Thank you so much David.
If I get a cash gift from my husband and, some time later, I put this monely into a GIC, does it mean that the interest from that GIC should be atttibuted to my husband's tax return for the rest of our lives?...
Or is it that income/loss generated up to the time of giving the gift should be atrributed to the giver, but after the gift is given, it is the new owner who is resposible for taxes on newly generated interest?
(My question is specifically about cash gifts and bank interest.)
Many thanks
xxxx
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david ingram replies:
If your husband gave you $1,000 and you put in a drawer for twenty years and then took it out and put it in the Bank of Montreal and the B O M paid you $22.50 interest, the interest is taxable to your husband.
However, the next year, when you receive interest on the $22.50 interest, the interest paid on the interest is taxable to you .
Therefore, as time goes by, more and more of interest on the interest becomes taxable to you.
This also applies if you were not married when your husband gave you the money as the act clearly says "to a spouse or a person who has since become a spouse". In 43 years, I have only seen this application applied once in the case of a dentist who gave his receptionist some money and then married her ten years later after his wife died.
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