# recieving money as a gift



## whatodo (Jul 4, 2019)

My parents are downsizing and are giving the excess cash to us kids. About 1 million each. What kind of information will I need to provide the CRA/Banks. I talked to the banks they said just it's no problem they don't need anything. Will I need to provide source of funds? I assume on the transfer receipt it will show that the bank account it was sent from has the same last name as myself. Will that be enough? I'm in Canada less than 183 days a year. What will CRA ask for?


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## whatodo (Jul 4, 2019)

Just to add, money is coming from overseas.


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## whatodo (Jul 4, 2019)

cant find the edit button, 

Nobody involved is in Canada > 183 days a year.


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## dubmac (Jan 9, 2011)

talk to an accountant - better yet, tell your parents to talk to an accountant.


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## whatodo (Jul 4, 2019)

I have/will be again when I'm back before the money is sent. but I'd like to be able to have an intelligent discussion about it when I see them. lol


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## james4beach (Nov 15, 2012)

Congrats whatodo, this sounds like great news.

The international transfer, and your absence from Canada, might complicate things. You (or your parents) should see an accountant. If you want to get a head start on it before your parents can inquire, I suggest seeing an accountant yourself to get some background info. If you're receiving $1 million then it really is worth spending a couple hundred $ in a consultation to make sure things go smoothly.


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## MrMatt (Dec 21, 2011)

I second James recommendation for professional advice.
There are a lot of ways this can go wrong, a few hours of preparation can save you a lot of money and trouble. 

There are tax, money laundering and other laws, rules etc that you should be aware of.


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## humble_pie (Jun 7, 2009)

this thread has a few improbable twists

why is the OP considering keeping his funds in canada? he has almost no connection w this country other than the 'rents are giving him some presumably canada-based canadian dollars.

if he "invests" in this country, canada is going to hit him up w non-resident withholding tax on dividends & interests paid. The NR rate could go as high as 35% depending on the tax convention (if any) that canada holds with the country of his residence.

then there's the communication gap loss. OP has no knowledge of finance in this country, the fact that he's living abroad will make it difficult to quickly obtain canadian financial news.

if it were myself, i'd take the FX loss on the weak canadian dollar, i'd exchange my CAD gift money into a major currency to be deployed on the nearest global stock exchange to my foreign home base, i'd study that market & possibly hire expert advice; & i'd probably never give CAD investing another thought


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## Plugging Along (Jan 3, 2011)

^HP I was thinking the same thing. I considered this a troll thread at first based on the number of post the OP has. Then I am wondering if the OP is a Canadian resident, but works outside of the country. (My spouse and I did that on and off over the years) That would make more sense then. I am guessing if the OP isn't a troll, then he is a Canadian resident for tax purposes with family over seas. In that case, receiving the money is not a problem tax wise, but it will depend on the parents side to their tax laws. There are lots of little holes that need to filled in.


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## humble_pie (Jun 7, 2009)

^^ Plug my 1st takeaway was less detailed than yours. I had an overall impression that the OP didn't know anything about canadian finance and. did. not. want. to. know. He was simply too far away. Débranchè, as we say.

logically speaking, why would anyone put up with NR withholding taxes, lack of information, etc to keep their funds here under very awkward, possibly even neglectful, management.

why not remove funds to a nearby hub market such as hong kong or london or frankfurt or even switzerland. A lot more efficient.

.


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## james4beach (Nov 15, 2012)

I think the big question is where the OP anticipates spending their future. For example, even though I've earned income in the US, I've directed all the funds towards Canadian institutions & investments because that's where I plan to live long term. And for this reason I think of everything on a CAD basis.

We don't know the nature of OP's connection to Canada nor their future plans. But it's a good question.


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## OhGreatGuru (May 24, 2009)

whatodo said:


> ... About 1 million each. What kind of information will I need to provide the CRA/Banks. I talked to the banks they said just it's no problem they don't need anything. ... I'm in Canada less than 183 days a year. What will CRA ask for?


1. I don't know what idiot at the bank told you this, but you need a second opinion. (Preferably a professional one). The banks are obliged to report transactions like this to FINTRAC due to anti-money laundering legislation, and are entitled to freeze your access to the account until they have satisfactory documentation of the source. Your best bet is to talk to manager at the receiving bank as to what they need (usually a letter of some kind from the donor). 

