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Showing posts from February, 2011

No Gift Tax in Canada

Friday, February 18, 2011 ...no gift tax in Canada, but beware...While 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,…