Joint accounts | Income tax filing | Discussion forum

Attribution of income is always based on whose capital it is that funded the investment. It is a matter of fact, not choice, who reports how much income on their individual tax returns.

If you have the documentation to prove (to CRA if they query) your spouse provided the capital to fund a GIC in a joint account, then your spouse can claim the interest income received on that particular investment.

Record keeping of ownership of individual assets within a joint (JTWROS) investment account for taxation purposes. We avoided that kind of record keeping for decades by having 2 such JTWROS accounts... one with Spouse 1 named first (and funded only by Spouse 1) and the other one with Spouse 2 named first (and funded only by Spouse 2). That way the tax slips are always 100% to Spouse 1 in the former instance and 100% to Spouse 2 in the latter instance.

It is not a question of what the taxman takes and whether or not the answer could be the same (by coincidence with both in the same marginal tax bracket as an example), it is how the Income Tax Act says it is to be done.

I say just report it based on whose SIN is on the T5. Unless you're in different tax brackets and the amount of tax difference is material to you and you have no other way (e.g. pension income splitting) of getting in the same tax bracket.

My experience is CRA agents don't know or care about the Act, they just want the reporter of the income to be the same as the SIN and everybody's happy, back to sleep. Plus I've never heard of anyone being questioned about who sourced the funds in a joint account or about income attribution, even on this site. The amounts involved in the average joe/josephine's joint accounts seem not of interest to them. Not saying they don't have some unit investigating attribution among ultra-wealthy folks who shift large amounts of income to kids, etc, they might, but I even doubt that. My attitude, at this age, is if enforcer doesn't care then neither do I, do what's easiest & keeps everybody/computer happy (again, assuming it's not material to me).

Bill said
I say just report it based on whose SIN is on the T5. Unless you're in different tax brackets and the amount of tax difference is material to you and you have no other way (e.g. pension income splitting) of getting in the same tax bracket.

What he said!

Bill said
I say just report it based on whose SIN is on the T5. Unless you're in different tax brackets and the amount of tax difference is material to you and you have no other way (e.g. pension income splitting) of getting in the same tax bracket.

My experience is CRA agents don't know or care about the Act, they just want the reporter of the income to be the same as the SIN and everybody's happy, back to sleep. Plus I've never heard of anyone being questioned about who sourced the funds in a joint account or about income attribution, even on this site. The amounts involved in the average joe/josephine's joint accounts seem not of interest to them. Not saying they don't have some unit investigating attribution among ultra-wealthy folks who shift large amounts of income to kids, etc, they might, but I even doubt that. My attitude, at this age, is if enforcer doesn't care then neither do I, do what's easiest & keeps everybody/computer happy (again, assuming it's not material to me).  

It is one thing to say that one does not have knowledge of anyone being desk audited by CRA to provide documentation supporting attribution of income on tax returns, and that one personally has never been caught in CRA's net as regards proper attribution of income on investments, but it seems to me to be terrible advice to suggest someone they should not care much about potentially breaking the law with inappropriate income splitting, and/or attribution of income.

For the most part, our tax system is based on the honor system, and it is both cost effective and cost efficient to do so, but tax evasion is in fact illegal and is taken seriously by CRA when it is discovered, as it should be. Example analogy: In the corporation that I worked for, reporting of expense accounts was based on the honor system but we were required to retain the documentation supporting expense reports. If spot audits found cheating, the employee was automatically terminated. That is how honor systems work.

As I mentioned, there is no gift tax in Canada to anyone other than a spouse or a minor child. https://www.taxtips.ca/personaltax/when-are-gifts-and-inheritances-taxable.htm
and any other of the dozens of Google links.

You might be forgetting CRA agents are assuming the correct owner of the capital is the one named as the owner of the investment in the first place....which then makes using the SIN number attached to the T3 or T5 or T5008 the correct one, or apportioned appropriately as all CRA approved tax software has provisions for. Indeed, the option to allocate tax slips is front and center of all tax software I am familiar with.

A CRA agent would not assume a taxpayer would take their own capital and illegally invest it in their spouse's name in the first place (spousal registered accounts and documented spousal loans excepted). So Bill, your assumptions are not necessarily correct and it is thus a bit outrageous to conclude "the enforcers are urging the taxpayer to break the law". Rather, it is more likely a case of there being plenty of anecdotal evidence on financial forums of people either being ignorant of tax law or playing footloose and fancy free of tax law.

You obviously can do as you wish for yourself but I think it is a disservice in a financial forum to recommend/opine/suggest taxpayers do not follow the ITA. I suspect we will continue to disagree on this matter.