawyer or accountant.