Income splitting with my parents
I'm running a Smith Maneuver and I am trying to work out a way to minimize tax. I heard about the CRA's Income Attribution Rule and the minimum interest that a loan must charge so that any investment income / capital is attributed to the receiver rather than the lender.
Here's my situation:
- I have $100k from the revolving portion of my HELOC at 3% interest rate
- My parents are not eligible for any social assistance due to them being in the financial guarantee period of a sponsorship application.
- My marginal tax rate is 30% (so capital gain is taxable at 15%)
Is this a workable and legal arrangement?