Personal Finance

Transferring Inheritence to a Spouse?

  • Last Updated:
  • Feb 18th, 2018 9:26 am
[OP]
Member
Dec 26, 2013
470 posts
159 upvotes
Ottawa

Transferring Inheritence to a Spouse?

Is it possible to gift a portion of a large inheritance over to your spouse ex. $500k and invest this money under her name? Theres obviously tax advantages to doing this in both reg and non reg accounts, just wondering what the CRA says about this?
9 replies
Deal Addict
Jan 30, 2012
1550 posts
903 upvotes
TORONTO
wilyam wrote: Is it possible to gift a portion of a large inheritance over to your spouse ex. $500k and invest this money under her name? Theres obviously tax advantages to doing this in both reg and non reg accounts, just wondering what the CRA says about this?
Canada does not have gift taxes, period. You can give as much as you like to your spouse whenever you feel like it.

However, if you give money to spouse or related minor child, AND the gift is used to earn income, then the income from the gift is attributed back to the giver: https://www.taxtips.ca/personaltax/attributionrules.htm

You might be better off making a loan to your spouse at the prescribed rate (which is currently 1%) https://www.taxtips.ca/personaltax/lend ... -child.htm

Talk to an accountant or a good financial advisor.
[OP]
Member
Dec 26, 2013
470 posts
159 upvotes
Ottawa
M8Rxmjsik wrote: Canada does not have gift taxes, period. You can give as much as you like to your spouse whenever you feel like it.

However, if you give money to spouse or related minor child, AND the gift is used to earn income, then the income from the gift is attributed back to the giver: https://www.taxtips.ca/personaltax/attributionrules.htm

You might be better off making a loan to your spouse at the prescribed rate (which is currently 1%) https://www.taxtips.ca/personaltax/lend ... -child.htm

Talk to an accountant or a good financial advisor.
Thanks for links, it mentions attribution rules only apply to dependant children and spouses, so if I gifted this money to a sibling, the income earned wouldn’t be attributed back to me?
Deal Addict
Jan 30, 2012
1550 posts
903 upvotes
TORONTO
wilyam wrote: Thanks for links, it mentions attribution rules only apply to dependant children and spouses, so if I gifted this money to a sibling, the income earned wouldn’t be attributed back to me?
It doesn't say dependent children, it says related minor child.

So if your sibling has reached the age of majority, attribution rules don't apply.

However, do you trust your sibling with $500k? I don't think I would :)
[OP]
Member
Dec 26, 2013
470 posts
159 upvotes
Ottawa
M8Rxmjsik wrote: It doesn't say dependent children, it says related minor child.

So if your sibling has reached the age of majority, attribution rules don't apply.

However, do you trust your sibling with $500k? I don't think I would :)
Im curious why safeguards were put in place to prevent tax savings, income splitting from gifting between spouses and related children, but not between close relatives or siblings?
Deal Addict
Jan 30, 2012
1550 posts
903 upvotes
TORONTO
wilyam wrote: Im curious why safeguards were put in place to prevent tax savings, income splitting from gifting between spouses and related children, but not between close relatives or siblings?
I'm not a member of parliament, I don't write the laws :)

And the laws don't prevent tax savings from income splitting, they just make you go through a few hoops to avoid attribution. Since the prescribed rate is so low (currently 1%), it allows you to transfer all investment income to the lower income spouse or to a child. And I hope your investments make much more than 1% :)
Deal Addict
May 12, 2014
2951 posts
2740 upvotes
Montreal
wilyam wrote: Im curious why safeguards were put in place to prevent tax savings, income splitting from gifting between spouses and related children, but not between close relatives or siblings?
Because no one would (should) trust their close relatives with that much money.
Deal Addict
Nov 13, 2013
2766 posts
1467 upvotes
Ottawa
FrancisBacon wrote: Because no one would (should) trust their close relatives with that much money.
But your husband is ok??

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