# Question I have always had about cash savings...



## goobomcgaba (Feb 3, 2018)

Ill explain this as easily as I can. I need an answer. 

Jack is a student, he doesn't make much money but he does live at home and has very little expenses. Say he made around 10k in 2015 and around 10k in 2016. The pay was in cash but he DID report these incomes on his taxes the following years. Say he did not spend any of this money and kept this cash at home inside of his room and not in a bank. In 2017 he makes a bit more like around 15k but this is direct deposit and directly to his bank account. Over the course of 2017, he puts around 10k into his bank account in small increments over the course of the year, not all at once. So because of this he in total puts around 25k into his bank account but only made around 15k. Because he put around 25k into his bank account in 2017 but only reported around 15k would this become a problem? Or is it normal because this is money he already had and made years ago but was already reported on taxes? Simple but complicated question for me.


----------



## goobomcgaba (Feb 3, 2018)

goobomcgaba said:


> Ill explain this as easily as I can. I need an answer.
> 
> Jack is a student, he doesn't make much money but he does live at home and has very little expenses. Say he made around 10k in 2015 and around 10k in 2016. The pay was in cash but he DID report these incomes on his taxes the following years. Say he did not spend any of this money and kept this cash at home inside of his room and not in a bank. In 2017 he makes a bit more like around 15k but this is direct deposit and directly to his bank account. Over the course of 2017, he puts around 10k into his bank account in small increments over the course of the year, not all at once. So because of this he in total puts around 25k into his bank account but only made around 15k. Because he put around 25k into his bank account in 2017 but only reported around 15k would this become a problem? Or is it normal because this is money he already had and made years ago but was already reported on taxes? Simple but complicated question for me.


In simpler terms. I’m asking if you can put thousands of dollars that you made in previous years that you did not spend yet in to your bank account years later. Like putting in what would be a whole years of pay saved up. I’d think this would cause problems because it would look weird because your putting way more money into your account then you actually made that year.


----------



## GreatLaker (Mar 23, 2014)

Might look weird but probably under any threshold where CRA would audit.

He should keep records of the cash pay received and how it was reported on his tax return. If not, "Better Call Saul".


----------



## OptsyEagle (Nov 29, 2009)

I can't tell you for sure when the red flag would go up, with respect to cash deposits to a bank account, but if it did the big question that would arise is WHY did this person wait 2 years to deposit this money into their bank account. If they didn't mind hiding away the cash before, why do they all of a sudden want to deposit it into their bank account now. Then they would probably ask themselves if perhaps the money might have come from somewhere else.

Anyway, none of that means that the deposit would end in any problems, especially if it was legally earned and reported, but my recommendation is one should try to deposit their monthly income, every month ... not two years later. Just my opinion.


----------



## goobomcgaba (Feb 3, 2018)

So In short, someone can make a whole years salary in cash and report it on taxes that year but not spend any and keep it in there house away from a bank, and then years later deposit that whole income into there bank account in small increments over the year and this won’t be a problem? But since they reported it years ago, in the current tax year they don’t report because it’s old money. I can never get a straight answer on this.


----------



## cainvest (May 1, 2013)

goobomcgaba said:


> So In short, someone can make a whole years salary in cash and report it on taxes that year but not spend any and keep it in there house away from a bank, and then years later deposit that whole income into there bank account in small increments over the year and this won’t be a problem?


No problems, why would there be?


----------



## BC Eddie (Feb 2, 2014)

Isn't it simple common sense that CRA would question multiple large deposits for which you have no explanation? I think it is also reasonable to think if you can show you earned the money over several years (through tax return, pay slips, whatever) but your expenses have been low (record of living at home, no car, etc.) that the CRA would not have a problem. But large deposits and no explanation smacks of money laundering.


----------



## goobomcgaba (Feb 3, 2018)

cainvest said:


> goobomcgaba said:
> 
> 
> > So In short, someone can make a whole years salary in cash and report it on taxes that year but not spend any and keep it in there house away from a bank, and then years later deposit that whole income into there bank account in small increments over the year and this won’t be a problem?
> ...


Because I would think it would look weird. It would look like it’s new money because it’s coming in years later. I don’t know it just seems like it would cause a problem


----------



## goobomcgaba (Feb 3, 2018)

And the way I’m saying, I’m saying this money never got withdrawed years ago or anything, it was straight cash pay that never touched a bank account but However was reported.


----------



## Spudd (Oct 11, 2011)

goobomcgaba said:


> Because I would think it would look weird. It would look like it’s new money because it’s coming in years later. I don’t know it just seems like it would cause a problem


Even if it did cause a problem, you would just have to show your pay stubs or old tax returns to show where the money came from. But if you're so concerned, just spend the cash instead of depositing it.


----------



## cainvest (May 1, 2013)

goobomcgaba said:


> Because I would think it would look weird. It would look like it’s new money because it’s coming in years later. I don’t know it just seems like it would cause a problem


What kind of problem would it cause ... is your concern that CRA would audit you?


