US Person - Can I transfer my TFSA to my sibling in Canada?

unfazed · Post by **unfazed** » Sat May 12, 2018 11:58 am

Hi - I immigrated to the USA a few years ago. I stupidly did not close my TFSA. Its a small account - under $10,000. I would like to transfer the whole thing to my brother, as he hasn't contributed a cent to one and has plenty of room. Is this even possible? What are the tax implications for me as a US taxpayer for doing this?

nelsona · Post by **nelsona** » Sun May 13, 2018 2:39 pm

No problem, but why would you not just take the money? There is no advantage to doing this, you still must report any gains incurred by the transfer.

As long as it is under the gift tax maximum for the year, nothing to report.

unfazed · Post by **unfazed** » Sun May 13, 2018 2:54 pm

OK so if I gift it to him, I must first declare the entire TFSA amount as income and then gift that same amount? Yeah, that seems like a wash.

I suppose I could just liquidate it, report that income on my current tax year, put the amount in my traditional IRA (non-deductible) and then convert it to my Roth. I believe it will be around $5500.

nelsona · Post by **nelsona** » Mon May 14, 2018 9:35 am

No. you must report the INCOME generated from the sale and transfer, ie. If your TFSA had a stock in it that had grown $2000, you must report that growth as cap gains on your return.

unfazed · Post by **unfazed** » Mon May 14, 2018 12:00 pm

Ah OK then. That should be no problem. If the growth occurred in 2017 I will have to amend my 2017 return, correct?

Thank you.

nelsona · Post by **nelsona** » Mon May 14, 2018 1:33 pm

Yes. Whatever year(s) your TFSA grew.

Remember that you are not allowed to contribute to a TFSA while non-resident, and can be subject to penalties from CRA for doing so. You usually only find out when you close the TFSA.

unfazed · Post by **unfazed** » Mon May 14, 2018 1:43 pm

Thanks for your advice. Yes I didn't contribute (my online broker wouldn't let me once I moved) but there were some gains.

A bit peeved at my husband's CPA firm who didn't have the correct answer back in 2015 when I brought it up.

I don't want to be penalized for not claiming the gains.

nelsona · Post by **nelsona** » Mon May 14, 2018 2:12 pm

Well, you need to report any income for those years to IRS. Interest, dividends, cap gains. Unfortunately, you will have interest to pay.