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Email this10:22 am
October 27, 2013
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It appears to me the Mom has no ties to Canada, not even a SIN, and the only reason the money is in Canada is because she wants it out of China and her son has been leveraged to get her a bank account that she could not get on her own. I am guessing there are tens of thousands of accounts like that especially in the BC Lower Mainland. Point being this is not likely that unique of a situation.
Think as others suggest, it is reasonable to appeal it to CRA saying none of the money is his and he has never made a single deposit (if true). Assuming the funds never touched his hands or that he facilitated the deposits in any way.
11:58 am
October 21, 2013
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I agree with Bill's and AltaRed's recent posts.
It's mom's money. She should pay any tax owing on her own tax returns.
It's not clear, however, if she is required to file a return in Canada or if she is a Cdn citizen.
If she has no real ties to Canada, then she has evidently found a loophole through which interest income may be earned but no tax is owing.
Although this particular transaction was probably picked up by CRA simply by computer operations, it does point to a problem for the government.
I'm sure they would not want it to be a trend for people living offshore with no obligations to Canada raking in unlimited amounts of tax-free money, and then ultimately passing it on to their kids intact, all tax-free, while Canadians are limited to their income from TFSAs. Or would they?
3:24 pm
April 6, 2013
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Loonie said
…
If she has no real ties to Canada, then she has evidently found a loophole through which interest income may be earned but no tax is owing.
…I'm sure they would not want it to be a trend for people living offshore with no obligations to Canada raking in unlimited amounts of tax-free money, and then ultimately passing it on to their kids intact, all tax-free, while Canadians are limited to their income from TFSAs. Or would they?
No tax on the arm's length deposit interest is owing to Canada. But, Mom would be paying personal income tax on the interest in China, which taxes residents on their worldwide income, like Canada does.
According to pwc: China - Individual - Taxes on personal income, she likely will owe 20% income tax to China on the interest.
The US has similar treatment for deposit interest paid to non-resident aliens. IRS: Aliens - Which Income to Report notes the following:
Nonresident Aliens who receive interest income from deposits with a U.S. bank, savings & loan institution, credit union, or insurance company, or who receive Portfolio Interest (described in Publication 519, U.S. Tax Guide for Aliens) are exempt from taxation on such interest income as long as such interest income is not effectively connected with a United States trade or business.
4:58 pm
February 22, 2020
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Thanks again for the replies, you guys are awesome. To address a few points here: I didn't know how to report T5, normally there's no place on electronic tax filings to attach tax slips, I combine my interest earnings from various T5s on "investment income", that was it. But I can provide all transaction histories to show that she was the one who wired all the money in. I admit that it was foolish in hindsight to have my name on someone else's account, and my mom was lazy to stick with my bank, she could have shopped around. I did find out today that many banks here can open an account for non-resident, but she has to be physically present. My mom emailed the bank and asked if they can delete my name from the account or transfer to another account, hope this works. I'm also learning tax reporting for non-resident of Canada. According to the tax treaty between Canada and China, like Norman1 said, the interest is either exempt, or if not, taxed at no more than 10%. But as for income tax in China, it's all messed up, it's not operating based on rule of law, otherwise what's the legal grounds for the restrictions on capital flow.
6:13 pm
September 11, 2013
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Main thing is you discovered there are no taxes payable to Canada by anyone here, your objection should succeed if you can show none of the money in the account came from you.
1:15 pm
November 8, 2018
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depositsavings said
I didn't know how to report T5, normally there's no place on electronic tax filings to attach tax slips, I combine my interest earnings from various T5s on "investment income", that was it.
You should look for better tax preparation software. Find one that not only allows to submit T5 from each issuer, but also downloads them from CRA My Account.
Also, make it a habit to visit CRA My Account service regularly during tax season to see what Tax Slips they show for you. You'll find them under "Tax information slips."
Most tax slips will appear there before end of February, but at least one bank that I know, Simplii, submits them early April.
2:30 pm
April 6, 2013
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depositsavings said
…I didn't know how to report T5, normally there's no place on electronic tax filings to attach tax slips, I combine my interest earnings from various T5s on "investment income", that was it. …
One attaches slips by entering them into the tax software.
Tax software will allow one enter individual T5 slips. StudioTax has an additional field, that's not on the T5 slip, for one to specify one's percentage share of the amounts on the T5 slip for slips of joint accounts.
CRA knows the T5 slip is for a joint account because Box 23 (Recipient Type) will be "2" for a joint account and "1" for an individual account.
4:35 pm
October 21, 2013
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Yes, I think OP could have avoided a lot of grief if he'd declared the T5 and then attributed the money. Too bad his software was not up to the challenge.
If he had done this and declared it 100% mom's, CRA would most likely still have asked for proof of this but it wouldn't have gone directly to a reassessment where he must pay up right away. They would have looked at his evidence first. From their point of view, he failed to declare income.
6:00 pm
February 22, 2020
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Thanks for the above, I'd been using UFile until 2018, I remember on the interface it asks me to add T4, T4A, T5 and other slips, but the "upload" is actually just entering numbers for each box, never did it ask me to upload a PDF copy from my computer. Last year I used Turbotax free version, it was the same. And I never knew I can find tax slips from CRA account interface, thanks Alexandre. I will be more careful this year.
5:52 am
November 8, 2018
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Alexandre said
Most tax slips will appear there before end of February, but at least one bank that I know, Simplii, submits them early April.
I stand corrected: this year, Simplii submitted T5 to CRA on February 29. Under CIBC bank name, of course.
This is significant improvement over last year, when they submitted T5 on April 4.
I can file my taxes now. Tax refund, looking forward to have you in March. 
6:55 am
April 6, 2013
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T5 slips have to be issued by end of February. That just means the slips have to be generated, sent out, and uploaded to CRA.
It can take some time for CRA to make them available through their web portal to the taxpayer.
7:06 am
April 6, 2013
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depositsavings said
Thanks for the above, I'd been using UFile until 2018, I remember on the interface it asks me to add T4, T4A, T5 and other slips, but the "upload" is actually just entering numbers for each box, never did it ask me to upload a PDF copy from my computer. …
I don't think any tax software yet is able to read the PDF copies of the tax slips.
The most so far is that some NETFILE software can use CRA's Auto-fill service to download the tax slips and other info from the taxpayer's CRA My Account. That will partially fill in the return.
However, the percentage allocation for T5 slip interest, for example, is not known by the financial institution or CRA. I suspect the percentage would be set, as a default, to 100% by the tax software. Taxpayer would need to review the T5 slips in the software afterwards and adjust the percentage.
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