Personal Finance

joint saving account claim under low income member for tax

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  • Apr 30th, 2014 6:20 am
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[OP]
Deal Fanatic
Dec 28, 2006
5860 posts
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Kanata

joint saving account claim under low income member for tax

Just a question of reporting interest income for joint account holders. If a family have income disparities, e.g. one is working, the other is not. For tax return, can you claim all the interest income generated from their joint saving account to the low income member to save tax?
8 replies
Deal Addict
Dec 10, 2012
3360 posts
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Canada
it has to be consistent every year tho
Sr. Member
Oct 14, 2012
631 posts
367 upvotes
Woodstock
Generally, no. The interest should be claimed proportionate to the amount the person put into the account. So if the high income earner is putting 80% of the money into the account, then the high income earner has to claim 80% of the interest.

If you can show somehow, perhaps through separate bank accounts, that the low income earner is not paying any expenses and instead is putting only the money that low income earner makes into the savings account, then the low income earner could claim 100%.

The CRA is pretty fussy about "attributing" income back to the person who owns the money. Parents, for example, have to pay income tax on the interest their young children earn on their bank accounts, savings bonds, or other investments, even if the money was given to them by friends at a birthday party.
Deal Addict
Jan 28, 2014
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BetCrooks wrote:
Apr 29th, 2014 4:11 pm
Generally, no. The interest should be claimed proportionate to the amount the person put into the account. So if the high income earner is putting 80% of the money into the account, then the high income earner has to claim 80% of the interest.

If you can show somehow, perhaps through separate bank accounts, that the low income earner is not paying any expenses and instead is putting only the money that low income earner makes into the savings account, then the low income earner could claim 100%.

The CRA is pretty fussy about "attributing" income back to the person who owns the money. Parents, for example, have to pay income tax on the interest their young children earn on their bank accounts, savings bonds, or other investments, even if the money was given to them by friends at a birthday party.
Agreed - the attribution rules. When I was working some of the money deposited came from me - but we declared proportionately. But once I stopped working we increased the amount attributable to him. The only exception is that I had a small inheritance and we kept it 100% separate so that the paper trail would clearly lead back to me. Should we be audited we do not want a problem - and my husband is a CA.
[OP]
Deal Fanatic
Dec 28, 2006
5860 posts
518 upvotes
Kanata
How do they verify which person owns the money, what if the spouse has separate account and they kind of sharing the money and the family agrees to put the money in the saving account of the low income family member.
Sr. Member
Dec 16, 2004
714 posts
100 upvotes
Toronto
In common practice a lot of people do what you are suggesting - even putting accounts in the names of their kids and such but everybody is correct in saying that attribution rules apply. Basically the CRA doesn't care whose name the account is - they only care about where they money came from. It would be up to you to provide a paper trail or some sort of proof that the money belongs to the person whose name it is under.
Deal Addict
Oct 4, 2009
2544 posts
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Montreal
rivet wrote:
Apr 29th, 2014 7:52 pm
How do they verify which person owns the money, what if the spouse has separate account and they kind of sharing the money and the family agrees to put the money in the saving account of the low income family member.
As others have stated, it is based on where the money came from. How are you going to show where a spouse with no income got the funds for these savings?

What is perfectly legitimate is if both spouses have income, the higher earning spouse can pay for all household expenses while the lower earning spouse saves most of his/her take home pay and invests at a lower marginal rate.
Deal Addict
Jan 21, 2014
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my spouse doesn't work I always split the joint account interest 50/50 consistently since day one. For over 23 years now, never once questioned by the CRA
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Apr 11, 2008
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mkl38s wrote:
Apr 29th, 2014 10:42 pm
my spouse doesn't work I always split the joint account interest 50/50 consistently since day one. For over 23 years now, never once questioned by the CRA
People drive 120km/hour on highways all the time, they may never get caught, doesn't mean it's legal and no one would get caught.

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