Joint ownership of savings account/GICs and the tax implications

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Koogie
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Joint ownership of savings account/GICs and the tax implications

Post by Koogie »

My elderly mother will receive circa net 400K from the sale of her home in January and needs to park it for 18 months before she pays off a short term mortgage on her new home. She wants me to arrange this for her.

My thought at current rates is to use GICs and split it between two CDIC institutions and game the coverage.
Perhaps 2 x 18mos. GIC at Oaken (one in her name, one jointly held) and two somewhere else similarly arranged.
I believe this qualifies all four for full CDIC coverage.

The question is, never having done this before, how is taxation handled ? I believe that jointly held GICs are held in a primary persons name(with their SIN) and also a secondary persons name. This means that interest is attributed to the primarys SIN and the secondary is only there to(in practical terms) increase the CDIC coverage (along with survivorship rights, etc..)

Correct ? A simple, possibly stupid, question I know but I've never done joint ownership before.

Also, there was nothing in Finiki to answer this (that I could find). A common enough question that it might merit inclusion, in clear and simple terms.

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BRIAN5000
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Re: High interest rates for savings, GICs and MMFs (2017)

Post by BRIAN5000 »

Oaken has two CDIC insurers so you could have it all at Oaken all CDIC insured if that meets your other criteria.

It's my understanding even if the T4 comes in joint names it's where the money comes from that determines who will pay the taxes . Not sure how CRA tracks this. Maybe best to keep at least a simple paper trail if there is a problem. You could call CRA and ask :roll: :roll: mabe they will answer the call, maybe they will answer correctly.....
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amphitryon
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Re: High interest rates for savings, GICs and MMFs (2017)

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This is also my understanding. The slips do show both SINs for joint accounts. At filing time (I use U-File), I simply apportion the percentage income from our joint accounts at 50/50, but even the odd 30/70 split on some has not been a problem yet. In the end, I try to equalize income for both of us as much and where possible at tax time; true attribution for income, going back to the source of the original funds, is hardly practical on joint accounts.
Calling is hardly an option, because even with rapid re-dial you need to go a few rounds in order not to get told to leave a message. With a simple T1 Adjustment case from 2014 still not completely understood by the good folks in Sudbury, I try for as little voice-contact as possible. This way I do have a good paper trail, which by now should be highly embarrassing for Sudbury, because I can document that in the same matter, two completely different ''officials'' issued contradicting instructions.
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Re: High interest rates for savings, GICs and MMFs (2017)

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amphitryon wrote: 16 Dec 2017 15:19 This is also my understanding. The slips do show both SINs for joint accounts. At filing time (I use U-File), I simply apportion the percentage income from our joint accounts at 50/50, but even the odd 30/70 split on some has not been a problem yet. In the end, I try to equalize income for both of us as much and where possible at tax time; true attribution for income, going back to the source of the original funds, is hardly practical on joint accounts.
A logical way to deal with joint accounts is for each account holder to fund it proportionately, i.e. 50/50 basis. CRA may not challenge 50/50 allocations on joint accounts (since I suspect most do it that way) but CRA really should to check on attribution. I suspect in most cases they have bigger fish to fry.

When my former spouse and I of almost 40 years had accounts, our investment accounts were his (100)/hers (0) and hers (100)/his(0) JTRWOS accounts that were funded accordingly and made book keeping simple and a robust paper trail less complicated. But but our operational accounts were joint 50/50. In my current relationship, nothing is JTWROS except for our operational chequing account. It is truly not difficult to manage the book keeping if it starts from an individual's 'income generating' account where pay is deposited.
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Re: Joint ownership of savings account/GICs and the tax implications

Post by Peculiar_Investor »

Koogie wrote: 16 Dec 2017 13:45 there was nothing in Finiki to answer this (that I could find). A common enough question that it might merit inclusion, in clear and simple terms.
If you had looked at my finiki user page you would find "Items that might become articles" which I have been using as a notepad to ideas towards an article on this subject. It has just never reached the point where it is ready for 'prime time', i.e. the main wiki article space.
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Re: Joint ownership of savings account/GICs and the tax implications

Post by OhGreatGuru »

I suspect the commenters advising that you can split the income with no trouble are missing the point. I suspect OP wants to have the GIC's joint with himself or other beneficiaries, in order to have the money pass outside of the estate. And wants to know if the interest can be assigned entirely to his mother more tax purposes. If that is the question, the answer is yes.