2. This has nothing to do with CRA (for income taxes). To be charitable to the bank, they may have thought you were only asking if there were any tax consequences to this gift.

3. In your second post you clarified that the money is coming from outside Canada to an account inside Canada, so it is a reportable international transfer of funds.

4. The fact that you are in Canada less than 183 days per year may be irrelevant. You appear to believe that makes you a non-resident for tax purposes. But CRA may consider you a "Deemed Resident" for a variety of reasons, even though you are not a factual resident. Most of those reasons have to do with whether or not you have "residential ties". They might feel that 1 million smackers in a CDN bank account is sufficient evidence of such. You should get professional advice. The gift is not, in itself, taxable, because we have no gift tax in Canada. But it could affect your on-going tax status. And any future earnings on that $1M are going to be taxable by somebody, because Canada is not a tax haven.


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## Plugging Along (Jan 3, 2011)

humble_pie said:


> ^^ Plug my 1st takeaway was less detailed than yours. I had an overall impression that the OP didn't know anything about canadian finance and. did. not. want. to. know. He was simply too far away. Débranchè, as we say.
> 
> logically speaking, why would anyone put up with NR withholding taxes, lack of information, etc to keep their funds here under very awkward, possibly even neglectful, management.
> 
> ...


 I didn't read it that way at first because the OP knew about the 183 days which implied they knew something about Canadian tax system. However, reading it again, your assumptions could be right. 
Hmmm... the mystery remains. Too many holes for me to guess now.


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## james4beach (Nov 15, 2012)

Well said, OhGreatGuru. One thing I've learned by hopping between countries (I've worked in 3 countries) is that you'd better decide which jurisdiction you're a resident of, for tax purposes. This is sometimes a grey area and not always easy to sort out, but you have to decide and be clear on where you're a resident for tax purposes.

Once this is decided, you must be consistent with all tax authorities in different countries, and the banks. This is going to be very important for your investing activities.


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## whatodo (Jul 4, 2019)

humble_pie said:


> this thread has a few improbable twists
> 
> why is the OP considering keeping his funds in canada? he has almost no connection w this country other than the 'rents are giving him some presumably canada-based canadian dollars.
> 
> ...


I am Canadian. I left for a job about 5 years ago. My foreign home base is a bad idea to keep the money in because of foreign currency restrictions. I wanted to open a bank account in London. I talked to a HSBC agent over the phone and was advised I should open the account in Canada first.


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## whatodo (Jul 4, 2019)

james4beach said:


> I think the big question is where the OP anticipates spending their future. For example, even though I've earned income in the US, I've directed all the funds towards Canadian institutions & investments because that's where I plan to live long term. And for this reason I think of everything on a CAD basis.
> 
> We don't know the nature of OP's connection to Canada nor their future plans. But it's a good question.


That's the problem. I don't know where I'll be in the next 6 mths and even long term is uncertain due to personal life issues.


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## whatodo (Jul 4, 2019)

OhGreatGuru said:


> 1. I don't know what idiot at the bank told you this, but you need a second opinion. (Preferably a professional one). The banks are obliged to report transactions like this to FINTRAC due to anti-money laundering legislation, and are entitled to freeze your access to the account until they have satisfactory documentation of the source. Your best bet is to talk to manager at the receiving bank as to what they need (usually a letter of some kind from the donor).



I talked to a account manager at RBC. I told her i'd be getting a million dollars transferred from overseas and if there was anything they needed from my end.


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## james4beach (Nov 15, 2012)

Your situation is complicated enough that you're going to have to speak with a professional. I doubt few people on this forum have experience with this kind of scenario.

My opinion as an amateur, _non-expert_ to your situation is: investing the money in Canada sounds fine, given that your two obvious choices are Canada or the foreign home base. I also suspect you are going to end up being a tax resident of Canada. Just being present less than 183 days is not the end of the story and does not automatically free you from tax obligations. Regarding the money transfer, you'll probably want to receive it by wire transfer. Beware that if you're receiving a cheque, there are difficulties transporting a cheque for more than 10K across national borders (requires customs declarations, otherwise can be seized). Wire transfers will automatically be reported to authorities, so you'll need documentation that clearly indicates where the funds are coming from.

Don't mail a payment (in any form). If the money is moving long distance, then use a wire transfer.

