rental property and capital gains and

My_question_is: Canadian-specific
Subject:        rental property and capital gains and income spliting
Expert:         taxman at
Date:           Sunday October 29, 2006
Time:           11:51 PM -0500
how often must i do my taxes.  can i split the income frome rental property?
david ingram replies:
I am not sure if this is a serious question.
1. The CRA requires an individual to file their Canadian T1 return by April
30th of the next year. Therefore your 2006 return is due by April 30, 2007.
An exception would be if you were self-employed and bill others for your
services and when you are paid, the payer does not deduct CPP or EI from the
money paid to you. If you OR YOUR SPOUSE is self employed, your return is
not due until June 15, 2007.
A further exception does not apply to you.  However, non-residents of Canada
with rental property have until June 30, 2007 to file their 2006 rental tax
return under Section 216(4) of the Income Tax Act.
If you are married or in a common-law situation, you can NOT split your
income on your tax return with your spouse if they did not put an equivalent
amount of money into the deal. This is covered by section 74.1 of the Income
Tax Act. You may give your partner 30%, 50% or 100% of the profit but it is
still taxable to you if they did not put money into the deal.
Section 75.1 covers capital gains.  Again, you can not split it if they did
not put money into the deal.
However, with planning, one can move the income to the spouse by having the
spouse use their share of the money they receive to buy some of the property
from you.
In other words:
1.	You buy the property totally in your spouse's name with your money.  At
that point 100% of the profit is taxable to you even though under common
law, your spouse "owns" the property and the income.
2.	You pay the tax on the profit but your spouse gives you the money and
pays you for "x" percentage of the property. Let's pretend that they made
enough to actually pay you for 2% of the value of the property.
3.	Next year, you pay tax on 98% of the profit and your spouse pays tax on
2%.  Over a series of years, it is possible to switch any percentage you
desire into their name for tax purposes.
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