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Joint Account income taxes
September 30, 2023
2:01 pm
Vatox
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Just had a quick question. In a joint account, does the tax receipt for interest capital gains only go to the primary holder or does the secondary holder also have to declare part of that income? Thanks everyone.

EDIT: that’s non-spouse holders.

September 30, 2023
2:12 pm
Vatox
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Okay, did some quick research. It’s proportional to holders contributions. So it looks like a joint account can’t be used to offload capital gains from a secondary holder.

October 1, 2023
9:59 am
Bill
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Far as I know tax receipt only shows SIN of primary, may show primary or both names, fyi.

October 1, 2023
2:15 pm
AltaRed
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It is up to the account holders to properly attribute taxable income proportionately to the capital contributed by each joint account holder.... regardless of what SINs are on the tax slip and/or associated with the account. One cannot transfer cap gains or losses to another taxpayer.

October 3, 2023
10:29 pm
Vatox
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AltaRed said
It is up to the account holders to properly attribute taxable income proportionately to the capital contributed by each joint account holder.... regardless of what SINs are on the tax slip and/or associated with the account. One cannot transfer cap gains or losses to another taxpayer.  

Yes, that’s what I discovered in my research. I wanted to pass the capital gains by not being the primary holder, but the tax reporting has to be proportional to contributions and I would be 100%, so it changes nothing! I did find it interesting that the tax receipt is only sent to the primary holder though,

October 4, 2023
8:26 am
Bill
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My personal experience over the years is you're more apt to be flagged by CRA for questioning if income is reported by other than the person whose SIN is on the T5, and often a year or so later. Just be prepared for that.

October 4, 2023
8:55 am
Wrayzor
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Bill said
My personal experience over the years is you're more apt to be flagged by CRA for questioning if income is reported by other than the person whose SIN is on the T5, and often a year or so later. Just be prepared for that.  

Is that experience with 50:50 reporting, or when assigning all income to the secondary owner(s)?

October 4, 2023
8:56 am
AltaRed
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Bill said
My personal experience over the years is you're more apt to be flagged by CRA for questioning if income is reported by other than the person whose SIN is on the T5, and often a year or so later. Just be prepared for that.  

That has never happened in all my years of proper and proportional splitting along attribution lines....as required in the Income Tax Act. Never play fast and loose with income attribution, especially for larger sums. This subject has been discussed to death in many forums.

October 4, 2023
3:44 pm
Bill
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Wrayzor, in my case it was whenever 100% income was assigned to secondary owner whose SIN did not show on the T5 at all.

October 4, 2023
9:03 pm
Vatox
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Bill said
Wrayzor, in my case it was whenever 100% income was assigned to secondary owner whose SIN did not show on the T5 at all.  

I suppose that the main contributor should be primary then, especially if it’s 100%.

October 5, 2023
3:22 am
Bill
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Yes, if you don't want to have to explain to CRA what's going on if you're reporting it 100% on secondary's tax return.

If you're splitting it tax-wise then it doesn't matter who is primary or secondary.

In my experience CRA has never asked for proof of anything, as soon as they're assured the income in total has been reported by the joint holders involved they've accepted the allocation, even if it's 100% by one joint holder. In my experience.

October 5, 2023
7:47 am
AltaRed
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That is a lot of record keeping, to keep attribution correct. It would be so much easier to not comingle funds like that, especially in those odd situations where the secondary owns all, or the majority, of the balacne. Have 2 accounts with each being primary of one account and holding only that individual's funds in that account. I was circa 35 years old when I got wise to doing things that way.

January 25, 2024
4:53 am
AmyR93
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Thanks for the informative discussion on joint account taxes. Based on your experiences, how does one handle a situation where the contributions to the joint account are not evenly split? For instance, if one party contributes significantly more, does this change the tax reporting requirements? Any insights or personal experiences on this would be greatly appreciated.

January 25, 2024
5:14 am
Bill
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The rules are that income is to be reported based on the contributions to the account. For example if one person contributes 60% of the amount in the account then that person is supposed to report 60% of the income the account generates, and so on.

I ignore the rules and report 100% of the income on the person whose SIN (usually the primary joint account holder) is shown on the year-end T slip issued, that seems to keep CRA happier in my experience. I've been reassessed in the past because a T slip with my SIN was not reported 100% on my income tax return, CRA's computer and their agents seem happier when the T slip SIN matches the reporting so I've been doing it forever since with no issues. Not recommending anything here, you asked experience and that's mine.

January 25, 2024
7:36 am
dougjp
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AltaRed said
That is a lot of record keeping, to keep attribution correct. It would be so much easier to not comingle funds like that, especially in those odd situations where the secondary owns all, or the majority, of the balance. Have 2 accounts with each being primary of one account and holding only that individual's funds in that account. I was circa 35 years old when I got wise to doing things that way.  

That's exactly how I've been doing it with my spouse (sorry this is a bit off topic as the OP wanted non-spouse related tax info). In other words, from the standpoint of record keeping, and possibly having to deal (or not) with the CRA, its simple to establish up front with joint account openings at the same bank and let them do the book work. The side benefit is the ease of transferring funds if need be.

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