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Discussion Starter #1
This question is for going forward as this tax year is done. I'll try and make the story short:

(1) My wife and I sold our jointly owned house a couple of years ago.
(2) Put the money from the house sale into a jointly owned Non-Reg account.
(3) We split our yearly dividend income 50/50 on our taxes (have done so for the past 2 years) with no issues at all with CRA. Both our names appear on the Dividend Income slip from our broker.
(4) Can we do the same with any capital gains going forward.

My wife is fully retired and receiving CPP (reduced) and OAS. With me still working and also receiving pension income we could save by spliting any capital gains when we file our taxes.

I came across this at a tax site recently:

"The general rule, then, is that you declare your capital gain based on the proportion of your investment at the time you made the investment.

For example, if you bought 200 shares of stock and then sold them, realizing a capital gain, all of the capital gain would have to be declared on your income tax because you are the one and only person who paid for the stock.

If, on the other hand, you and your spouse bought 200 shares of stock, and you paid 75 percent of the purchase price while your spouse paid 25 percent of the purchase price, you would declare 75 percent of the capital gain on your income tax and your spouse would claim the other 25 percent."

My take on this is that in our specific case we can because the money is 50/50 ours so spliting 50/50 as per our Dividend Income makes sense, well at least to me but will it make sense to CRA.

Thanks for taking the time to read this lengthly post as it was only suppose to be short :)
 

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My understanding is income or CG ... the key for splitting is who provided the funds for the investments.

If the joint NR account was funded 50/50 before the house sale or had nothing in it before the house sale then I believe you are fine to split 50/50 for both income and CG.

If you'd funded it 100% before the house sale then I believe that technically, you'd need to adjust to whatever the earlier funding plus your share of the house proceeds worked out to. Say a 40/60 split for her and you.

Practically speaking, if the original funding by you alone was small before the proceeds of the house were deposited, I'm not sure CRA would notice or care.


Keeping it simple is why some here on CMF suggest using two joint NR accounts. The first name on the account funds it as well as has their name on the tax forms and the second name can take control if something happens to the first person. This way, the brokerage documents who is to claim the income/taxes. It does double the transactions should both like the same investment.


Note that I'm not an expert ... just a financial forum, tax article reader.


Cheers
 

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We split our yearly dividend income 50/50
In theory, the split should be along the lines of the original capital inputs to the house whose sale funded the account in the first place, but it would not surprise me if that information was lost to history and 50/50 is the most reasonable split to assume. I think if you already split the income from the account 50/50, then you have established that split. If you split the CGs any other way, that would be more likely to attract attention.
 

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Thankyou both for your good information. The entire amount in the account was funded after and from the sale of house completely. I will do the 50/50 split with any capital gains as we have been doing with the dividends. If CRA doesn't then they will simply fix that part of my return.
 

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Not sure the split on the original house matters much for a couple, married or common law. I'm not sure CRA would do much about "I gave her half", with the transfer no generating CG taxes.

And I do agree that changing the split may draw CRA's attention.

I'd make sure that any new funds come from each one to keep the 50/50 split intact. What's in there and withdrawals I don't think will matter.


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Thankyou both for your good information. The entire amount in the account was funded after and from the sale of house completely. I will do the 50/50 split with any capital gains as we have been doing with the dividends. If CRA doesn't then they will simply fix that part of my return.
We have been doing that for years without a problem. Throughout our life, we always had joint accounts. Very hard to say whose money was used for what. But mostly I paid for living expenses because I earned more.

We do have two unregistered joint investment accounts. One with my wife as first name and one with mine. When set up, both accounts started off about equal, but because of RRIF withdrawals, this could have changed. As a result, we draw more living expenses (and TFSA contributions) from mine and keep the accounts approximately equal.

No problems with CRA after doing this for 18 years. Besides, we are allowed to split pension income, so nothing to be gained by us or CRA by doing complex accounting. We both pay tax at the same rate.

Nevertheless, it would seem that CRA in strict terms would want us to account in way some have suggested. It is something they should change.
 
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