Q: Just want to confirm my understanding of attribution rules on these points below:
1. If a grandparent gifts $5,000 to an adult grandchild (over age 18) to be used for investing purposes, there is no attribution rules applicable.
2. But no such luck, if gifting funds to a spouse or to a minor child under 18, where the funds are being used for investing. Attribution rules will apply.
3. If a spouse puts the gifted funds in a TFSA, how will CRA be able to track attribution back to the gifter?
Thanks.
1. If a grandparent gifts $5,000 to an adult grandchild (over age 18) to be used for investing purposes, there is no attribution rules applicable.
2. But no such luck, if gifting funds to a spouse or to a minor child under 18, where the funds are being used for investing. Attribution rules will apply.
3. If a spouse puts the gifted funds in a TFSA, how will CRA be able to track attribution back to the gifter?
Thanks.
5i Research Answer:
We are not tax professionals but we believe your understanding of points 1 and 2 are correct. On the TFSA, it appears as though there are no attribution rules for gifted spousal amounts into a TFSA as long as the usual TFSA rules are being followed (not in excess of contribution amounts). This link has some helpful summaries: https://www.taxtips.ca/personaltax/attribution-rules-re-gifts-transfers-loans-to-spouse-or-related-minor-child.htm