A Canadian who lived abroad thought she followed TFSA contribution rules, but CRA surprised her with a penalty tax

The 2026 tax-free savings account (TFSA) dollar limit is $7,000, but the amount you can contribute is based not only on the current year’s limit but on prior years’ limits, contributions and withdrawals. However, there’s a catch: To accumulate annual contribution room for a particular calendar year, you must be at least 18 years of age and be a resident of Canada for tax purposes in that calendar year.

It’s the residency requirement that can occasionally be the source of confusion for some taxpayers who don’t fully understand how years of non-residency work in the calculation of their TFSA room. A...