# Holdiing family money on my account



## tavogl (Oct 1, 2014)

Hi,

My mom is selling a business and her share would be around $US 200K. She does not have an US$ Account as she lives in South America, shes is asking me if she could get the money transferred to me here in Canada. I have an RBC US$ Savings account so I know it's not a problem, but I would like to know what are the tax implications? if I hold the money for a few months while she goes to the US and opens her own account. So I just want to know what are the tax implications with this? thanks.

Let me know if you need to know any more details.


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## mark0f0 (Oct 1, 2016)

If your mom is a non-resident of Canada, any interest you pay her, either as a counterparty, or as a trustee, would be subject to withholding and CRA remission requirements in some form or another.

You'd need to clarify whether you are merely a trustee of the money, or if you are actually borrowing the money from your mother with a promise of repayment.


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## tavogl (Oct 1, 2014)

mark0f0 said:


> If your mom is a non-resident of Canada, any interest you pay her, either as a counterparty, or as a trustee, would be subject to withholding and CRA remission requirements in some form or another.
> 
> You'd need to clarify whether you are merely a trustee of the money, or if you are actually borrowing the money from your mother with a promise of repayment.


Hi Mark, Thanks for the quick reply.

I would only hold the money for her until she opens her own account, a few months I guess.
I would not borrow or use any of the money.

My Mom is not a Canadian resident, she lives in South America. 

_any interest you pay her, either as a counterparty, or as a trustee, would be subject to withholding and CRA remission requirements in some form or another._

I did not understand this part, could you please explain further if possible? Thanks!


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## AltaRed (Jun 8, 2009)

The short answer is any interest that is earned on this money while in your account will be taxable to you on a T5 tax slip next April. But let's face it... .it is not going to be much. $200k @ 0.5% (maybe) for 3 months = 200x0.005x3/12 = USD$250 (converted to maybe $330 CAD) x your marginal tax rate. Not exactly a hardship.


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## mark0f0 (Oct 1, 2016)

tavogl said:


> Hi Mark, Thanks for the quick reply.
> 
> I would only hold the money for her until she opens her own account, a few months I guess.
> I would not borrow or use any of the money.


But if you are 'holding' the money, you are either a trustee of the money, or a borrower of the money. Thus, you are considered to be, in the eyes of the CRA, dealing with a foreign entity, and there are certain requirements of dealing with a foreign entity. Either as a borrower, or as a trustee.



> My Mom is not a Canadian resident, she lives in South America.


Then she is a non-resident, and you are subject to the Canadian rules around dealing with non-residents. 



> _any interest you pay her, either as a counterparty, or as a trustee, would be subject to withholding and CRA remission requirements in some form or another._
> 
> I did not understand this part, could you please explain further if possible? Thanks!


If she either lends you the $200k, or gives you the $200k to hold as trustee, and you pay interest on that money (or invest it and obtain interest as a trustee), then you have obligations to the CRA insofar as withholding tax concerning dealing with a non-resident entity.

http://www.businesslawyers.com/blog...11/01/dealing-with-non-resident-beneficiaries

The fact that you are related to your mother does not relieve you of complying with the Canadian rules of dealing with non-residents.

Having said that, your mother could "gift" you the money, you could lend/invest it, and then at a later date, you could "give" the money back to your mother. The (Canadian) owner being responsible for all taxes. The test here being whether ownership of the money is actually with the Canadian (ie: you), or with the non-resident entity.


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## Spudd (Oct 11, 2011)

I feel like this might raise flags as potential money laundering activity. You should probably contact RBC and make sure it's allowed and won't cause problems, in addition to figuring out the tax treatment.


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## tavogl (Oct 1, 2014)

Hi,

Thanks for the quick replies,

I guess we don't have an issue with paying tax on the interest earned on this money, I think it's fair.

What I definitely don't want is to be is to have the 200k show as "income" and pay income tax on that, because that is not the case.

