Have you maximized your TFSA contribution room and wondering if you can contribute to a spouse’s TFSA?
This post answers the question. You’ll also learn whether you can open a joint TFSA with your spouse or anyone else.
Can you contribute to a spouse’s TFSA?
Unlike RRSPs that allow spousal contributions, you cannot contribute to your spouse’s TFSA directly. With TFSAs, only the accountholder can contribute to their own account subject to their annual contribution limit.
However, you can give your spouse or any other person some money to contribute to their own TFSA account.
This means that the money you gift to your spouse will not reduce your own limit and the income earned in the TFSA will not be attributed to you – like it works for RRSP spousal contributions.
Related Post: TFSA FAQs
Spousal RRSP vs Spousal TFSA Contributions
Unlike TFSAs, you can open and contribute to a spousal RRSP. Spousal RRSPs let couples lower the overall income taxes they get to pay.
It is a smart tax planning strategy for spouses with a big disparity between their annual incomes. The higher-income spouse will receive the tax deduction, but the withdrawals will be taxed in the hands of the lower-income spouse.
However, there’s a 3-year attribution rule. Under this rule, the contributions to a spousal RRSP can not be taken out within three years of the date they were made. If the money is withdrawn earlier, it will be taxed in the hands of the contributing spouse.
Giving money to a spouse to contribute to their TFSA works differently.
Here’s an illustration:
Consider 2 Canadian residents, Jane and John, that are married. Jane is the higher-income spouse, and she always maximize the contribution room for both her TFSA and RRSP. The remaining contribution room for the year is $10,000 for each of her plans.
However, John still has $30,000 available contribution room in both his TFSA and RRSP.
Jane has just received a bonus of $7,500 and is considering putting it in one of John’s registered accounts.
Her options are below:
Open a Spousal RRSP and contribute to John’s RRSP
The contribution will reduce her own RRSP contribution room to $2,500 and she would claim the RRSP deduction on her income tax returns.
John’s contribution room is unaffected even though his RRSP account has increased by the $7,500 contribution from Jane.
| Jane | John | |
|---|---|---|
| RRSP Available Contribution Room | $10,000 | $30,000 |
| Spousal RRSP Contribution | $7,500 | $0 |
| New RRSP Contribution Room | $2,500 | $30,000 |
Give the cash to John and he contributes to his TFSA
Jane’s TFSA limit remains $10,000 but John’s own drops to $22,500. Any gains earned on the money will be tax-free and not attributed to Jane.
| Jane | John | |
|---|---|---|
| TFSA Available Contribution Room | $10,000 | $30,000 |
| Amount Gifted by Jane | $0 | $7,500 |
| New TFSA Contribution Room | $10,000 | $22,500 |
Can I have a Joint TFSA?
You cannot have a joint TFSA account with your spouse or any other person. This is because a TFSA can only be opened and held by one person. Also, the TFSA accountholder is the only person that can contribute to the account.
You can, however, give someone the money to contribute their TFSA, designate them as a beneficiary or successor holder or open a non-registered investment account with them.
Learn more here: Can I have a Joint TFSA? And a few options to consider.
FAQs: Contributing to a Spouse’s TFSA
You cannot contribute to someone else’s TFSA even if they are a spouse of common-law partner.
No, it will not. The spouse making the gift will retain their contribution room. But the contribution will be counted against the TFSA contribution room of the receiving spouse or accountholder.
The contributing spouse claims the deduction for a spousal RRSP contribution. Note that there are 2 parties to a spousal RRSP: the contributor (the spouse making the contributions) and an annuitant (the plan owner).
