# child savings account



## e_rookie (Feb 22, 2013)

My child ( still minor) has a savings account where I am the exclusive contributor .

Technically this account is considered by the bank a joint account ( between me as a parent & the child). The SIN of the child is also associated to this account .

Does the interest on this account has to be reported on my own tax return as parent ?

Thank you for reading . 

If you can reference the legal reasons in your response that would be even more appreciated .


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## OptsyEagle (Nov 29, 2009)

Yes. The tax must be paid by the person who contributed the money. The parent. Since you effectively control your children, who are under 18, the law does not see this type of gift as an arms length gift and feel it would be wrought with tax avoidance, if they allowed it to be taxed in the name of the minor child.

They have made an exception if the account generates a capital gain. Those are taxed in the name of the child.


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## Just a Guy (Mar 27, 2012)

How much are you putting in that interest on a savings account would even matter?


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## james4beach (Nov 15, 2012)

Poor kids these days. I remember how I used to earn 6% in my cash account, when I was a kid.

I can just see the kids storybooks now: "long, long ago, before the sly Mr. Carney came to town, people use to earn INTEREST in their savings accounts. Everyone was happy and children could save up their pennies for tomorrow; it was a joyous time! But one day the evil banksters started losing money in their gambling business. The banksters put a gun to the prime minister's head* and said, ' If you don't drop interest rates and start giving us free money, everyone is going to suffer along with us! '. The country was very scared. So interest rates were lowered, so banksters could start making money gambling again. And Jimmy, this is why your bank account only earns $0.01 in interest every month"

* figuratively speaking here of course... the pressure from banksters was communicated through the media, PR, and via their agents in government (Finance Minister, Bank of Canada, etc)


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## gibor365 (Apr 1, 2011)

Just a Guy said:


> How much are you putting in that interest on a savings account would even matter?


I have almost $3,000 in interest every year in such accounts in ING Direct... I also didn't know what to do, so I called CRA last year and they said that person who contributed should pay taxes on this interest. Somebody on forum advised me that maybe if I open second account and deposit interest from 1st account there, maybe I don't have to pay taxes on interest on 2nd account, but I'm not sure, also not sure if ING will setup 2nd joint child account for the same kid.


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## Just a Guy (Mar 27, 2012)

Yep, I can see how the government would see this as trying to hide income...

I assume you've already maxed out RESPs? If not transfer the funds there and get the 20% grants. It would also shelter the interest going forward. 

Then maybe look into a trust account. 

BTW, I'm available for adoption...


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## OptsyEagle (Nov 29, 2009)

Just google "Canadian Tax Attribution Rules" and you will probably get all the info you need.


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## MoneyGal (Apr 24, 2009)

gibor said:


> I have almost $3,000 in interest every year in such accounts in ING Direct... I also didn't know what to do, so I called CRA last year and they said that person who contributed should pay taxes on this interest. Somebody on forum advised me that maybe if I open second account and deposit interest from 1st account there, maybe I don't have to pay taxes on interest on 2nd account, but I'm not sure, also not sure if ING will setup 2nd joint child account for the same kid.


Interest on interest is not attributable. The reason the suggestion was made to open a separate account is for recordkeeping purposes - you'd be able to demonstrate that only second-generation interest ("interest on interest") was deposited in the account. 

Another tip: if you set up your CCTB to be direct-deposited into an account established for your minor child, there is no attribution of interest generated from those funds back to the parent.


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## e_rookie (Feb 22, 2013)

Thank you for your suggestions & replies OptsyEagle & MoneyGal !


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## e_rookie (Feb 22, 2013)

*Thanks*

to OptsyEagle & MoneyGal for their replies


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