Social Insurance Numbers for Children

SIN NUMBERS FOR CHILDREN

"In trust" accounts are a common way that parents and grandparents put money aside for the future use of their children and grandchildren. This is a tax-effective form of  income splitting. 

The tax rules for this type of account differ depending on the "source" of the money. All dividends, interest and capital gains are taxable to the child if the source is the Child Tax Benefit.
Dividends and interest on accounts that are gifts are taxable to the donor. The capital gains are taxable to the child. 

Most of the return on international equity funds, the preferred choice for this type of account, consists of capital gains. The result is little or no tax for these accounts. 

In order to keep your records straight, we recommend that you apply for a Social Insurance Number for any children who have these accounts. This will minimize the risk of challenge in case Revenue Canada requests more information.

A S.I.N. can be obtained free-of-charge from your local federal
Human Resources Development office. Let us know when you receive the number.

Last Updated Thursday, June 25 2009 @ 03:26 PM CDT|1,444 Hits