Subsection 74.1(1) - Transfers and loans to spouse or common-law partner
Cases
Lipson v. Canada, 2009 DTC 5528, 2009 SCC 1, [2009] 1 S.C.R. 3
The taxpayer's wife ("Jordanna") borrowed $562,500 from the Bank of Montreal under an interest-bearing demand promissory note in order to purchase...
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| Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) | policy of spousal attribution rule: cannot exploit spousal status on property transfers | 346 |
The Queen v. Kieboom, 92 DTC 6382, [1992] 2 CTC 59 (FCA)
In finding that s. 74(1) applied to attribute dividend income to the taxpayer when he permitted his wife to subscribe for common shares of his...
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| Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) | 60 | |
| Tax Topics - Statutory Interpretation - Interpretation Bulletins, etc. | 73 |
Garant v. The Queen, [1985] 1 CTC 153, 85 DTC 5408 (FCTD)
The taxpayer and his wife agreed to change their matrimonial regime from community of property to separation of property. Since the partition was...
Beique v. The Queen, 81 DTC 5050, [1981] CTC 75 (FCA)
Income derived from real property which the taxpayer's wife bought with money he had given her, was attributed to him.
Murphy v. The Queen, 80 DTC 6314, [1980] CTC 386 (FCTD)
Under a court-approved variation of trust, the plaintiff forewent his vested right to receive a ½ share of the income of a trust, and a...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | included right to be included in class of discretionary beneficiaries | 46 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 106 |
Lackie v. The Queen, 79 DTC 5309, [1979] CTC 389 (FCA)
Payments received by the wife of the taxpayer for gravel removed from land that had been conveyed to her by the taxpayer were found to be payments...
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| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) | 66 |
Administrative Policy
7 October 2016 APFF Roundtable Q. 19, 2016-0655841C6 F - Reimbursement of attributed income
Situation 1
CRA assesses Spouse A under s. 74.1(1) on the basis that interest received by Spouse B on transferred funds should be included in...
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| Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1) | no obligation to repay income reallocated to other partner | 170 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | excess disposition proceeds not required to be repaid | 91 |
29 June 2016 External T.I. 2016-0642811E5 - attribution rules - spouses
An individual sold shares, with the proceeds placed in a non-registered joint investment account with the individual’s spouse for the purpose of...
S4-F3-C1 - Price Adjustment Clauses
CRA will consider a price adjustment clause to represent pricing at fair market value if:
- the agreement reflects a bona fide intention of the...
19 May 2010 External T.I. 2010-0364131E5 F - Issuance - Discretionary shares
Upon the incorporation of Opco, X subscribed for and continued thereafter to hold all the Class A voting participating shares of Opco, whose terms...
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| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | subscription for discretionary shares of Opco might represent a s. 15(1) benefit conferred by Opco on subscriber, or engage s. 69(1)(b) where this is benefit conferred by existing shareholder | 203 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | Kieboom/s. 69(1)(b) rather than s. 15(1) where benefit conferred by shareholder rather than corporation | 185 |
6 February 2004 External T.I. 2003-0044021E5 F - Les règles d'attribution et les REER
CRA noted that where an individual gifts money to enable the latter to make deductible RRSP contributions, which are used to acquire an...
14 January 2004 External T.I. 2003-0029571E5 F - Attribution - société de personnes
A couple (Monsieur and Madame) formed a farming partnership. Monsieur contributed all of the farming business (which previously had been carried...
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| Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1.1) | allocation of farming partnership income did not appear reasonable | 152 |
27 March 2003 External T.I. 2002-0180045 F - DEDUCTION DES INTERETS
In order to generate an interest deduction, Ms. A borrowed money from a bank to purchase shares from Mr. A (also in the top bracket), who used the...
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| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) | s. 245(1) might be applied to transactions to convert non-deductible mortgage interest to deductible interest pursuant to sale of shares to borrowing wife and use of s. 74.1(1) | 120 |
20 June 2001 External T.I. 2001-0066825 F - REGLES D'ATTRIBUTIONS
Dividends and capital gains generated in 2001 by the taxpayer on property acquired from the taxpayer’s spouse before May 23, 1985 would be...
19 April 1995 External T.I. 9431235 - ATTRIBUTION RULES AND RRSP
Where an individual's contributions to his RRSP is funded with cash transferred to him from his spouse, s. 74.1(1) will apply to the amount...
26 September 1994 External T.I. 9412015 - ATTRIBUTION AND COMMUNITY PROPERTY
Where a person transfers property to his or her spouse prior to becoming a resident of Canada, s. 74.1(1) would apply to any income earned from...
31 May 1994 External T.I. 9411795 - INTERSPOUSE TRANSFERS AND RRSP'S
Where an individual transfers cash to a spouse for no consideration, the spouse contributes the cash to an RRSP of which she is the annuitant, the...
93 C.R. - Q. 36
The Act does not provide specifically that attribution ceases when a loan to which s. 74.1(1) applies is repaid. Accordingly, if the loan is...
8 May 1991 T.I. (Tax Window, No. 3, p. 22, ¶1250)
Where Mr. X purchases real property from his spouse, generates $10,000 of net rental income from the property, but fails to pay the $9,000 of...
4 May 1994 External T.I. 9400825 - ATTRIBUTION RULES
A taxpayer who transferred cash from his wife to assist her in purchasing a property that was subsequently sold by her at a gain was referred to...
