Tax treatment of joint accounts

Q – With a joint account, who pays the tax on the interest or capital gain earned on the account? Can it be either person whose name is on the account, or does it has to be spilt between them? – W.L.
A – The Canada Customs and Revenue Agency will usually look at the original source of the money in the account to determine an answer in such cases. Let’s take the most typical example, a husband-and-wife joint account.

Scenario 1 – The husband works and contributes all the money to the account. The wife stays home and looks after the kids. In this case, all the interest would be shown as income by the husband.

Scenario 2 – Both work, and contribute equally to the account. The interest income should be divided equally between them for tax purposes.

Scenario 3 – The wife works full-time and contributes 75% of the money in the account. The husband works part-time and contributes 25%. In this case, the interest earned should be divided between them on a pro-rata basis. – G.P.