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.
Principal Issues: Is a cash gift to an adult child from a parent taxable where the funds are used to pay off a mortgage on the child's home?
Reasons: Amount is personal.
Michael D. Cooke, C.A.
December 14, 2010
Dear XXXXXXXXXX :
Re: Technical Interpretation Request - Taxability of a Cash Gift
This is in reply to your letter dated August 10, 2010 concerning the possible income tax consequences under the Income Tax Act (the "Act") of a cash gift of approximately $XXXXXXXXXX (CDN) from your father-in-law so that you can pay off the mortgage on your home. You also indicate that since your father-in-law lives in XXXXXXXXXX it is not possible, under XXXXXXXXXX laws, for him to transfer the entire amount to you in a single transaction. Rather, you indicate that the amount of the gift must be transferred to you in $XXXXXXXXXX (CDN) increments over a number of months. You also want to know if there are any other potential reporting requirements under Canadian laws.
Generally speaking, there are no income tax consequences under the Act where an adult child receives a gift of cash from a parent and those funds are used for personal purposes. However, since your situation involves an international transfer of currency there may be other non-income tax related reporting requirements to consider. For instance, please refer to the information on the Canadian Border Services Agency's ("CBSA") website by using the following link: http://cbsa-asfc.gc.ca/security-securite/cbcr-dmte/how-comment-eng.html. Since any discussion on these other reporting requirements is beyond the scope of the Canada Revenue Agency's mandate you should contact the CBSA directly by using the toll-free number they have provided.
We trust that these comments will be of assistance.
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch
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