I moved back to China but kept contributing to my TFSA — is that a problem?
Yes, a serious one. Any contribution you make while a non-resident of Canada is automatically an excess contribution, taxed at 1% per month until the money is withdrawn (and designated as a withdrawal of non-resident contributions) or you become a Canadian resident again. No new TFSA room accrues while you are non-resident, and automatic pre-authorized contributions keep the meter running every month.
The rule
A TFSA is only for Canadian residents. The day you become a non-resident:
- Your existing TFSA can stay open and keep growing tax-free in Canada.
- You must not contribute another dollar.
- You earn no new contribution room for non-resident years.
How the 1% penalty works
| Detail | Rule |
|---|---|
| Rate | 1% per month on the non-resident contribution |
| Clock stops when | Amount withdrawn in full (designated as non-resident withdrawal) or you re-establish residency |
| Form | RC243-SCH-B to calculate the tax |
| Relief | CRA may waive if the error was reasonable and you acted quickly |
A $1,000 monthly auto-contribution left running for a year costs $120+ in penalties — and the contributions themselves don't even buy you any room.
What to do now
- Cancel all automatic contributions today.
- Withdraw the non-resident contributions and designate the withdrawal properly.
- File RC243-SCH-B and pay what is owed; then request penalty relief explaining the reasonable error.
Frequently asked questions
Can I keep the TFSA open while living abroad?
Yes — the account stays, and growth remains tax-free in Canada. You just can't add to it. (Your new country of residence may tax it, though — China does not recognize the TFSA.)
I became resident again in June — do I get full-year room?
No. You only accrue room for years in which you were a resident aged 18+; partial years don't give partial room.
Will CRA really catch this?
Financial institutions report TFSA contributions to CRA. Non-resident contributions are one of the most commonly assessed TFSA penalties.
Sources
- https://bbs.fcgvisa.com/t/tfsa-2026-7-000-109-000-1/49141
- https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4466/tax-free-savings-account-tfsa-guide-individuals.html (CRA Guide RC4466)