- A surviving spouse or common-law partner who receives TFSA payments as a beneficiary can contribute them to their own TFSA as an exempt contribution that does not affect their own contribution room.
- The amount must be received and contributed by the end of the rollover period, must not exceed the TFSA's fair market value at death, and must be designated on Form RC240 within 30 days.
- A child or other non-survivor beneficiary cannot designate an exempt contribution and pays 1% per month on any excess over their own room.
If your spouse or common-law partner died and you were named as a beneficiary of their TFSA, rather than as successor holder, you receive the account's value instead of taking over the account. You may be able to move that money into your own TFSA without using up your own room.
This article explains who qualifies, the deadlines, the Form RC240 step, the 2026 change for post-death earnings, and when the option is not available. Your facts may differ, so a lawyer or accountant can confirm how this applies to you.
This article covers Canadian federal tax law, which applies in every province.
Who counts as a survivor
For TFSA purposes, a survivor is an individual who was, 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.
This differs from a successor holder, who is the surviving spouse or common-law partner named in the contract or will and who takes over the TFSA itself. If you were a designated beneficiary instead, you receive the account's value.
What makes a contribution exempt
A survivor who receives TFSA payments as a beneficiary can contribute them to their own TFSA as an exempt contribution that 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 death to the end of the calendar year after the year of death (December 31 of the following year). 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.
Form RC240 and the 30-day deadline
You send 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 definition of exempt contribution in s. 207.01(1) also requires designation within 30 days.
Starting January 1, 2026, earnings accrued in a TFSA after the holder's death, up to the end of the rollover period, can be designated as exempt contributions. This is a recent change, so check the CRA's current wording before you rely on it.
- Confirm you were the spouse or common-law partner immediately before the death.
- Ask the issuer how and when the payments will be made.
- Contribute to your own TFSA before the rollover period ends.
- File Form RC240 within 30 days of each contribution.
When no exempt contribution is allowed
An exempt contribution is generally not 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, the Income Tax Act s. 207.01(1) limits the exempt amount to nil, unless the Minister allows a greater amount.
Quebec is treated differently because it does not recognize the successor holder designation for TFSAs. A surviving spouse or common-law partner in Quebec can still contribute amounts received to their own TFSA without affecting unused room, but only if the contribution is made by December 31 of the year following death and Form RC240 is filed within 30 days.
How this compares with a child or other beneficiary
| Beneficiary | Own TFSA contribution | Tax effect |
|---|---|---|
| Surviving spouse or common-law partner (survivor) | Can be an exempt contribution that does not affect own room | No effect on own room if conditions are met |
| Non-survivor, such as a child | Only if they have available room; cannot designate any amount as exempt | Over-contributing is taxed at 1% per month while the excess remains |
Beneficiaries generally pay no tax on amounts up to the TFSA's fair market value at the date of death. Earnings made after death and before the estate is settled are generally taxable, because the tax-free part is limited to the fair market value at death. Starting January 1, 2026, earnings accrued after death, up to the end of the rollover period, can be designated as exempt contributions. A non-survivor beneficiary, such as a child, cannot designate any amount as exempt.
What to do next
- Find out the date of death, since the rollover period depends on it.
- Ask the TFSA issuer for the fair market value at death and the payment dates.
- Ask whether the deceased had an excess TFSA amount, since that blocks an exempt contribution.
- Make a note of the 30-day RC240 deadline once you contribute.
- Speak with a lawyer or accountant if several survivors, an excess amount or post-death earnings are involved.
Frequently asked questions
Does an exempt contribution use up my own TFSA room?
No. A survivor's exempt contribution does not affect their own available contribution room. The conditions on timing, amount and designation still have to be met.
What if I miss the 30-day deadline for Form RC240?
The rule is that you send the form within 30 days of the contribution, unless the CRA allows a later date. If you are late, a lawyer or accountant can help you ask the CRA about it.
Can a child of the deceased make an exempt contribution?
No. A non-survivor beneficiary can contribute only if they have available room and cannot designate any amount as exempt. Any excess is taxed at 1% per month while it remains.
Can I include earnings made after the death?
Starting January 1, 2026, earnings accrued after the holder's death, up to the end of the rollover period, can be designated as exempt contributions. Because the change is recent, confirm the current CRA wording.
Sources
- CRA – If you are a successor holder of a TFSA — canada.ca
- Income Tax Act s. 146.2 — Justice Laws (federal)
- CRA – What happens when a TFSA holder dies — canada.ca
- CRA – Death of a TFSA holder (issuers) — canada.ca
- CRA – If you are a designated beneficiary of a TFSA — canada.ca
- CRA – Definitions for TFSA — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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