No Gift Tax in Canada

Friday, February 18, 2011 
...no gift tax in Canada, but beware...
W
hile at the gym the other day, someone asked me what the limits were for gifting property to his children.  I told him there were no limits.
"Maybe you're thinking of the U.S.  They have a gift tax," I said.  I didn't want to bother him about the gift tax details and how it was designed to thwart tax planning for the U.S. estate tax.
"So I can give any amount to my kids?"
I nodded, "But there's exceptions."  Too many I thought. 
First, I explained under the Income Tax Act how he and his children are related.  Dah!  Seems obvious, but the act defines who is related and sets out rules that kick in between related persons.  When it comes to gifting property from one related person to another, the act says the disposition occurs at fair market value and that means a potential capital gain on the gift.
"But I'm giving him cash, how can there be a gain?"
"There isn't," I said, "As long as it's Canadian dollars, there's no gain or loss.  With foreign currencies there may be a forex gain."
"A what?"
"A foreign exchange gain.  The currency rates change over time.  When you calculate the amounts in Canadian dollars you could have a forex gain or loss."
"I see, but that's not me.  So I've got nothing to worry about."
"If you're only giving cash, you're okay, but if you give shares or your cottage to your children, there's could be a capital gain and tax hit."
He looked at me as if I were joking.
"I'm serious.  You have to be careful with shares or cottages.  You can end up with a tax bill and no money to pay it." 
"I wasn't thinking of doing that."
"Okay." 
"Thanks, time to run my laps." 
He was gone before I could tell him about the other exceptions.  Like legal issues around death and divorce--Family Law issues.  Or when you give money to your children, it belongs to them and they can do with it as they please--you lose control over it.  I'll mention it to him some other time.
At least he doesn't have to worry about the attribution rules.  His children are all over the age of 18.
I wonder if he has any grandkids who are minors? 
Posted 2011/02/18 at 20h54ET in Estate Planning.

Comments

Day 5: Writing a Novel—The Deep Blue Hold

Monday, November 21st, 2016 No work on the novel on Day 4. Note: Unedited writings from my notebook for this novel. Square bracket items represent added comments.
At 18:31—Office ... if I use Leänne instead of Leanne how will people react... Y esterday was Sunday and I took it off, plus I was dealing with some mental health issues. I know this story is something that is simply a matter of putting in the time to make it happen. I’m supposed to be working on it as much as I can but I haven’t been doing that. Two main reasons. It’s been a while since I’ve worked on a story. Then there’s the issues of my mental health. Things happen. I get down and it impacts on my writing. I might be using it as an excuse, but it’s clearly something I need to deal with. I have to find a schedule I can work with. Perhaps I need to put this first and cut out other things. Not sure but I will figure it out. A name for the hero came to me. For the moment going with Leanne or is it Leanna? Should be Le…

Writing a Novel: The Deep Blue Hold–Introduction

Thursday, March 9th, 2017 ... I fight my insecurities and doubts and I withdraw farther away from people and life ... I n November 2016 I started work on a new novel with the working title: The Deep Blue Cage. A few weeks after I started, I stopped. I was feeling too depressed about everything including the idea of writing a new novel. It happens to me at various times, with varying degrees, and it is debilitating. The ultimate issue was: Why bother? Why bother write another novel no one will read and no one will care about. I also found I was dreading the writing process more and more. It was painful to think about. I walked away and focused on other things. Or tried to. That didn’t work either. I felt trapped and unsure where I should head, what I should do. I even asked the big question, what the hell is life about anyway. There’s no one answer to this question despite the proclamations of some and because I believe I can think critically, can reason, I look at it from many a…

Day 6: Writing a Novel—The Deep Blue Hold

Tuesday, November 22nd, 2016 Note: Unedited writings from my notebook for this novel. Square bracket items represent added comments.
At 20:44—Office ... Lost at sea, she's rescued by a ship and wished she had never set foot on it.... N othing new on this story. Nothing came to me while I was sleeping or when on my errands. I thought something would come about, but nope. So be it. I have two chapters written. Not sure if they are any good but they are there. And so Chp. 3 to write. And I don’t see the scene because I’m not sure what should happen. The question is what is the cliffhanger. Nope. 3 about her, not the ship and crew. And I’ve already written the last line of the chapter. She wakes up and feels immense pain. Not sure if I should mention blood in the water. This chapter or the following. So it’s early dawn or not quite sunrise. And she’s in the cockpit unconscious. But how do I write it from her POV if she’s out. Hmmm. I can do it but should I do it? And I don’t w…

James Piper, Author

Search This Blog