Whatever you do, *don't* use a bank draft or cashier's cheque. See this thread: Bank draft nightmare (UPS loses inheritance)


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## whatodo (Jul 4, 2019)

james4beach said:


> Your situation is complicated enough that you're going to have to speak with a professional. I doubt few people on this forum have experience with this kind of scenario.
> 
> My opinion as an amateur, _non-expert_ to your situation is: investing the money in Canada sounds fine, given that your two obvious choices are Canada or the foreign home base. I also suspect you are going to end up being a tax resident of Canada. Just being present less than 183 days is not the end of the story and does not automatically free you from tax obligations. Regarding the money transfer, you'll probably want to receive it by wire transfer. Beware that if you're receiving a cheque, there are difficulties transporting a cheque for more than 10K across national borders (requires customs declarations, otherwise can be seized). Wire transfers will automatically be reported to authorities, so you'll need documentation that clearly indicates where the funds are coming from.
> 
> ...


i'm sure i'll have to pay tax on money earned from investing this money. that's a given but it's the whole multiple countries thing giving me a headache.


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## humble_pie (Jun 7, 2009)

whatodo said:


> i'm sure i'll have to pay tax on money earned from investing this money. that's a given but it's the whole multiple countries thing giving me a headache.



your parents appear to be wealthy international business persons with substantial foreign operations. Big enough to shed distributions for the offspring in $1,000,000 blocks, one of which is coming your way.

suggestion: perhaps could ask the 'rents to shed your own personal $1M block from one of their canada-based businesses? thus you would avoid all this cross-border pain & angst


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## humble_pie (Jun 7, 2009)

Plugging Along said:


> Hmmm... the mystery remains. Too many holes for me to guess now.



keep guessing Plug, i believe you're warm each:

jas4's track is stone cold though


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## AltaRed (Jun 8, 2009)

humble_pie said:


> your parents appear to be wealthy international business persons with substantial foreign operations. Big enough to shed distributions for the offspring in $1,000,000 blocks, one of which is coming your way.
> 
> suggestion: perhaps could ask the 'rents to shed your own personal $1M block from one of their canada-based businesses? thus you would avoid all this cross-border pain & angst


Certainly, if that is an option, it could be a better approach - except can a business actually gift the funds? As long as there is no tax write off by the business, probably so.

James' floater on tax residency leaves a lot of unanswered detail. There is the question of whether there is a tax treaty and if so, the tie-breaker rules. Other issues pertain to key important things like residential leases/ownership, existence or not of a Canadian driver's license and/or health care card. IOW, presence of personal ties is way more important than financial account ties. Lots of non-residents for tax purposes have large financial accounts in Canada. I did when I was an ex-pat.


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## humble_pie (Jun 7, 2009)

actually i wasn't really serious

there seems to be quite a lot of wool floating around in this thread


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## AltaRed (Jun 8, 2009)

humble_pie said:


> actually i wasn't really serious


I was half-serious. That kind of offshore money doesn't just exist on its own without tentacles.


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## whatodo (Jul 4, 2019)

humble_pie said:


> your parents appear to be wealthy international business persons with substantial foreign operations. Big enough to shed distributions for the offspring in $1,000,000 blocks, one of which is coming your way.
> 
> suggestion: perhaps could ask the 'rents to shed your own personal $1M block from one of their canada-based businesses? thus you would avoid all this cross-border pain & angst


No operations in Canada. My dad's not a Canadian, he is a rich ******* though. He's probably one a high net worth individuals if not a ultra high net worth individual. He told my mum to take us and move to Canada when we were teens because he wanted to spend time with his mistress.


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## dubmac (Jan 9, 2011)

whatodo said:


> No operations in Canada. My dad's not a Canadian, he is a rich ******* though. He's probably one a high net worth individuals if not a ultra high net worth individual. He told my mum to take us and move to Canada when we were teens because he wanted to spend time with his mistress.


these are first world problems.


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## whatodo (Jul 4, 2019)

dubmac said:


> these are first world problems.


i was just giving context.


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## whatodo (Jul 4, 2019)

AltaRed said:


> Certainly, if that is an option, it could be a better approach - except can a business actually gift the funds? As long as there is no tax write off by the business, probably so.
> 
> James' floater on tax residency leaves a lot of unanswered detail. There is the question of whether there is a tax treaty and if so, the tie-breaker rules. Other issues pertain to key important things like residential leases/ownership, existence or not of a Canadian driver's license and/or health care card. IOW, presence of personal ties is way more important than financial account ties. Lots of non-residents for tax purposes have large financial accounts in Canada. I did when I was an ex-pat.


driver's license yep. no health card though.


