# tax on gifts from family members?



## joncnca

i was looking through the 2010 tax guide an thought of an interesting question.

what are some (legal) ways to avoid being taxed on a monetary gift between family members?

for instance, if a husband gives a wife some amount of money, or if a parent gives to an child (both under and over 18 years)

i know there is an exemption for small gifts, but let's say it's tens of thousands of dollars?


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## Plugging Along

There is no gift tax in Canada. If it actual cash being given, then the tax has already been paid.


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## stardancer

...unless you are thinking about the attribution rules.

If you gift $$ to a relative (or friend) who spends it on something, then there is no tax. 

If you gift $$ to a spouse or a dependent under 18, and that person invests the money, then the interest/dividends are attributed back to you; you report it as income and pay the appropriate tax.

If you gift $$ to a relative over 18 (not a spouse) or a friend, then the interest/dividends are not attributed back to you; the individual pays the taxes on the investment income.


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## joncnca

oooh yes, the attribution rules


thanks!


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## fraser

We did spousal loans, fully documented, in 2010 since the prescribed minimum interest rate was at it's lowest point. Interest payments in Jan took place and we maintained a clear audit trail per the instructions of our accountant.


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## Square Root

fraser said:


> We did spousal loans, fully documented, in 2010 since the prescribed minimum interest rate was at it's lowest point. Interest payments in Jan took place and we maintained a clear audit trail per the instructions of our accountant.


That is one of the best ways to split income. The other is the pension splitting allowed between spouses.


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## joncnca

fraser said:


> We did spousal loans, fully documented, in 2010 since the prescribed minimum interest rate was at it's lowest point. Interest payments in Jan took place and we maintained a clear audit trail per the instructions of our accountant.


but this assume's it's a loan, meant to paid back with interest. what about a gift?

also, what if it's parent to child, it wouldn't be a spousal loan, right?


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## frugalmini

*Quesion about Cash Gift*

Hi, everyone

I have a question here about money gift. 

I have graduated from university for almost 2 years, but I have managed to save every month start years ago. And I'm planning to buy a small condo anytime soon. My parents are very kind to offer to help me with a large down payment, so I can save on the interest. I know bank will ask they to sign the cash gift form. And my parents live oversea. 

I wonder if I will have to pay tax on it. Or is there a limit on up to how much I don't need to pay tax. 

I have heard comments 

Thank you,


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## CanadianCapitalist

frugalmini said:


> I wonder if I will have to pay tax on it. Or is there a limit on up to how much I don't need to pay tax.


There is no tax implication for you when you receive a gift for your down payment from parents living overseas. 

PS: I've merged this thread with an existing one.


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## Eclectic12

joncnca said:


> but this assume's it's a loan, meant to paid back with interest. what about a gift?
> 
> also, what if it's parent to child, it wouldn't be a spousal loan, right?


My understanding is that a gift won't have tax on it, with the exception of property (see below). 

Since it is parent to child gift, if the child is 18 or older, the child then reports any income or capital gain made with the gift on their tax return.

If the child is under 18, income earned on the gift but not capital gains will attribute back to the gifter.


An exception is property such as a cottage. Regardless of the status of the child, the property will be "deemed" to have been sold by the giver and may have a capital gain from the date of purchase to the date of the gift.


Here is a link:
http://www.jamiegolombek.com/articledetail.php?article_id=754


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## frugalmini

Thank you very much. 

Sorry to reply late, I couldn't find it earlier. I'm new to the forum.


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## Brian Weatherdon CFP

You're over 18 and living in Canada. This gift you mention from your parents is not taxable to you. Cheers! 
B


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