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Joint Ownership of Investment Accounts and Taxation: how to report:




Joint Ownership of Investment Accounts and Taxation: how to report:


Where there is a loan of property, if the borrowing spouse pays interest at a rate at least equal to the Canada Revenue Agency (CRA) prescribed interest rate each year, there is no attribution.

This is commonly known as the spousal loan strategy.


WITHDRAWALS FROM THE JOINT ACCOUNT:

If one of the joint account holders withdraws funds from the joint account, it is important to factor this withdrawal in determining the proportionate tax reporting going forward. The proportion of future income that should be reported by each spouse should be recalculated if either party makes a withdrawal from the account.

Tax slip reporting

Although a T5 or T3 tax slip may be issued for your joint account in your sole name with your Social Insurance Number (SIN), does not automatically imply that the CRA is expecting you to report all the income for tax purposes. The CRA only requires one SIN to be included on the tax slip so only the primary account holder’s SIN number is displayed.


For example, the tax slip may be issued to you even though you only contributed a portion of the funds or never contributed any funds to the joint account.


Your spouse, who contributed funds to the account, Income earned in a joint account held between spouses must be reported based onhow much each spouse contributed to the account. would also be required to report their proportionate share or all of the income even though a tax slip was not issued in their name and SIN.


● Attach the original tax slips issued in your name to your individual income tax return but do not report the full amount of income appearing on the slips.


● Provide the CRA with a brief explanation of the reason why you are only reporting your proportionate share of this income. If you did not contribute to the account, your proportionate share would be zero.


● Provide your spouse with a copy of your tax slips in order for them to report their proportionate income on their tax return. Your spouse will need to attach the copies of the tax slips originally issued in your name to their income tax return, explaining why they are reporting this income even though the tax slips were issued to you.

If filing electronically, the above considerations still apply. Retain your copy of the tax slips and your explanation in your own files in case the CRA asks for the information at a later date.


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