You can have more than one TFSA, but only one per person at a time

You can open multiple Tax-Free Savings Accounts (TFSAs) during your lifetime, but you cannot hold more than one TFSA with the same financial institution at the same time. You can, however, have one TFSA open at a bank, another at a credit union, and a third at an investment firm — all at once. The key rule is that the total amount you contribute across all your TFSAs in a single year cannot exceed your annual contribution limit, which varies by year and is set by the Canada Revenue Agency (CRA).

If you open a second TFSA while one is already active, both accounts remain open and both earn tax-free growth. The problem arises only if you contribute more than your limit across both accounts in the same year. Overcontribution triggers a penalty tax of 1% per month on the excess amount until you withdraw it.

Key Takeaways

  • You can hold multiple TFSAs at different financial institutions at the same time, but only one per institution.
  • Your total contributions across all TFSAs in a single year cannot exceed your annual TFSA contribution limit, which the CRA sets each year.
  • Overcontributing to multiple TFSAs triggers a 1% monthly penalty tax on the excess amount until you withdraw it.
  • The CRA tracks your total TFSA contributions across all accounts through the financial institutions you use, so you cannot hide contributions in a second account.
  • Closing one TFSA does not immediately free up contribution room; the room becomes available again on January 1 of the following year.

Why you might want more than one TFSA

Some people open a second TFSA to separate savings by purpose — one account for an emergency fund and another for long-term investments, for example. Others switch to a different financial institution because the new one offers better interest rates or lower investment fees, and they keep the old account open to avoid closing costs or to maintain the account history.

A second TFSA can also be useful if you want to move money between institutions without triggering a taxable event. Instead of withdrawing from one TFSA (which counts as a contribution room reduction until next year) and depositing into another, you can transfer the funds directly from one institution to the other. This direct transfer does not affect your contribution room in the current year.

How the CRA tracks your contributions across multiple accounts

Every financial institution that holds a TFSA must report your contributions and withdrawals to the CRA each year. The CRA maintains a record of your total TFSA contributions across all institutions under your Social Insurance Number (SIN). When you try to open a new TFSA or make a contribution, the financial institution can request your contribution room from the CRA to verify you have not exceeded your limit.

This means you cannot open a second TFSA at a different bank and hide contributions from the CRA. The two institutions will eventually report conflicting information, and the CRA will send you a notice of assessment showing the overcontribution. You will then owe the 1% monthly penalty tax on any excess.

You can check your own TFSA contribution room at any time by logging into My Account on the CRA website using your online banking credentials or a CRA user ID. This shows your cumulative room across all TFSAs you have ever opened.

What happens if you overcontribute across multiple TFSAs

If your total contributions to all TFSAs in a year exceed your limit, you owe a penalty tax of 1% per month on the excess amount. For example, if your limit is $7,000 and you contribute $8,000 across two accounts, you owe 1% tax on $1,000 for each month the overcontribution sits in your accounts. If you withdraw the excess in the same month you discover it, you owe one month of penalty tax. If you wait three months to withdraw, you owe three months.

The CRA will not automatically calculate this penalty for you. You must report it yourself on your tax return for the year in which the overcontribution occurred. If you do not report it and the CRA discovers the overcontribution during an audit, you will owe the penalty tax plus interest on the unpaid amount.

The fastest way to fix an overcontribution is to withdraw the excess amount as soon as you notice it. The withdrawal itself does not count as a new contribution; it simply removes the money from your TFSA accounts. Your contribution room for the following year will be reduced by the amount you withdrew, but you will stop accumulating penalty tax once the excess is gone.

Transferring money between multiple TFSAs

If you have two TFSAs open and want to move money from one to the other, you have two options: a direct transfer or a withdrawal and redeposit.

A direct transfer moves funds from one TFSA to another without you touching the money. You contact the receiving financial institution and ask them to initiate a transfer from your other TFSA. This does not count as a withdrawal or contribution in the current year, so it does not affect your contribution room. Direct transfers are the cleanest option and take one to two weeks to complete.

A withdrawal and redeposit means you withdraw money from one TFSA and deposit it into another. The withdrawal counts as a contribution room reduction immediately, but the room becomes available again on January 1 of the following year. If you withdraw $5,000 in June and redeposit it in July of the same year, you have used $5,000 of your current-year contribution room. You cannot recontribute that $5,000 until next year without triggering an overcontribution penalty.

Closing one TFSA when you have multiple accounts

You can close any TFSA at any time without penalty. When you close an account, the financial institution will transfer the remaining balance to you or to another account you specify. Closing one TFSA does not immediately free up contribution room if you have another TFSA open at a different institution.

The contribution room you used in the closed account remains used for that year. On January 1 of the following year, the CRA will add back the total amount you contributed to the closed account in prior years, plus any new annual room you earn. For example, if you contributed $7,000 to TFSA #1 in 2023 and $5,000 to TFSA #2 in 2023, then closed TFSA #1 in 2024, your contribution room for 2024 will include the $7,000 from the closed account plus your new annual room.

Annual TFSA contribution limits by year

The CRA adjusts the TFSA contribution limit every five years based on inflation, rounding to the nearest $500. The limit has been $7,000 since 2023. Before that, it was $6,500 from 2015 to 2022, and $5,500 from 2009 to 2014. If you have been opening TFSAs since the program began in 2009, your total cumulative contribution room is the sum of all annual limits for each year you were may be able to access, minus any contributions you have already made.

You can find your exact contribution room on the CRA's My Account portal. This number reflects all TFSAs you have ever opened, whether they are currently active or closed. If you are unsure whether you have overcontributed across multiple accounts, this is the most reliable place to check.

Frequently Asked Questions

Can I have one TFSA at a bank and another at an investment firm at the same time?

Yes. You can hold one TFSA at each financial institution simultaneously. The restriction is one TFSA per institution, not one TFSA total. Just remember that your total contributions across all accounts in a single year cannot exceed your annual limit.

If I close a TFSA, can I open a new one right away?

Yes, you can open a new TFSA immediately after closing one. However, closing an account does not free up contribution room in the same year. The room you used in the closed account remains used until January 1 of the following year, when the CRA adds it back to your available room.

What if I did not know I was overcontributing across two TFSAs?

Withdraw the excess amount as soon as you discover it to stop accumulating penalty tax. You will still owe 1% per month for each month the overcontribution was in your accounts, but the penalty stops once you withdraw. Report the overcontribution on your next tax return or contact the CRA to amend a prior return.

Does transferring money between my two TFSAs count as a contribution?

A direct transfer from one TFSA to another does not count as a contribution or withdrawal in the current year. A withdrawal followed by a redeposit does count as a contribution room reduction in the year of withdrawal, and the room does not return until January 1 of the next year.

How do I find out my total TFSA contribution room across all my accounts?

Log into My Account on the CRA website using your online banking login or CRA user ID. Your TFSA contribution room statement shows your cumulative room across all TFSAs you have ever opened, whether active or closed.