Residents of Canada who receive a gift, inheritance, or receive lottery or other gambling winnings are not taxed on their receipt and do not have to include these amounts in income for tax purposes. However, giving a gift can sometimes result in unintended tax consequences.
Gifts of Capital Property
If you decide to give capital property such as real estate or investments in stocks as a gift, you will have been deemed to have disposed of the property and may have to pay capital gains tax on the disposition.
In addition, if you give income producing property such as an income paying bond or dividend paying stock to a minor child or other family member who is under age 18 you may still have to have to pay tax on that income.
Employer Gifts
If you own a business and provide gifts to your employees, the gift may be considered a taxable employment benefit to the employee. Cash gifts and cash like gifts such as gift cards will normally be treated as a taxable benefit while other gifts may not.
Gambling Winnings
While gambling winnings are not normally considered income for tax purposes, these winnings can be deemed to be income if it can be shown that your sole source of income is repeated and regular positive gambling.
Related Articles
- Tax On Gifts & Inheritances
- Tax On Gifts of Foreign Stock
- Tax of Gifts & Inheritances
- Tax Free Employment Benefits
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{ 10 comments… read them below or add one }
How about lawsuits where there is a settlement?
It’s taxability would be based on the facts. If the settlement was to enforce a claim that would have been taxable if received, then yes.
Interesting how do you know if its taxable then? Are there any ITs on this issue.
But isn’t the ideal of a settlement to make you whole, so you had losses or damages and the settlement is an agreed upon amount which is usually less than what the losses might be. So how would that be taxable if there really isn’t a financial gain per say? Ie. for example say with loss of land due to rights you thought you had ownership.
Windsor,
It really depends on the circumstances. In the case of the Nortel class action lawsuit, the CRA released the following. As you can see, it really depended on whether the shares were held non-registered and if they were still owned.
What about if the monetary gift is large in amount and comes from outside of Canada? Would that be taxable income?
Canada does not tax gifts or inheritances.
Wonderful. Thank you very much for your prompt reply!
On the subject of settlements, my father fell and badly injured himself in the States. He is a Canadian citizen and resident. His lawyer in the US will be pursuing a personal injury settlement from the business location where he tripped. He has been told that any settlement would not be taxable in the US (he has other US source income and therefore files with the IRS annually). My question, naturally, is what the tax implications are in Canada. Does the form the settlement take (annuity, trust, cash) make any difference? Are there any other angles we should be looking into? Thank you so much for any assistance.
can you deduct a gift to a family member. I gave money to my mom and brother due to some financial hardship though they are not my dependants.
No. Gifts cannot be deducted.