Question

Bob makes a $3,700 contribution to a TFSA in his name. His spouse, Sarah, doesn't have extra cash to contribute to a TFSA. Bob asks you to contribute the remaining the $1,300 unused contribution to a spousal TFSA in Sarah's name. How do you respond.

Answer 1

Bob cannot directly contribute to Sarah's TFSA as contributions must be from the account holder. He can gift Sarah money to contribute to her own TFSA, following the rules and contribution limits.

Step-by-step explanation:

Regarding Bob's request to contribute $1,300 to Sarah's spousal TFSA, it's important to clarify that Tax-Free Savings Accounts (TFSAs) are individual accounts and contributions must be made by the account holder from their own funds. In the context of the scenario provided, Bob would not be allowed to directly contribute to Sarah's TFSA. However, he can gift Sarah the $1,300 without any tax implications on the gift, and Sarah can then contribute to her own TFSA, if she has remaining contribution room.

If Samuel decides not to contribute to a different situation, Rachel believes she would be at a disadvantage by contributing. Conversely, if Samuel does contribute, she thinks she would benefit by not contributing. This reasoning implies a situation where Rachel is considering her gains based on Samuel's decision to contribute or not.