How Much of a Cash Gift is Tax-Free in Canada?
Here’s the good news – if you want to give your children a lump sum of money as a gift, it’s completely tax-free. In other words, you don’t have to pay taxes on gifted money, no matter who you receive it from. This is true regardless of whether the giver and the receiver are related or not.
There are two main types of gifts that people can give: “inter-vivos” and “testamentary”. Inter-Vivo gifts are those that are given during your lifetime. Testamentary gifts are those that are given after your death and are often found in your Will. Both inter-vivo and testamentary gifts are tax-free in Canada if they are given in the form of cash or money.
And here’s more good news – you can gift as much money as you want without being taxed. In Canada, there’s no limit on how much you can gift someone. Whether you gift them $500 or $30,000, it’s all completely tax-free.
According to the Financial Post, a recent poll found that many Canadians were confused about the taxes associated with making a gift, with over half admitting they simply didn’t know what taxes exist on a financial gift to a child or relative, while nearly 10 percent believed that the gifts were potentially taxable to the recipient.
While gifts themselves are, indeed, received tax-free, it is important to keep in mind that there can be taxes arising depending on what is given away. When you make a gift of assets “in-kind,” such as appreciated securities or real estate, you will generally be treated as if you have sold the gifted property at fair market value, and you will pay tax on 50 percent of capital gains. So, it does appear cash is king when gifting.
What is an Estate and How is it Taxed?
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This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.
7 thoughts on “How Much of a Cash Gift is Tax Free in Canada?”
Is there a link to CRA page regarding this topics.
We have been getting cash from our parents in laws over the years and I have been afraid of depositing it.
What papers do I need to show cra to proof it’s from them? They are in another country so I want to know ahead of time.
Teresa, gifts are tax free but you should record the gift so that there is no dispute that the gift was intended to be in trust and not fully received. There is a presumption that when a parent “gifts’ something to a child, unless evidence is produced to the contrary the presumption is that the recipient child holds the gift in trust for the parent. that is the reason we suggest it be recorded in writing s a gift.
How to deal with a investment property in a will which is not in the province we reside in
Hello Mo, currently when you prepare a Will in Ontario it reflects Ontario only properties. You would need to deal with the property in the country/province or state that it is located in. I hope that helps. Peter
If i wanted ti gift my child $100,000.00 while I’m still breathing! Is it tax free for both of us ? And do I need to give a reason for this gifting?
Sincerely Teresa Reilly
Theresa, you can gift as much cash as you want tax free for both you and the recipient because you have already payed income tax (or gains tax) when you earned that money. Beware if you dip into registered assets like RRSPs to fund the gift, the withdrawal amount will be added to your taxable income for the current tax year.
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