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Gifting Money to Family in Canada | Tax Rules

Updated

The CRA’s list of amounts that are not reported or taxed includes most gifts and inheritances, so the person receiving a gift generally does not report it. The CRA lists most gifts and inheritances among amounts you don't report or pay tax on, so receiving one isn't income to you, but income earned on it afterwards, such as interest, is taxable. A cash gift is therefore generally not taxed to the person receiving it. Giving away property that has gone up in value can still create a tax bill, because the Income Tax Act treats the gift as a sale at fair market value, and so can giving or lending money to a spouse or minor child, where the attribution rules can tax the income it earns back to you.

This page is part of the investment tax hub. For property passed on at death, see inheritance tax in Canada.

Giving away property: the deemed sale

If you give capital property (other than cash) as a gift, you are considered to have sold it at its fair market value at the time of the gift and report any capital gain or loss for that year, and the person who receives it is generally considered to have acquired it at that fair market value; a sale to someone you don't deal with at arm's length for less than fair market value is also treated as a sale at fair market value. A gift to your spouse or common-law partner, when you are both resident in Canada, is the exception: it generally passes at your cost with no gain or loss unless you elect to have it transferred at fair market value.

The rule comes from paragraph 69(1)(b) of the Income Tax Act, which covers anything disposed of “to any person by way of gift”, and the CRA’s capital gains guide, T4037. In detail:

  • A gift of capital property is treated as a sale at its fair market value at the time of the gift, and any taxable capital gain or allowable capital loss goes on your return for that year.
  • Giving cash is not one of the cases where you are considered to have sold capital property.
  • The person who receives property as a gift is generally considered to have acquired it at its fair market value on the date received.

You report the gain even though you received no money. Property here means things like shares, mutual fund units, crypto-assets, a cottage, a rental property or art; cash has no gain to report. Paragraph 69(1)(c) deems someone who acquires property “by way of gift, bequest or inheritance” to acquire it at its fair market value, so their gain when they later sell is measured from that value. A spouse or common-law partner who receives property under the rollover described below is the exception. Tracking that figure is covered in adjusted cost base.

You bought shares for $10,000 and give them to your adult daughter when they are worth $50,000.

ItemAmount
Deemed proceeds (fair market value)$50,000
Your adjusted cost base$10,000
Capital gain you report$40,000
Taxable capital gain at the 50% inclusion rate$20,000
Your daughter’s cost for the shares$50,000

The taxable gain is included on line 12700 of your return, and each tax rate applies only to its own band of taxable income, so the tax on it depends on your other income that year; the marginal tax rate calculator shows the rate that applies.

Selling to family for less than the property is worth

A sale to a relative below fair market value is not a gift, and the rules are less kind: If you sell property to someone you don't deal with at arm's length for less than its fair market value, your selling price is considered to be the fair market value; if you buy from them for more than fair market value, your purchase price is considered to be the fair market value. The buyer of a bargain gets no matching adjustment: paragraph 69(1)(c), which gives the recipient a fair market value cost, covers gifts, bequests and inheritances, not sales, so that paragraph does not give the buyer a fair market value cost. Because you are treated as having received fair market value while the buyer’s cost is not raised by that paragraph, the same increase in value can be taxed in both your hands and theirs.

You sell your son a $50,000 portfolio of shares, which cost you $10,000, for $1. You report a $40,000 gain as if you had sold for $50,000. Your son’s cost is $1, so if he later sells for $50,000 he reports a gain of $49,999 on the same increase in value.

Gifts to a spouse or common-law partner

A spouse is the exception. Subsection 73(1) of the Income Tax Act applies to capital property you transfer to your spouse or common-law partner (or to a qualifying spousal trust, or to a former spouse to settle rights from the relationship), provided you are both resident in Canada at the time:

  • You generally have no capital gain or loss when you give capital property to your spouse or common-law partner or a spousal or common-law partner trust.
  • You are considered to receive the property's adjusted cost base (for depreciable property, a share of the class's undepreciated capital cost in proportion to the property's fair market value), and your spouse or partner is considered to have bought it for that amount.
  • You can elect on your return for the year of the transfer not to have this rollover (subsection 73(1)) apply, so the transfer happens at fair market value.

T4037 describes the election for a sale to your spouse at fair market value, made with a letter signed by both of you; your spouse then reports any later gain when they sell.

The rollover settles the tax on the transfer itself, not on what happens afterwards. Under the attribution rules: When your spouse or partner sells that property, you usually report the capital gain or loss, if at the time of the sale you are resident in Canada and still together. Income from the property is taxed to you as well: Income or loss from property you transfer or lend to your spouse or common-law partner (or someone who later becomes one) is taxed to you for the time you are resident in Canada and they are your spouse or partner. The way out is a sale for full value: They don't apply to a transfer for consideration worth at least the property's fair market value (any debt in it charging interest as above, and for a spouse, with an election out of the tax-deferred rollover).

