As far as I understood, when the original holder's TFSA pass away, the successor will inherit the TFSA. There are many examples where they explain that if there's an excess on the deceased holder's TFSA, the successor will have to pay taxes of 1% for the excess (or difference against the contribution room of the successor holder's TFSA). If there is unused contribution room on the successor holder's TFSA, he/she can shelter the excess without trouble.
The CRA's web page mentions that the successor will have 2 independent accounts (his/her own TFSA and inherited one) and he/she can still contribute on the deceased holder's TFSA while his/her own contribution room is not exceeded.
But I have 2 questions about this:
- Imagine that both TFSAs (deceased and successor) don't have any excess, but are at 100% of the contribution room. Does the successor have to pay taxes for the full amount of the inherited TFSA?
- The deceased holder's TFSA is open to contribute more money in there. But the TFSA of the deceased holder will still increase the contribution room over the years?
It would be very appreciated if a link can be offered.
Thanks in advance.