A) Make sure mother is listed first on the list of account holders;
b) Keep a copy of the paperwork for the original purchase agreement in case CRA asks for evidence down the road that the GIC's were purchased with the mother's money.
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Re: Joint ownership of savings account/GICs and the tax implications

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BRIAN5000 wrote: 16 Dec 2017 14:22 Oaken has two CDIC insurers so you could have it all at Oaken all CDIC insured if that meets your other criteria.
Bugger.. I had forgotten that. Grr.. it is very tempting to get it all done and dusted with one phone call.. but I really don't think I feel comfortable at this point in time with lending Uncle Warren all 400K.. lol Yes, I know it would all be CDIC safe but we do have to hand it over to a different bank at maturity to close out a mortgage and with my luck, that is just when HCG would go into receivership. If required, I could fund it out of my own pocket until CDIC paid out but with my luck that would also be during a market crash... lol. Pessimist, moi ?
OhGreatGuru wrote: 16 Dec 2017 18:08 I suspect the commenters advising that you can split the income with no trouble are missing the point. I suspect OP wants to have the GIC's joint with himself or other beneficiaries, in order to have the money pass outside of the estate. And wants to know if the interest can be assigned entirely to his mother more tax purposes. If that is the question, the answer is yes.
A) Make sure mother is listed first on the list of account holders;
b) Keep a copy of the paperwork for the original purchase agreement in case CRA asks for evidence down the road that the GIC's were purchased with the mother's money.
Actually, it isn't a question of estate in my mind, simply taxation and gaming the CDIC coverage. As I said, I have never held anything joint before and sometimes it is the simple things one has never done before that need the most clarification. Plus, I am pretty confident I wouldn't get a trustworthy answer necessarily from either the financial institution employees we use or the CRA agents on the phone.
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Re: Joint ownership of savings account/GICs and the tax implications

Post by Mordko »

Not an accountant, but...

There won't be an issue as long as you can prove attribution of money in the joint account. If you have sales documents for the house and money transfer records then for taxation purposes all the money should be attributed to the account holder who sold the house and the money actually belong to.
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Re: Joint ownership of savings account/GICs and the tax implications

Post by OhGreatGuru »

To OP: I think your hope of gaming CDIC coverage is based on false premises.

See http://www.cdic.ca/en/about-di/how-it-w ... fault.aspx

Deposits held in more than one name
Joint deposits are those held in the names of two or more people. Coverage for joint accounts is for a total of up to $100,000 regardless of the number of joint depositors.
BRIAN5000
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Re: Joint ownership of savings account/GICs and the tax implications

Post by BRIAN5000 »

So if 10 people are on a joint account that is only covered for $100,000 not 1 million!

"Each eligible joint deposit is protected for up to $100,000 per set of joint owners, regardless of the number of people who own the deposit."
http://www.cdic.ca/en/about-di/how-it-w ... -name.aspx

Related or unrelated not sure about a minor?
So

Brian 100,000
Jane 100,000
Brian & Jane 100,000
Brian & Jane & Sue 100,000
Jane & Sue 100,000
Brian & Sue 100,000

Times 2 insurers at Oaken equals 1.2 million
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Koogie
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Re: Joint ownership of savings account/GICs and the tax implications

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OhGreatGuru wrote: 19 Dec 2017 20:24 To OP: I think your hope of gaming CDIC coverage is based on false premises.
See http://www.cdic.ca/en/about-di/how-it-w ... fault.aspx
Deposits held in more than one name
Joint deposits are those held in the names of two or more people. Coverage for joint accounts is for a total of up to $100,000 regardless of the number of joint depositors.
Thanks. I think I'll be fine though since we only have to split up 400K.

Bank 1
Madre - $100K
Madre & Koogie - $100K

Bank 2
Madre - $100K
Madre & Koogie - $100K
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Re: Joint ownership of savings account/GICs and the tax implications

Post by Donut »

When I do my income tax and report a joint T5 there is a question, "what portion of this income is Yours?" If I answer "20%" then it is assumed that 80% belongs to the other joint owner.
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Re: Joint ownership of savings account/GICs and the tax implications

Post by kcowan »

The other owner will have to state 80% and the claims will have to line up. We are past the stage of having joint investments but when we did, CRA would sometimes check to verify that 100% was claimed by the two together. Sadly the tax program did not do it at the time. Nice to hear that it does now.
Last edited by kcowan on 06 Sep 2018 09:38, edited 1 time in total.
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Re: Joint ownership of savings account/GICs and the tax implications

Post by AltaRed »

It may depend on the particular tax software, but I wouldn't rely on it without first checking.
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Re: Joint ownership of savings account/GICs and the tax implications

Post by amphitryon »

If a couple uses U-file and prepare the tax return together, the transfer of the ''balance'' of the interest is done automatically as long as you tick the correct box. Has worked fine for as long as I have been using this program. But seems to work for spouses only.
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