The Tax Trap in Family Gifts
Gift to Spouse for FHSA Contribution
Income Tax Act s. 74.5(12)(d)
You can gift or lend money to your spouse or common-law partner to contribute to their FHSA, and there will be no attribution back to you, even after the funds are withdrawn.
Gift to Spouse for TFSA Contribution
Income Tax Act s. 74.5(12)(c)
You can gift or lend money to your spouse or common-law partner to contribute to their TFSA, and there will be no attribution back to you
while the funds are held in the TFSA, and
to the extent that your spouse does not, at the time of the contribution, have an excess TFSA amount.
Once funds are withdrawn from the TFSA income from the withdrawn funds will be attributed back to you.
Spousal RRSP Contributions
Income Tax Act s. 74.5(12)(a)
The attribution rules do not apply to a spousal contribution to a Registered Retirement Savings Plan (RRSP), to the extent that the contribution is deductible in computing the income of the contributor. However, if the contributions are withdrawn within 3 years (with certain exceptions), the withdrawal will be taxed in the hands of the contributor.
The Income Tax Act does not have the same wording for spousal RRSP contributions as it does for funds gifted to a spouse for a contribution for a TFSA. It does not indicate that the exception to the attribution rules will only apply when the funds are held in the spousal RRSP, so there should be no attribution when the funds are withdrawn after the 3 year period.
No Attribution re Canada Pension Plan Splitting
The attribution rules specifically exclude Canada Pension Plan pension split with a spouse from being attributed back to the originating spouse
No Attribution re Interest-Bearing Loans
The attribution rules do not apply to loans where interest is charged at a rate at least equivalent to the specified rate of interest. See our income splitting article on lending to a lower-income spouse or child. For information on when attribution rules may apply when a taxpayer purchases investments with funds borrowed from a joint line of credit, see our information on this in our article Interest Expense on Money Borrowed to Purchase Investments.