27 October 1999 External T.I. 9926225 - JOINT REGISTRATION OF INVESTMENTS

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: The income tax consequences of including children's names on a parent's investment accounts, with a view to reducing probate fees.

Position: In adding names to an investment account, there may or may not be a change in how the income from this investment should be reported. This depends on whether the registration of additional names has resulted in the disposition of a share of the parent's interest in the property to the children.

Reasons: By virtue of paragraph (e) of the definition of "disposition" in section 54 of the Income Tax Act, a disposition does not include a transfer of property in which there is a change in the legal ownership without any change in the beneficial ownership.

XXXXXXXXXX 	J. Gibbons
		5-992622
October 27, 1999

Dear XXXXXXXXXX:

A copy of your letter dated January 1, 1999, which was faxed to the Regina Tax Services Office on September 27, was forwarded to us for reply. You have requested our opinion concerning the income tax consequences of including your name and the names of your siblings on your mother's investment accounts, with a view to reducing probate fees.

As requested, we have considered your situation and have provided some comments below. However, we cannot confirm the tax implications of particular transactions unless the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3. Thus, our comments are of a general nature only.

In adding names to an investment account, there may or may not be a change in how the income from this investment should be reported. This depends on whether the registration of additional names has resulted in the disposition of a share of your mother's interest in the property to the new registrants. By virtue of paragraph (e) of the definition of "disposition" in section 54 of the Income Tax Act, a disposition does not include a transfer of property in which there is a change in the legal ownership without any change in the beneficial ownership. Thus, if a change of beneficial ownership has not occurred, so that there is no disposition for tax purposes, the new registrants will not be required to include any income or capital gains in income in respect of the property. The determination of whether there has been a change in beneficial ownership is a question of fact. In this regard, we refer you to paragraphs 2 to 5 of the enclosed Interpretation Bulletin IT-437R, "Ownership of Property (Principal Residence)," for the Department's general views on what constitutes beneficial ownership.

If a change in beneficial ownership does occur, your mother will be considered to have disposed of property pursuant to section 54 of the Act. If property is gifted in this manner, both the proceeds of disposition of the property for your mother and the acquisition price of the property for the new registrants will be deemed to be equal to the fair market value of the particular property pursuant to paragraphs 69(1)(b) and 69(1)(c) of the Act respectively. Further, the attribution will not apply to any income earned on the transferred property unless the children are minors.

We trust that these comments will be of assistance.

Yours truly,

John Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate

Enclosure

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