----------



## P_I (Dec 2, 2011)

goobomcgaba said:


> So In short, someone can make a whole years salary in cash and report it on taxes that year but not spend any and keep it in there house away from a bank, and then years later deposit that whole income into there bank account in small increments over the year and this won’t be a problem? But since they reported it years ago, in the current tax year they don’t report because it’s old money. I can never get a straight answer on this.


Am I missing something here? Even if someone gets their whole years salary in cash, there would be a T4 for the salary reported to CRA. When a tax return has been filed and assessed, then the CRA requirements have been met. What one does with their salary, whether keeping in a mattress, a home safe, a jar in the backyard, or a bank account is of no interest to CRA. Generally depositing funds into bank accounts isn't reported unless they meet FINTRAC Transaction reporting requirements, so why is there a concern?


----------



## goobomcgaba (Feb 3, 2018)

cainvest said:


> goobomcgaba said:
> 
> 
> > Because I would think it would look weird. It would look like it’s new money because it’s coming in years later. I don’t know it just seems like it would cause a problem
> ...


It’s more that I’m just wondering because I’m curious. But if they did audit that would kind of be annoying wouldn’t it


----------



## goobomcgaba (Feb 3, 2018)

P_I said:


> goobomcgaba said:
> 
> 
> > So In short, someone can make a whole years salary in cash and report it on taxes that year but not spend any and keep it in there house away from a bank, and then years later deposit that whole income into there bank account in small increments over the year and this won’t be a problem? But since they reported it years ago, in the current tax year they don’t report because it’s old money. I can never get a straight answer on this.
> ...


It’s jhst that I couldn’t find a definite answer on the Internet. And people say if you put excess money in bank account can get you into hot water and even though it is legit money, it might not look that way


----------



## cainvest (May 1, 2013)

goobomcgaba said:


> It’s more that I’m just wondering because I’m curious. But if they did audit that would kind of be annoying wouldn’t it


An audit would be a little annoying but nothing I'd lose sleep over. If it's a source of concern for you just spend it (or some of it) instead of taking future money out of the bank.


----------



## Eclectic12 (Oct 20, 2010)

goobomcgaba said:


> It’s jhst that I couldn’t find a definite answer on the Internet. And people say if you put excess money in bank account can get you into hot water and even though it is legit money, it might not look that way


It sounds to me to be similar to a tax book I read years ago where a few of the author's clients had problems with large gifts. By the time CRA decided that what was in the bank did not match up to reported income, the gift giver had moved away, become unreachable or died. The recommendation was to have the gift giver write a letter so that if CRA ever asked - it was documented as a gift.

Between the filed tax returns showing the income and as P_I suggests, the likely existence of a T4, any questions should be more annoying than a problem. Unless one has lost documentation or similar issues.


Cheers


----------



## gardner (Feb 13, 2014)

I think the types of transactions mentioned -- ~10K over the course of a year in $1K chunks -- would not necessarily be reportable in FINTRAC. Absent something that sets off FINTRAC alarm bells, I do not see that the CRA would necessarily see what's in an individual's bank account or over what period it accumulated. The amounts sound to be generally under the personal exemption anyway and would attract very little or no income tax. It is possible that the bank would ask about cash deposits of > a few hundred dollars, but an answer like "gift from my uncle" or "sold my sled" would satisfy them.


----------



## Mortgage u/w (Feb 6, 2014)

I don't see the need to align your bank deposits with your tax reporting. Sure if you get audited, one might question the extra deposits, but given the fairly low amount deposited, its not an alarming issue.

The bank _can _question you since any deposit over $10k (or accumulation of) will required you to fill out a declaration of funds. 

But as for the deposits vs CRA, I wouldn't lose any sleep over it.


----------



## Joe Black (Aug 3, 2015)

Depositing $10K in cash is ultimately no different than transferring $10K from one bank to another. In either case you are just moving your "savings" around. If you were required to do any report through FINTRAC, etc., just say exactly what it is, i.e. you are just moving your savings from cash to a bank.

I doubt banks or the CRA pay any attention to *one-time* large deposits. It is much more likely that repeated large deposits that can't be explained by your reported income that would raise red flags.


----------



## smihaila (Apr 6, 2009)

OP, there should be absolutely NO problem. As many others already stated, it is your money, earned and paid taxes for honestly. It is nobody's business (CRA, banks, fintrack and all the 1984 Big Brother crap that is interfering and becoming increasingly more visible nowadays in our daily lives) and you can do whatever your heart desires with it. You can even deposit 100k in one transaction - it's no problem for someone to distrust the Canadian or World Banksters' system and having wanted instead to keep it under mattress or temporarily investing it in other instruments.

Heck, the Canadian banks are more than happy to receive and keep your money "in trust". You are even welcome to bring more from abroad (again, assuming it's not the result of some illegal activities, well, unless you are HSBC) - the more you bring, you make the Canadian feudal lords even happier 

You're over-thinking it, relax...


----------



## OnlyMyOpinion (Sep 1, 2013)

Actually it_ is_ the bank's business to conform with regulations like FINTRAC reporting requirements and it is in their best interests to cover their a$$.
If you are not known by branch staff and don't have 'history' with them you should not be surprised to have questions asked if you deposit large sum(s) of cash.
It is different if you are transferring from one account to another, you are not dealing with cash and you are creating an audit trail.


----------

