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.
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{ 21 comments }
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.
Q. In Ontario casinos, is there an amount of winnings from a casino, in which you would receive a receipt? How do you prove to the government that you won the money at a casino and did not make the money some how else?
There’s no cash bedding in casinos. Have to casher your chips or your card if you’re playing slot machines. The casino will give you receipt with your cash.
How do you prove to the government that you won money at the casino and did not make it some how else?
My dad passed away and left my sister 100 000$ to split 3 ways…she’s has to cash the cheque and do so…she doesn’t know how to do it without gettin taxed big or gettin in trouble? Thanks
Jim,
No need to over think this! She cashes / deposits the cheque then writes you and your other sibling a cheque each for 1/3.
Thanks for the reply, although she has some more concerns… When my dad passed away he did not have a will and she was name executive… The cheque is made out to my dads estate and my sisters name(co). She doesn’t know if she should deposit the cheque in his estate or in her account(dad was a teacher)? It was originally $140 000 but the government taxed it $40 000. She assumes if she cashes it in her account she will be taxed again because she will be in higher tax bracket? If she does deposit it she thinks she cant split it 3 ways because she will be tax because theres a limit on amount of money for a gift(do you know that amount). And if she deposit the money takes it out and gives us cash she says it’s tax avasion and they will come after her if she gets audited.. I guess what is the most simple way? Any help is greatly appreciated, thanks
Hi Jim,
The funds are not income and there is no tax … period.
There is no such thing as a gift limit.
She must make sure the deceased’s final tax return is filed and taxes are paid from the deceased’s funds. There may be another return to file as well.
If she does not believe me, she should seek the assistance of an estate lawyer.
If you bought someone a vehicle worth 25,000.00 does that person need to claim it as a gift on taxes?
Hello Catol,
There are no gift taxes in Canada.
winning a 5 million dollar lotto
am i allowed to gift my family members a share without causing them Financial harm say 100 K per person ?
The gift has no tax implications for Canadian purposes assuming the recipients are adults.
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