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By Jason Heath, CFP on May 20, 2025
Estimated reading time: 4 minutes

By Jason Heath, CFP on May 20, 2025
Estimated reading time: 4 minutes

If you have tax-free savings accounts in Canadian and U.S. dollars, here’s how to avoid overcontributing.

I just set up an American dollar TFSA to complement my existing TFSA. I do not know how the contribution gets calculated, and the goal is to not overcontribute with the sum of these.

—Michelle

An investor can open more than one tax-free savings account (TFSA). There are no restrictions on the number of accounts that can be opened, either. Some people have a TFSA for cash savings at an online bank and another for securities at a discount broker or portfolio manager, for example.

TFSAs have annual contribution limits, and there is a penalty tax of 1% per month for overcontributions. If you have more than one TFSA, it increases the risk of inadvertently overcontributing—even more so if you hold and/or trade in U.S. dollars.

Let’s look at the considerations for your Canadian and U.S. TFSAs, Michelle.

The Canada Revenue Agency (CRA) outlines the types of investments that can be held in a TFSA. The rules are generally the same for a TFSA as for a registered retirement savings plan (RRSP). The six........

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