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Spousal attribution and TFSA contributions
February 11, 2017
9:06 am
Norman1
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When one gives money to a spouse to contribute to their TFSA, spousal attribution rules are not circumvented.

According to TaxMentor.ca: Attribution Rules on Transfers to TFSA of Spouse, CRA was asked in 2010. CRA replied in TI2010-0354491E5 that spousal attribution on the money is temporarily suspended by Income Tax Act 74.5(12)(c) while the money is in the spouse's TFSA and spouse had not overcontributed to their TFSA at the time of contribution.

When the spouse withdraws the money from the TFSA, spousal attribution resumes.

February 11, 2017
9:53 am
Bill
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I guess that makes sense that any income earned after the money comes out of a TFSA would be attributed back to the spouse who first gifted the money to the TFSA holding spouse, though I'm guessing it's not going to be too common that a person takes money out of a TFSA and then invests it outside of a sheltered plan, i.e. it would probably come out to be spent.
SavingIsGood referred to giving money to children and no attribution rules apply re money given to adult children, as far as I know, i.e. it's their money now. You have to be 18 to have a TFSA.

February 11, 2017
11:02 am
Norman1
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Bill said
I guess that makes sense that any income earned after the money comes out of a TFSA would be attributed back to the spouse who first gifted the money to the TFSA holding spouse, though I'm guessing it's not going to be too common that a person takes money out of a TFSA and then invests it outside of a sheltered plan, i.e. it would probably come out to be spent.

Currently TFSA contribution room is $52,000. Without resumption of spousal attribution, one would be able to do the following:

  1. Give $52,000 to spouse in January.
  2. Spouse contributes $52,000 to TFSA.
  3. Spouse withdraws the $52,000 in December.
  4. Next month is January of a new year. $52,000 withdrawn in December is added back to TFSA contribution room. Give spouse another $52,000 and repeat.

Without resumption of spousal attribution, after five years, one would have been able to give spouse at least $260,000 of money with no spousal attribution!

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