# In-trust account for child - tax treatment?



## yyzvoyageur (Apr 10, 2009)

I have a savings account for my child that I believe (will have to confirm with the bank—both our names are on the statements) is an in-trust account for her. A family friend is considering making a substantial cash gift to her. If that money is wired to her account, what is the tax treatment of any interest accured thereto? She's very young and that would be her only income (if, in fact, it would be considered _her_ income).


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## InvestingForMe (Sep 6, 2012)

Hi, yyzvoyageur
First check with your bank to see who's SIN# is listed on the account. If your child was a minor at the time you opened the account (or still is a minor) there is a high likelihood your SIN# is on the account and on any subsequent T5 Income Tax Slips. If, in the past, the account did not earned a meaningful amount of taxable income, the bank would not have issued a T5 slip.
If your child has a SIN #, then make sure the bank uses it for the account, then all income and future income tax slips will be in your child's name. (You can visit here if you need to apply for a SIN#) With the income in the child's name, the income can benefit from personal income tax credits. If the income earned is less than the personal amount allowed by CRA, you may not need to file an annual income tax return in your child's name. I am not a income tax professional, so best to verify this last comment with one.
Hope this helps.


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## Homerhomer (Oct 18, 2010)

I disagree with the above suggestion, child SIN on the account only means the likelyhood of income being accepted as childs is higher only because of the SIN matching, however the attribuiton rule states that the income will be attributed back to to the person giving.

If it was this easy everone would be giving money to their chidren and saving thousands of dollars in tax.


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## yyzvoyageur (Apr 10, 2009)

Homerhomer said:


> I disagree with the above suggestion, child SIN on the account only means the likelyhood of income being accepted as childs is higher only because of the SIN matching, however the attribuiton rule states that the income will be attributed back to to the person giving.


In my case the gifter is a non-resident of Canada with no blood relation to my child.


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## MoneyGal (Apr 24, 2009)

yyzvoyageur said:


> In my case the gifter is a non-resident of Canada with no blood relation to my child.


The "blood relation" thing is a red herring. The income attribution rules cease upon non-residency. This means all income derived from / earned in the trust are reportable by the beneficiary. This would be true whether the gifter is a "blood relation" or not - in this case what matters is residency, not relationship.


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## Homerhomer (Oct 18, 2010)

MoneyGal said:


> The "blood relation" thing is a red herring. The income attribution rules cease upon non-residency. This means all income derived from / earned in the trust are reportable by the beneficiary. This would be true whether the gifter is a "blood relation" or not - in this case what matters is residency, not relationship.


+1, yes, the residency status is the determining factor and affects who claims the income.


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## InvestingForMe (Sep 6, 2012)

The original post stated the gift was from a 'family friend', which I read to imply no blood relationship between the child and the donor. So regardless of residency, no attribution rules should apply. Correct?


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## MoneyGal (Apr 24, 2009)

Yes. But the "arms-length" relationship can be complex, because the attribution rules are complex (for example, are aunts and uncles arms-length or not? Why are we talking about "blood relatives"? What does CRA consider an arms-length relationship? etc.). So when you have a more simple binary decision (the rules of attribution do not apply to foreign gifts), I go with that one first.


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