Can a Surviving Spouse Put an Inherited TFSA Into Their Own TFSA in Canada?

When a spouse or common-law partner dies, their TFSA does not always pass to you as the new account holder. If you were named as a beneficiary rather than as a successor holder, you receive the value of the account instead of taking over the account itself. Many survivors then want to know whether they can put that money into their own TFSA without losing their own contribution room.

The federal rules do allow this in many cases, through what the CRA calls an exempt contribution. It comes with a deadline, a filing step and a few situations where it is not available. This guide walks through each so you can see where you stand before you move any money.

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

Successor holder or beneficiary: why it matters

A successor holder is the surviving spouse or common-law partner named in the TFSA contract or in the will. On the holder's death, they immediately become the new holder and take ownership of the TFSA. In that case the deceased is not considered to receive an amount from the account, so it continues as a TFSA with its tax-free status intact.

Anyone else named, including a spouse who was named only as a beneficiary, is a designated beneficiary. A designated beneficiary receives the account's value rather than taking over the account. If nobody is named, the TFSA assets are directed to the deceased's estate and the will governs distribution.

Whether a successor holder designation is valid depends on provincial or territorial law, so it is worth confirming how your account was set up with the issuer or a lawyer.

Who counts as a survivor

For the exempt contribution, the key word is survivor. Under the Income Tax Act s. 146.2(1), a survivor is an individual who is, immediately before the holder's death, the holder's spouse or common-law partner.

A common-law partner is a person who is not your spouse, with whom you are living in a conjugal relationship and who meets a further condition, such as having lived with you for at least 12 continuous months or being the parent of your child.

How the exempt contribution works

A survivor who receives TFSA payments as a beneficiary can contribute them to their own TFSA as an exempt contribution. That contribution does not affect their own available contribution room.

Two conditions apply. The amount must be received and contributed during the rollover period, which runs from the date of death to December 31 of the year following the year of death. The total also cannot be more than the TFSA's fair market value at death. Fair market value means the highest price, expressed in money, obtainable in an open and unrestricted market between informed, prudent parties dealing at arm's length, neither under compulsion to buy or sell.

Starting January 1, 2026, earnings accrued in the TFSA after the holder's death, up to the end of the rollover period, can also be designated as exempt contributions. This is a recent change, so check the CRA's current wording or ask an accountant how it applies to your situation.

Filing Form RC240

The survivor sends Form RC240 (Designation of an Exempt Contribution – TFSA) to the CRA within 30 days of making the contribution, unless the CRA allows a later date. The Income Tax Act s. 207.01(1) definition of an exempt contribution also requires the designation to be made within 30 days.

• Confirm the date the person died and work out the December 31 end of your rollover period.
• Get the account's fair market value at the date of death from the issuer.
• Confirm the amounts you received and keep records of each payment.
• Make the contribution to your own TFSA before the rollover period ends.
• Send Form RC240 to the CRA within 30 days of each contribution, and keep a copy.

When an exempt contribution is not available

No exempt contribution is possible if the deceased's TFSA had an excess TFSA amount, or if payments are received by more than one survivor. Where there was an excess, s. 207.01(1) limits the amount to nil or a greater amount the Minister allows.

A beneficiary who is not a survivor is treated differently. A non-survivor, such as a child, may contribute received amounts to their own TFSA only if they have available room, and they cannot designate any amount as exempt. Over-contributing is taxed at 1% per month while the excess remains.

Whether naming a successor holder would have avoided all this is a fair question. Because a successor holder takes over the account itself, no amount is received and no exempt contribution is needed. The successor holder's own contribution room is also not affected, if the deceased had no excess amount.

What to do next

• Ask the issuer whether you were named as successor holder or as a beneficiary, and ask for a copy of the designation.
• Note the date of death and mark the December 31 rollover deadline plus a 30-day reminder after each contribution.
• Ask the issuer whether the account had any excess TFSA amount, since that can rule out the exempt contribution.
• Do not contribute more than the fair market value at death, plus any post-death earnings that qualify under the 2026 change.
• If more than one survivor or an estate is involved, speak with a lawyer or accountant before moving funds.

Mistakes can be costly because of the short filing window, so if anything is unclear, a lawyer or accountant can confirm how the rules apply to your facts.

Frequently asked questions