Skip to main content

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.

Labels:

Comments

Post a Comment

Popular posts from this blog

If Only We Could Agree

Monday, June 11, 2012 ... have you been accused of misspelling a word you know is correct ... S usanne O’Leary wrote an interesting article on her experience with the variations of the English language in different countries. You know the obvious ones like colour with or without a “u” but less obvious ones like travelled versus traveled. Growing up in Sweden she learnt English in school—the UK variation. In publishing her books, she read reviews where she was criticized for improper spelling. False accusations as it turns out. While I write tire and cozy, it’s not incorrect to write tyre or cosy. Same language. Both accepted. Just different. You can read her write-up here along with the numerous comments posted by readers. I found it interesting, but that’s me. As a Canadian I deal with this issue everyday. I feel her pain when she’s criticized for something based on ignorance. No fun. I was told by a boss that “data are” isn’t correct. It should be “data is.” Read...
2 comments
Read more

Things I’ve Never Done

Friday, November 11, 2011 ... you would think, assume, I had did these things ... I I’ve done a few things most people never get a chance to do. Lived in Africa for one. Have written a few novels and screenplays. Wrote some songs you wouldn’t want me to perform. But for the most part, my life isn’t terribly distinguished. Life like most people except there’s a few things I’ve never experienced. Never been married. Close? Not really. I’ve never even been on a date or had a date on Valentines Day. I think most people, where the day is recognized, have done that. I often wonder what it would be like. Never had a birthday party with cake and friends. I remember the odd the birthday card from this aunt or that uncle. It doesn’t help when your birthday is the same day as a holiday. I don’t know who my father is. That one-half of my genes, my DNA that is me. Don’t know and probably never will. I think most people know who there father is even if the relationship isn’t what ...
1 comment
Read more

A Piece of the Action (1977)

Saturday, March 7, 2009 A Piece of the Action. Feature film. (1977, 135 mins) IMDB ... Who would you have over for dinner? Sidney Poitier or Bill Cosby. ... A PIECE OF THE ACTION is the third film starring Bill Cosby and Sidney Poitier. Poitier also directed the films. (And yes, I would be fascinating to have both them sitting around a table for dinner.) We're in Chicago and I love the setup for this film. It's clever, fun and interesting. It starts during the dark of night. Crosby is a cat burglar robbing a vault in a bank. He's by himself, all the tools he needs, and doesn't speak a word of dialogue for at least the first twenty minutes of the film. It must have been killing him. His robbery goes off successfully. (It includes a jump from a six or seven story window. There was a similar scene in their earlier films.) When the cops arrive during the daylight, they haven't a clue and we catch a glimpse of James Earl Jones as a detect...
Post a Comment
Read more