“No good deed goes unpunished”
Many people consider gifting some of their hard-earned assets to children during their lives. While this is certainly a generous gesture it can result in negative consequences.
While there is no “gift tax” in Canada, one must be mindful of the following issues:
- Gifts of capital assets (Real estate, investments, etc) may result in a capital gains tax for yourself;
- If assets are given or loaned to a spouse or a related minor child, attribution rules may apply;
- If not gifted outright, double tax may apply on accrued capital gains;
- You will likely lose the use of the asset; and
- You may need the asset for your own living/health care expenses later.
Before giving away your assets we recommend that you consult with your accountant and lawyer.