# T5 on joint account & Submitting tax return



## lister (Apr 3, 2009)

My spouses mom works and lives out of Canada in a country that does not have a tax treaty with Canada. She is a Canadian citizen but is a non-resident (whether official or not I don't know, I've read the criteria and she's a non-resident, she just has a bank account here, no other ties.) That bank account is a joint account with my spouse. There was a sum of money put into it by mom that generated about $85 worth of interest and a T5 was issued.

Is it possible to use that T5 for my spouse since it's a joint account and not bother filing a tax return for the mom? Or is there some attribution rule about that sort of thing?


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## Rico (Jan 27, 2011)

lister said:


> My spouses mom works and lives out of Canada in a country that does not have a tax treaty with Canada. She is a Canadian citizen but is a non-resident (whether official or not I don't know, I've read the criteria and she's a non-resident, she just has a bank account here, no other ties.) That bank account is a joint account with my spouse. There was a sum of money put into it by mom that generated about $85 worth of interest and a T5 was issued.
> 
> Is it possible to use that T5 for my spouse since it's a joint account and not bother filing a tax return for the mom? Or is there some attribution rule about that sort of thing?


We're talking about $10-14 of taxes (1/2 of 85 x using the two lowest marginal tax rates) so getting this wrong isn't going to hurt too badly if audited.

However, one should always file properly and I would think that the answer is that if it is a joint account (i.e., both names are indeed on the T5) then the share is 50% and the mom should report it. I'm not sure what the filing process is for non-residents, especially with no tax treaty.

On the other hand, if your spouse claimed it all and paid tax on it, there is no tax avoidance - just the "wrong" person is paying the tax (assuming the mom and your spouse are at the same marginal rate).

Call CRA and ask: 1-800-959-8281


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## kcowan (Jul 1, 2010)

I would get your spouse to claim it all. The CRA will be satisfied. If mom is not filing, it is best not to raise any questions about that. This is just a practice that I follow and has nothing to do with the tax act.


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## lister (Apr 3, 2009)

Yeah, well, either way no money from it will be going to the government. Neither of them have any notable income here so they have the same marginal rate. The spouse is a student that earned a little bit of money that doesn't come anywhere near the personal exemption limit.

I called CRA and was told that interest is exempt for non-residents. There is some question on how the T5 is written (I stupidly didn't bring it into work.) There is the issue of how much was contributed by whom so it would fall 100% under mom. I then spoke with someone in the international tax services office who said that the T5 may have been issued in error and a fax to wherever with all the info could clarify the issue.

At this point given the small amount, same marginal rate and my dislike of extra paperwork (I wasn't counting on filing for the mom this year, next year probably with an investment account), I'm leaning towards filing the T5 under my spouse.


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## MoneyGal (Apr 24, 2009)

lister said:


> (I wasn't counting on filing for the mom this year, next year probably with an investment account), I'm leaning towards filing the T5 under my spouse.


Just one note of caution. The requirement to file is not based on the amount of Canadian income which might be taxable, but on the residency status. Canada requires residents and deemed residents to report all (as in worldwide) income on a tax return every year. 

If you do not file one year, but then file in a subsequent year, CRA will likely request filings for the "missing" years. Because the person in question lives and works in a country with no tax treaty, she is at some risk - if she is deemed to be resident in Canada for tax purposes - for Canadian tax on her worldwide income. 

A single, joint bank account is *probably* not sufficient to establish residency status in Canada, but nonetheless the risk is present. Would she consider closing the bank account? What's the purpose of having it?


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## lister (Apr 3, 2009)

MoneyGal said:


> If you do not file one year, but then file in a subsequent year, CRA will likely request filings for the "missing" years. Because the person in question lives and works in a country with no tax treaty, she is at some risk - if she is deemed to be resident in Canada for tax purposes - for Canadian tax on her worldwide income.


That's what I've been worried about and why I've dragged my feet on opening up an investment account (plus TFSA & RRSP which isn't even possible) and trying to quietly delay any notion of her buying a condo here. I'm going to be the one stuck doing all the paperwork, dealing with the CRA, etc. Ugh.



> A single, joint bank account is *probably* not sufficient to establish residency status in Canada, but nonetheless the risk is present. Would she consider closing the bank account? What's the purpose of having it?


Based off what I've read the bank account shouldn't cause residency status. I think the purpose was to allow easy transfer of cash to pay for certain things here. Closing it is certainly possible.


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## OhGreatGuru (May 24, 2009)

lister said:


> ...Neither of them have any notable income here so they have the same marginal rate. The spouse is a student that earned a little bit of money that doesn't come anywhere near the personal exemption limit.
> 
> I called CRA and was told that interest is exempt for non-residents. ...
> 
> ...


If it were not for the fact that it is such a small amount, and your wife won't pay taxes anyway, I would suggest she tell CRA that she does not have a"beneficial interest" in the joint acount. That it is her mother's money, and she is a joint account holder only for administrative convenience, as her mother is a non-resident living abroad. However some sites advise that you should have a formal "side document" written up if that is the case. 

But she has also muddied the waters by implying that not all the money is her mother's. That being the case maybe you are better to split it.


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## lister (Apr 3, 2009)

OhGreatGuru said:


> If it were not for the fact that it is such a small amount, and your wife won't pay taxes anyway, I would suggest she tell CRA that she does not have a"beneficial interest" in the joint acount. That it is her mother's money, and she is a joint account holder only for administrative convenience, as her mother is a non-resident living abroad. However some sites advise that you should have a formal "side document" written up if that is the case.
> 
> But she has also muddied the waters by implying that not all the money is her mother's. That being the case maybe you are better to split it.


Sorry, I wasn't actually clear on the money earned and where it went. My spouse has not contributed anything to the joint account. Any money earned was put into a separate personal account.


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