22 June 1998 External T.I. 9812245 - SOCIAL INSURANCE NUMBER

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: SIN to be reported on "In-Trust Accounts"?

Position: Payee's SIN.

Reasons: Withholding tax deducted on account of payee.

XXXXXXXXXX 981224

Wm. P. Guglich

Attention: XXXXXXXXXX

June 22, 1998

Dear Sir:

Re: Social Insurance Number (“SIN”) To Use on “In-Trust Accounts”

This is in reply to your letters of May 8 and May 9, 1998, concerning the SIN to be reported on information slips respecting “in-trust accounts” established by a parent for minor children.

1. The first question describes a situation where child tax benefits are deposited in an “in-trust account.” You inquire whether the SIN of the parent or child is to be reported on the information slip respecting “in-trust account” income.

In general terms, the payee’s SIN is required to be reported on the information slip. Ordinarily, income earned on property transferred by a parent to a minor child is attributed back to the parent. However, in the case of a transfer of child tax benefits to a minor child, either directly or indirectly, or by means of a trust or any other means whatsoever, the income earned from investing these benefits is not attributed back to the parent due to the specific exception to the attribution rule in subsection 74.1(2) of the Income Tax Act (the “Act”) for amounts received as a result of the operation of subsection 122.61(1) of the Act. Consequently, where only child tax benefits are transferred to an “in-trust account” the income earned is not attributed back to the parent and if an information slip is required, the SIN of the child would be required to be reported unless the child is under 18 years old and the total income is expected to be $2,500 or less.

Where, on the other hand, the child tax benefit payments have been commingled with other funds of the parent in the “in-trust account,” the income earned would be attributed back to the parent and the parent’s SIN would be required to be reported on any information slip.

2. In your second question, you asked whether the exception for SIN reporting described in paragraphs 2 and 8 of IC 82-2R2 still reflects the Department’s position, if the child is under 18 years old and the total income is expected to be $2,500 or less. Paragraphs 2 and 8 of IC 82-2R2 continue to represent the Department’s position.

3. Your final question relates to a situation where the parent has provided the funds to purchase an investment vehicle (e.g. a mutual fund) which generates both investment income and capital gains. As stated in paragraph 19 of IT-510 Transfers and Loans of Property made after May 22, 1985 to a Related Minor, subsection 74.1(2) of the Act does not apply to attribute the capital gains to the parent. However, subsection 74.1(2) would attribute the other income, such as interest, back to the parent unless the source of funds invested was the child tax benefits. As this question pertains to the completion of the T3, we have forwarded it to Joe Hartwick (telephone # 613-957-9352) of the Business Returns Processing Division for a direct response.

We trust that these comments are of assistance.

Yours truly,

J. F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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