14 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 12, ¶1091)
"Income from property" for purposes of ss.74.1, 110.6 and 207.5 includes annuity income taxed under ss.56(1)(d), (d.1) and (d.2).
86 C.R. - Q.43
Where the property loaned or property substituted therefor is used to repay a low-interest loan to which s. 74.1(1) applies, there will not be any...
86 C.R. - Q.45
S.74.1 only attributes income from property, and s. 96(1)(f) applies for purposes of determining the source of income received by a partner.
Articles
Elie Roth, Tim Youdan, Chris Anderson, Kim Brown, "Taxation of Beneficiaries Resident in Canada", Chapter 4 of Canadian Taxation of Trusts (Canadian Tax Foundation), 2016.
Whether attribution rules apply from a release or surrender (p. 343)
The CRA states m paragraph 1.15 of Income Tax Folio S6-F2-C1 that the...
Subsection 74.1(2) - Transfers and loans to minors
Cases
Romkey v. Canada, 2000 DTC 6047 (FCA)
Trusts, that were established for the taxpayers' children, subscribed for non-voting common shares of the corporation for a nominal amount. The...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | 12 |
Sachs v. The Queen, 80 DTC 6291, [1980] CTC 358 (FCA)
The appellant settled a trust and sold shares of a company to his wife in her capacity of trustee. The trust deed basically provided that until...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(14) | 85 |
See Also
Krauss v. The Queen, 2009 DTC 1394 [at 2155], 2009 TCC 597
The taxpayer and her son transferred real estate on a rollover basis to a partnership in consideration for Class A units of the partnership having...
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| Tax Topics - Income Tax Act - 101-110 - Section 103 - Subsection 103(1.1) | family trust allocated unreasonable return on its nominal-cost units | 210 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(b) - Capital Loss v. Loss | 49 | |
| Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Real Estate | 49 |
Harvey v. R., 98 DTC 1089, [1997] 3 C.T.C. 3022 (TCC)
Given that minors could not contract and be parties to a proper loan, the taxpayer was found to have transferred funds to his infant children for...
Romkey v. R., 97 DTC 719, [1997] 3 C.T.C. 2405 (TCC)
Dividends on shares of a family corporation supposedly received by trusts for the benefit of the taxpayer's children were attributed to the...
Administrative Policy
28 May 2007 External T.I. 2007-0219801E5 F - Paiement de soutien aux enfants
Regarding a child assistance payment invested by the parent on behalf of a minor child, CRA stated:
[A]n amount paid by the Régie des rentes du...
20 March 2007 External T.I. 2006-0173711E5 F - Paiement des impôts d'une fiducie
Mr. A is one of the two trustees for an inter vivos trust for his minor children that provides for the distribution of all income to the...
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| Tax Topics - Income Tax Act - 101-110 - Section 105 - Subsection 105(1) | s. 105(1) does not apply where trustee pays trust taxes | 109 |
| Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) | s. 246(1) does not apply where trustee pays trust taxes | 134 |
16 February 2007 External T.I. 2006-0200541E5 F - Prestation universelle pour la garde d'enfants
Regarding payments of the universal child care benefit (UCCB) paid into a separate bank account held for the child, CRA stated:
[T]he interest...
11 September 2003 External T.I. 2003-0032975 F - DON A UN PETIT-FILS HANDICAPE
CCRA indicated that the s. 74.1(2) attribution rules apply to a gift of money to a disabled minor grandchild, stating that the “Act does not...
5 August 2003 External T.I. 2003-0027705 F - DON A UN ENFANT MAJEUR
CCRA noted that attribution of income did not apply investment income derived from a gift to a child over 17 nor was there attribution of taxable...
8 May 2001 External T.I. 2001-0072705 - Romkey - Estate Freeze
"Subsection 74.1(2) will generally not apply to attribute, to a freezor, dividends paid on shares held by a trust for minor children as part of a...
3 March 1995 External T.I. 9427115 - "transfer"? Dad invests $ in "trust" a/c for KIDS
The word "transfer" means to "divest, deprive or dispossess of title". Accordingly, there is no transfer of property to a taxpayer's child where...
21 March 1994 Internal T.I. 9405257 - ATTRIBUTION OF CAPITAL GAINS EARNED BY MUTUAL FUND
Where an individual (the "transferor") has bought units in a mutual fund trust for a related minor, s. 74.1(2) will not attribute capital gains...
18 February 1994 External T.I. 9318185 F - ABIL - Attribution of Allowable Capital Loss to Spouse
An allowable business investment loss is a type of allowable capital loss. Accordingly, in a situation where Mr. and Mrs. X are jointly and...
25 January 1991 T.I. (Tax Window, Prelim. No. 3, p. 29, ¶1109)
The proceeds of a life insurance policy are "substituted property" for purposes of the attribution rules.
87 C.R. - Q.8
The phrase "relating to any period" means accrued in a period.
Subsection 74.1(3)
Administrative Policy
27 October 2020 CTF Roundtable Q. 11, 2020-0860981C6 - Refinancing Prescribed Rate Loans
An individual, who used a loan ("Loan 1") bearing interest at the prescribed rate (2%) to purchase securities for $100,000, now wishes to...
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| Tax Topics - Income Tax Act - Section 74.5 - Subsection 74.5(2) | fresh prescribed rate loan could be made immediately after repayment of 1st such loan out of sale proceeds | 148 |