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I been looking for a tax professional to ask a question I have but couldn’t find anyone online so Im hoping it be ok to get your help.
If I give my parents each $102,000 to put into their TFSA to invest, and a few years down the line they decide to use this money to help me with a down payment, would this be audited and seen suspicious by the CRA or not? I have maxed out my personal TFSA, RRSP, and FHSA and wanted to see if I could gift them this money to invest in their TFSA. Of course they have no obligation to use it for me but I would want them to invest in their TFSA as opposed to my cash account which would incur capital gains. However, if they do decide to use it for me down the lines, would this raise issues? I want to pay least tax on investing this excess money.
Thanks for your help
Hello,
In Canada, there are no gift taxes, so you are allowed to gift money to your parents without immediate tax consequences. Your parents can then contribute these funds to their TFSA, provided they have available contribution room. Any investment growth within their TFSA would be tax-free, and they would not incur taxes when withdrawing the funds.
However, one thing to be mindful of is the CRA’s attribution rules, which are designed to prevent tax avoidance by shifting income to family members in lower tax brackets. The good news is that these rules do not apply to TFSA earnings. That means any growth within your parents’ TFSA would not be attributed back to you for tax purposes.
That said, if your parents later choose to gift you money for a down payment, the CRA typically does not scrutinize family gifts unless there are signs of tax evasion or aggressive tax planning. However, large transactions can sometimes trigger questions, especially if there is a pattern of structured transfers aimed at circumventing tax rules. To minimize scrutiny, it’s best that the funds remain genuinely under your parents’ control, with no formal expectation of repayment or return to you.