I'll call RBC and ask them directly.

Thanks for the ideas!


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## AltaRed (Jun 8, 2009)

The $200k will not be income. RBC cannot (and should not) answer those questions. Only a cross-border tax accountant can advise.


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## Mukhang pera (Feb 26, 2016)

Spudd said:


> I feel like this might raise flags as potential money laundering activity. You should probably contact RBC and make sure it's allowed and won't cause problems, in addition to figuring out the tax treatment.


I'm with Spudd. I am surprised that no one else has mentioned this. What these days with things such as FINTRAC and a whole lot of tracking you can be sure that goes on and we are not told about, I'd be nervous about getting involved.

Mom is selling a business, and she wants to send $200k to Canada pending opening a US bank account. Right there, it sounds peculiar. Is it a S. American business? A US business? How can it be a $200k business with no existing bank account? And does mom have no bank account, but owns a valuable business in whole or in part? Or does she and/or the business have an account at some locale, but a $200k deposit is likely to attract unwanted attention from government somewhere, hence the desire to put the money out of reach? The fact that mom is going to travel from some unnamed country in S. America (a fairly large place with "controlled substances" being a large part of many local economies) to travel to the US to open an account to receive the money sounds decidedly odd to this kid. But that's just me.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> The $200k will not be income. RBC cannot (and should not) answer those questions. Only a cross-border tax accountant can advise.


A tax book from years ago recommended for large gifts, having the originator write a letter to provide documentation.

I would think a similar letter would be of benefit ... though I expect one would need to make sure any NR requirements were taken care of as the letter would likely establish the $200K as held in trust.


Cheers


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## Eclectic12 (Oct 20, 2010)

Mukhang pera said:


> ... Mom is selling a business, and she wants to send $200k to Canada pending opening a US bank account. Right there, it sounds peculiar The fact that mom is going to travel from some unnamed country in S. America (a fairly large place with "controlled substances" being a large part of many local economies) to travel to the US to open an account to receive the money sounds decidedly odd to this kid. But that's just me.


This is one possibility.

OTOH ... I doubt many on CMF would require people sending money to them to avoid cheques, including certified cheques mainly a twenty day holding period as well as high fees. Or expect to be paying $3-6 USD *per ATM withdrawal* to a South American bank. Or avoid using an ATM if people are lingering around. Or worry about their card being cloned when it was used at an ATM.

All banking systems/services are not created equal.


Cheers


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## AltaRed (Jun 8, 2009)

Wire transfers (which is the most likely way to move this money) gets tracked by FINTRAC so I don't know what the issue is. I've moved such sums before, albeit between US and Canada, and always by wire transfer. Never been asked questions. RBC may want to know where* the money is coming from to tick off a box but they cannot advise on tax treatment, which is what RBC asked. Indeed, virtually no one at a branch level has the expertise to respond to such tax questions (I note another thread where a branch manager said that funds in a JTWROS account is always 50/50 for reporting interest).

That said, the OP has been pretty slim on details on which South American country, where the funds currently are, and what INS status the mother has with the USA. What happens with a few hundred dollars of taxable interest is mere noise in the overall situation.

* Which is why I am suggesting the mother gift the money to son....subject to gifting laws in the country in which the mother is (and is sending the money from). The son can always gift the money back (again subject to the laws of accepting gifts in the country in which she resides). Holding the money in trust would be a highly complicating factor (in my opinion). IOW, there are way more important questions than what the OP is asking.


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## tavogl (Oct 1, 2014)

Alright... I see where some people are going... let me try to explain a bit better the situation.

My mother lives in Venezuela, a country with currency exchange control, and where our currency losses it's value day by day. Big transactions are done in US currency, outside the country of course(wire transfers, cheque, etc.. wired to a US account usually), or US $ cash. I know this sounds like drug/money laundering paradise (and it is) but it's the only way to deal with bigger transactions, otherwise, you sell your business for X of our currency, and a week later the money lost it's value. I think it's been about 4.000% inflation last year alone, we'll see how this year ends.

