Beware the tax trap!

Unlike the U.S., there is no such thing as a Gift Tax in Canada. However, that does not mean that you can give anything to anybody tax-free as a strategy to reduce the tax burden on the estate at death. As usual, the folks in Ottawa who make these rules are one step ahead of you.

For example, you cannot make gifts to closely-related minor children or to your spouse without tax consequences. All dividends and interest earned on money or securities given away in these circumstances is attributed back to you for tax purposes.

You also must be careful about giving away securities or real property to anyone. In this case, the Canada Customs and Revenue Agency (CCRA) deems you to have sold the asset. If there is a capital gain at that point, tax will be due on the amount when you file your next return.