Cash gifts and the attribution rules

The income a cash gift earns afterwards can still come back to you. If you give or lend money or other property to your spouse or common-law partner, the income it earns is taxed to you, and so are capital gains when they sell it, while you are resident in Canada and still together; if you give or lend it to a child, grandchild, niece or nephew under 18, the income (but not capital gains) is taxed to you until the year they turn 18. The main exceptions are a loan at the CRA's prescribed rate with each year's interest paid within 30 days after the year ends, a transfer for fair market value, and living apart after the relationship breaks down.

A gift to a child who is 18 or older is outside those rules, so the income on it is the adult child’s. Loans to adult relatives have their own rule, explained on the attribution rules page along with the prescribed-rate loan.

Gifts into registered accounts

TFSA. A spouse or common-law partner can contribute money you gift them to their own TFSA, and subsection 74.5(12) of the Act switches the attribution rules off while the property is held in their TFSA (or FHSA), as long as they have no excess contribution. An adult child can do the same with their own room; the attribution rule for transfers to minors stops applying once the child turns 18. Room depends on the account holder, not on who supplied the money: The annual TFSA dollar limit is the same for everyone eligible, but your room is specific to you: the annual limit is added from the year you turn 18 as a Canadian resident (2009 at the earliest), unused room carries forward, withdrawals are added back the following year, and no room is added for a year you were a non-resident the whole year; changes in the value of your investments don't affect it.

RESP. A parent or grandparent can contribute to a child’s RESP and the government adds a grant: The basic CESG is 20% of personal contributions, up to $500 a year per child ($1,000 when there is unused grant room from earlier years), to a lifetime $7,200, whatever the family income; it is paid on contributions made up to the end of the year the child turns 17, and is returned if the child doesn't go on to post-secondary education. RESP grant rules has the details.

FHSA. A first-time buyer who receives cash can contribute it to their own First Home Savings Account, within their own participation room; only the account holder can claim the deduction for the contributions.

Money already in your own registered account. An RRSP, RRIF or TFSA is held in its owner’s name, so passing money from one during your lifetime means withdrawing it (a withdrawal from an RRSP or RRIF is taxable income to you) and giving the cash.

Gifting real estate

A gift of a home, cottage or rental is a disposition at fair market value like any other gift of property. If the property was your home, the principal residence exemption can cover some or all of the gain: The gain on a home is tax-free for each year you designate it as your principal residence: you or your family must have ordinarily lived in it that year, a family can designate only one home a year, and you report the sale on Schedule 3 and Form T2091; the exempt share is the years designated (while resident in Canada), plus one if you were resident in the year you bought it, divided by the years owned. The principal residence exemption guide explains the designation; for a rental or cottage that was never your home, see capital gains on rental property.

Land transfer tax is set by each province, and provinces measure it differently:

  • Ontario calculates it “on the value of the consideration”, which Ontario’s guidance says includes the purchase price and “liabilities assumed”, such as a mortgage the recipient takes over.
  • British Columbia bases its property transfer tax “on the fair market value of the property”, unless an exemption applies. Its exemptions list includes transfers of a principal residence, a recreational residence and a family farm, each with its own conditions.

Other provinces have their own rules, so the province’s own guidance for the specific transfer is the place to check before a property changes hands.

Gifting shares of a family business

A gift of private company shares is also a disposition at fair market value, so the value reported needs support, such as a valuation. If the shares are qualified small business corporation shares, the lifetime capital gains exemption can shelter the gain, up to the part of the lifetime limit ($1,275,000 for 2026) you have not already used. You were resident in Canada throughout the year of the sale. For trusts, see the family trust guide; testamentary vs inter vivos trusts compares the two kinds.

Giving now or leaving it in your estate

Holding property until death doesn’t avoid the tax: Capital property the person owned is considered sold at fair market value immediately before death, and the gain or loss is reported on Schedule 3 of the final return. A spouse and a few other exceptions are covered on inheritance tax in Canada. The difference is timing and control:

Gift during your lifetimeLeave it in your estate
When the gain is taxedOn your return for the year of the giftOn your final return
ControlPasses to the recipient for goodStays with you
ProbateNot part of the estate when you dieCounted in the estate value in provinces that charge probate fees
Recipient’s costFair market value on the day of the giftFair market value immediately before death

Records to keep

RecordWhy
Bank records of the transferShows the date and amount of a cash gift
A signed gift letterConfirms the money is a gift, not a loan (lenders may ask for one)
A valuation for propertySupports the fair market value you report and the recipient’s cost
The recipient’s cost baseThey need it when they sell

Sources

The figures and rules on this page come from these sources, last checked against them between September 23, 2026 and October 1, 2026. How we check facts.