We have a family business, which the family is ready to sell and there are some people interested in it.
My mother never needed an $US account before(Never had to deal with a large amount of money I guess?), and that's why she's asking me to do this.

No weird business here, copy Eclectic12 ?

Thanks!


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## AltaRed (Jun 8, 2009)

The clarity is appreciated. What I don't understand is why your mother eventually needs a USD account in the USA? Why not just leave the USD in Canada in a USD account? A number of banks (TD, BMO and RBC) have USD account offerings (BMO does it through their Harris bank affiliate). AFAIK, it is (can be) quite difficult for a non-US resident to open a US domiciled bank account without some residential/immigration ties to the USA, e.g. work/business Visas, citizenship/green card, etc.


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## tavogl (Oct 1, 2014)

AltaRed,

I think the plan is to buy a couple smaller properties in Florida, rent them and live off the income that generates. In a third world country like Venezuela you don't need much USD$ to make a living.

Cheers.


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## Eclectic12 (Oct 20, 2010)

tavogl said:


> Alright... I see where some people are going... let me try to explain a bit better the situation.
> My mother lives in Venezuela, a country with currency exchange control, and where our currency losses it's value day by day ...


My condolences ... my co-worker has been trying to get his family to leave, like he did.




tavogl said:


> ... No weird business here, copy Eclectic12?


It seems I needed to be more blunt.

Post #9 brought up "weird business", with almost zero possibility of any other possibilities. In addition to acknowledging that it was one possibility - troubles with SA banks were outlined to show there were other possibilities.

It seems I should have explicitly written "there are many other common reasons than weird business for this type of situation in SA".


Cheers


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## Mukhang pera (Feb 26, 2016)

tavogl said:


> Alright... I see where some people are going... let me try to explain a bit better the situation.
> 
> My mother lives in Venezuela, a country with currency exchange control, and where our currency losses it's value day by day. Big transactions are done in US currency, outside the country of course(wire transfers, cheque, etc.. wired to a US account usually), or US $ cash. I know this sounds like drug/money laundering paradise (and it is) but it's the only way to deal with bigger transactions, otherwise, you sell your business for X of our currency, and a week later the money lost it's value. I think it's been about 4.000% inflation last year alone, we'll see how this year ends.
> 
> ...


I also appreciate the clarification. 

As AltaRed commented, it might be best for now just to leave the money in a USD a/c in Canada. Then, once mum has travelled to Florida to buy her income property and she opens an account, the money can be transferred there.

As for any difficulty in opening a US a/c in the US these days, I have no idea. In the old days, anyone could do it, no questions asked. Probably different now.


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## Eclectic12 (Oct 20, 2010)

tavogl said:


> ... I think the plan is to buy a couple smaller properties in Florida, rent them and live off the income that generates. In a third world country like Venezuela you don't need much USD$ to make a living.


I'd suggest making sure everything goes through a bank instead of cash. The civil forfeiture laws allow for seizure of the cash with no charges or proof of any wrong doing with a low percentage of cash being returned.

http://www.washingtonpost.com/sf/investigative/2014/09/06/stop-and-seize/?utm_term=.071a38b18c17
https://priceonomics.com/how-police-officers-seize-cash-from-innocent/
http://www.reuters.com/article/us-usa-trump-police-idUSKBN15M2BU
https://www.forbes.com/sites/instit...-cash-seizures-civil-forfeiture/#19cc9a38561b


Cheers


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## KaoruChiwa (May 21, 2017)

Scotiabank has a very aggresive push in South America with multiple branches and location. As a canadian citizen, your mom can easily contact one of these branches and setup an account in no time.

http://www.scotiabank.com/ca/en/0,,7764,00.html

this is probably the best and simplist form. the paperwork for holding her money for a couple of months is probably more then her walking in and open up an account.


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