When you receive money from someone as gift, or give money as gift, do you have to declare it in tax return?
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Tax question
- Thread starter George The Curious
- Start date
Yes if is material and it is not your spouse. However if you give money to your spouse you are taxed on the first level of investment income. The investment income on the income of the gifted money is taxed to the receiver of the gift. Atribution rule.
Don't understand. It's not investment. Just cash. And not spouse.
Don't understand. It's not investment. Just cash. And not spouse.
So what happens during a wedding or your first house when your friends shower you with $$$ or your parents give you money for your new house. How many people actually declare this kind of stuff?
thumper18474
Well-known member
There is a certain threshold where you can gift money with no tax implications
not sure what it is ....25k?
not sure what it is ....25k?
There is a certain threshold where you can gift money with no tax implications
not sure what it is ....25k?
Are you sure? Didn't come up on Google search. Do you have a source?
So what happens during a wedding or your first house when your friends shower you with $$$ or your parents give you money for your new house. How many people actually declare this kind of stuff?
So the answer is no? Even if the amount is in millions?
No you do not have to report it. A gift is not taxable.
If I choose to help the OP out and send him $5,000 then that is a gift from me to him and not taxable.
It gets complicated with kids though as a gift is OK but income on gift is taxabale back to the giver.
But between friends, no. Rememer, I am talking about a true gift and not some cooked up scheme to compensate someone.
A true gift, a genuine gift is not taxable. Period.
If I choose to help the OP out and send him $5,000 then that is a gift from me to him and not taxable.
It gets complicated with kids though as a gift is OK but income on gift is taxabale back to the giver.
But between friends, no. Rememer, I am talking about a true gift and not some cooked up scheme to compensate someone.
A true gift, a genuine gift is not taxable. Period.
So the answer is no? Even if the amount is in millions?
Correct - even if it is millions. No tax.
shakenbake
Senior Turgid Member
Don't bother - irrelevant - not the OP question. This information bulletin refers to gifts and their tax deductibility as in giving to a registered charity etc and what you can deduct.
thumper18474
Well-known member
Are you sure? Didn't come up on Google search. Do you have a source?
Brother in law gifted his kids 25k each...but his accountant told him to keep it at 25k or less...not sure why..so take it for what it's worth...he does it every few years when his company divvies up the profit sharing...
My question is more about gifting of house or money from one family member to another. From all I read, there is no tax.
My question is more about gifting of house or money from one family member to another. From all I read, there is no tax.
Yes but there could be tax implications. Let's say you gift this house to your adult family member. No tax but you will have deemed to have sold it so you may have capital gains and the tax liability that goes along with it (if this is not your principle residence).
Say I give one of my extra cottages to my hero brother in law. He's happy but I gotta pay the tax on the gain of the sale. Ends up costing me cash flow.
The sale of a principal residence in Canada is not taxable. But yes when you get into cottages that are secondary residences there is a tax on any capital gains.Yes but there could be tax implications. Let's say you gift this house to your adult family member. No tax but you will have deemed to have sold it so you may have capital gains and the tax liability that goes along with it (if this is not your principle residence).
Say I give one of my extra cottages to my hero brother in law. He's happy but I gotta pay the tax on the gain of the sale. Ends up costing me cash flow.
As far as gifts are concerned there is no tax in Canada on such a transaction unless it is done with the primary intention of minimizing taxation.
The sale of a principal residence in Canada is not taxable. But yes when you get into cottages that are secondary residences there is a tax on any capital gains.
As far as gifts are concerned there is no tax in Canada on such a transaction unless it is done with the primary intention of minimizing taxation.
So here is a hypothetical situation:
Parents want to sell cottage, but trying to avoid capital gains tax. So they "gift" it to their child, and child sells it under his name. Assume the child owns no other properties, will the cottage become his primary residence and therefore no capital gains tax?
Sorry George... Yes, tax
Parents gift cottage to child - that triggers the sales price / exit price for the parents and the capital gain.
Child gets cottage at the new cost price / enter price. Child sells cottage at a profit / loss OR keeps cottage - don't matter as principal residence statring now.
HOWEVER - you have just changed the whole scenario -you now need estate planning advice. Perhaps a family trust is in order? Perhaps the cottage should be the Parents principal residence all along. Which property has appreciated more? Which has the highest cost base (purchase price + renos). There was a one time capital gains expemtion that was eliminated years ago but they allowed one to have the cottage appraised, and though not sold, to crystalize the sale and take advantage of the exemption. This is now way way way beyond casual advice. Maybe they can lease it to the child in perpetuity? Many many many families are in this predicament. If this is your family - GET professional advice - If this is a friend - stay out of it........
Every tax action has a tax reaction...........
Parents gift cottage to child - that triggers the sales price / exit price for the parents and the capital gain.
Child gets cottage at the new cost price / enter price. Child sells cottage at a profit / loss OR keeps cottage - don't matter as principal residence statring now.
HOWEVER - you have just changed the whole scenario -you now need estate planning advice. Perhaps a family trust is in order? Perhaps the cottage should be the Parents principal residence all along. Which property has appreciated more? Which has the highest cost base (purchase price + renos). There was a one time capital gains expemtion that was eliminated years ago but they allowed one to have the cottage appraised, and though not sold, to crystalize the sale and take advantage of the exemption. This is now way way way beyond casual advice. Maybe they can lease it to the child in perpetuity? Many many many families are in this predicament. If this is your family - GET professional advice - If this is a friend - stay out of it........
Every tax action has a tax reaction...........
Isn't the cost base to the child $0?Child gets cottage at the new cost price / enter price...