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## twa2w (Mar 5, 2016)

If your father wires the money to your bank, you should have no issues with the bank. They will ask you where the money is coming from, you simply tell them. It is highly unlikely you will be asked for more information unless that money is coming from certain countries like Iran, Iraq, n Korea Columbia etc.
FINTRAC reporting on this is done outside branch level and would have been scrutinsed before your branch sees it. It would not likely be redflagged or regarded as suspicious. 
However if you wire it out again in a few days to a tax haven, it may get a second look.
You will have no tax issues with receiving the money as far as CRA is concerned but you may where you are living but not likely.
If you invest the funds in Canada, then you may have some of the non resident issues on the income earned, noted by other posters depending on tax treaties.
You could open an account through one of the Cdn based banks, and set up a relationship with one of their offshore affiliates and have the money sent there until your situaton resolves.
Talk to HSBC or RBC. The local RBC branch manager may not be up on this stuff so ask for a referral to trust and the trust people will point you to the right person.
No need for the money to come into Canada.


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## humble_pie (Jun 7, 2009)

twa2w said:


> You could open an account through one of the Cdn based banks, and set up a relationship with one of their offshore affiliates and have the money sent there until your situaton resolves.
> Talk to HSBC or RBC. The local RBC branch manager may not be up on this stuff so ask for a referral to trust and the trust people will point you to the right person.



last i heard re RBC - & this was a decade ago - they were looking for minimum $10 million for trust account in one of those euro tax havens. These days $1M is plebeian.

HSBC in the channel islands might fit the biscuit


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## twa2w (Mar 5, 2016)

Nah, RBC will open an account in the channel islands for a mere million. Not a trust though with services or investment counselling . Just a simple account.
But he is likely better off at HSBC.


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## humble_pie (Jun 7, 2009)

twa2w said:


> Nah, RBC will open an account in the channel islands for a mere million. Not a trust though with services or investment counselling . Just a simple account.
> But he is likely better off at HSBC.




... but you specifically referred the OP to RBC "trust people"

if you'd meant ordinary offshore account, perhaps it might have been appropriate to spell that out in detail. Particularly since the OP says he has very little canadian financial knowledge & when it comes to subtle differences in services among overseas subsidiaries of canadian banks he might become a tad lost unless precise details are provided.

it's my impression, moreover, that RBC banking services are not a canadian exclusive in les Iles de la Manche. Probably every canadian chartered bank has a subsidiary in channel islands or isle of man or both. Also london. Also - in most cases - luxembourg.

it's worth noting that banks in those semi-independent island fiefdoms & duchies that are loosely connected to the UK are not, in fact, part of the Bank of England system. Neither will they be backed up by the Bank of Canada.


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## twa2w (Mar 5, 2016)

Precisely why I referred him to trust. It is the trust arm that would likely arrange the connection, unless he goes direct. And the trust arm has the knowledge about those things and which operation and where would best serve the clients interest. Jersey operations are different than Guernsey and different than Mann etc etc, SOme are investment mgt only, others deal with bank accounts. 
They have a specific person that deals with branch clients who are looking for offshore arrangements, trusts and other irregular arrangements including simple off shore accounts. 
Mind you they will turn up their nose at small stuff unless they see potential but for a million, they will at least hold a phone conversation and make some recommendations and likely an intro. I have been away from that for a while so don't recall the job title anymore. 95% of branches likely have never heard of this person or even know 1/10 of what RBC does off shore. But a referral or call to trust should put wheels in motion.

The Trust arm does far more than just trusts.

RBC is the Cdn bank with the biggest network of offshore arms by far that will deal with this sort of thing. That is why I suggested them and HSBC.


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## Pluto (Sep 12, 2013)

There is no gift tax in Canada. When you do your taxes you declare it as a gift. You shouldn't hear anything more about it. Nobody I know who has received a gift/inheritance from parents ever had any issue about it with CRA. 

If you don't pay taxes in Canada (since you are working elsewhere) I suppose it is a matter of the tax rules in that jurisdiction, not Canada. As far as I can tell the answer rests on the rules where you pay taxes.


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## Beaver101 (Nov 14, 2011)

^ Pluto, I think T_social wants to be notified when CRA comes calling.


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