# Income splitting



## samiam992 (Aug 27, 2015)

Hello,

Last year I transferred a large amount of money into the account of my child who is in school and above 21.
What i found was that the tax saving from this is very minimal. In his account this money was put into GIC, TSFA and mutual funds.

Is there any specific procedure I need to follow to have this amount put back into my account. He is going off to complete his masters and would like to pay for Tuition on his own, he will not be able to apply from grants or loans with my money in his account.

He is planning on applying for loans in 2016 not this year. 


Please advice 
thank you.


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## gibor365 (Apr 1, 2011)

If it's in cash you can just transfer it back... but with GIC not sure you may do anything before it matures


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## cashinstinct (Apr 4, 2009)

Grants and loans I have seen were mostly based on income, not assets.

Dod you see the questions asked ?


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## domelight (Oct 12, 2012)

samiam992 said:


> Hello,
> 
> Last year I transferred a large amount of money into the account of my child who is in school and above 21.
> What i found was that the tax saving from this is very minimal. In his account this money was put into GIC, TSFA and mutual funds.
> ...


 I Agree with cash I believe they are based on income. 
That being said if your son reported interest income from the principal of these monies on his tax return, and you transfer the funds back to yourself... 
CRA would disallow the gift and apply interest income to your returns along with interest and penalty. 
Or say your TFSA room was maxed out and your son earned profits in his TFSA, we're you to transfer the funds back..
CRA would rule you've over contributed to your TFSA.


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## Guban (Jul 5, 2011)

domelight said:


> I Agree with cash I believe they are based on income.
> That being said if your son reported interest income from the principal of these monies on his tax return, and you transfer the funds back to yourself...
> CRA would disallow the gift and apply interest income to your returns along with interest and penalty.
> Or say your TFSA room was maxed out and your son earned profits in his TFSA, we're you to transfer the funds back..
> CRA would rule you've over contributed to your TFSA.


Do you have a reference for this? I thought that there are no attribution rules for non-spouses if both parties are adults. Gifts of cash can be freely made at any time, I believe.

That being said, the OP refers to it as "my money in his account", so it sounds like it is not a true gift.


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## domelight (Oct 12, 2012)

Guban, I agree with your comments. To keep it simple I believe CRA would rule no gift was ever made. and attribute the investment income to dads return. (assuming the OP takes the money back) You cannot say in 2013 that its dads money, now in 2014 it's the sons money because he pays less tax on the interest earned, now in 2015 its dads money again because if benefits the son for Grants/loans.
I have no issue with 2013 & 2014 but its the move in 2015 that causes the problem. 

Contributions to a TFSA 

The CRA was asked whether a parent's gift to her adult daughter that is subsequently deposited by the daughter into her tax-free savings account ("TFSA") would be considered a contribution by the parent to the daughter's TFSA. 

Under s. 146.2(2)(c) of the Act, only the TFSA holder may make contributions to the TFSA. The CRA accepts that it is possible for contributions to be made on behalf of the TFSA holder under an agency agreement, such as contributions made under an employer-sponsored group arrangement (see CRA Document No. 2008-0296231I7, "Group tax-free savings account and non-employees" (November 25, 2008)). However, if a parent makes a contribution to a child's TFSA the account would no longer qualify as a TFSA (see s. 146.2(5)(c)). 

The CRA stated that, in the present case, where a parent makes a gift of money to an adult child, who then makes a contribution to her own TFSA, it would consider the adult child to have made the contribution to the TFSA (not the parent). The CRA noted that if the terms and conditions of the gift do not serve to divest, deprive or dispossess the parent of title to the funds and to vest the property in the hands of the adult child, then a gift may not have been made. 

See CRA Document No. 2009-0309861E5, "Tax-free savings accounts" (October 23, 2009).

External Technical Interpretation, Financial Sector and Exempt Entities Division
December 16, 2010 146.2(2)(c)2010-0369721E5


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