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I did a rough search and could not find anything on this topic. hope its not a repeat.

my question to the experts is how to invest the UCCB grant that we get in the child's name so the returns get taxed in the child's name and not ours. When i spoke briefly about this with my bank "financial advisor" all he said was to open a bank a/c and deposit the money in some savings account since we cannot buy mutual funds in the child's name. is there any solution other than RESP? i would like to stay away from RESPs for reasons i guess others in this forum would share with me.
 

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In Trust Investing

my question to the experts is how to invest the UCCB grant that we get in the child's name so the returns get taxed in the child's name and not ours.
If your children are under the age of 18 you can't open any investments in their name directly. You would need to open informal trust accounts (ie: Parent in trust for Child X). From a purely technical perspective any income would be taxed in the parents hands and capital gains could be attributed to the children. Tax receipts are issued to "Parent itf Child X" and you could then split the income on y
our return and capital gains on a return you file for the child.

From what I've seen, most of the time the income is so small that people just end up throwing out the tax receipts for those accounts and don't claim it anywhere.

I would advise using the RESP though ... you take the money the government gives you and you get even more money from the government (20% on the first $2,500 of RESP contributions) it's a real no brainer (imho).
 

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Not sure why you'd think any of us are anti-RESP.

I'm certainly against Group RESP's because I think these are products almost designed to rip people off. My biggest issue against them is that in many cases if you stop contributing, you lose a lot of money. And during an 18 year span of time it is probable that some kind of financial nightmare may happen to you where you have to stop giving them money.

I am absolutely in favour of self directed RESP's at a bank. And if you are like me and low income you will have to sign up with a different provider that offers all the grants like Investor's Group. But nothing beats the RESP as an investment....you get a free 20% from the government and you get to invest in just about anything you please. Every dollar goes to work right away.

Right now I have about $10,000 in there. Awesome.... Thanks government of Canada.
 

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CCTB and UCCB are benefits to the parents, not the children, is always how I understood it. The 'cheques' are made out to the lower income parent, not to the child.
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Good catch Jon202. The money doesn't come "in the child's name" anyway. So it's really a question of how to invest this extra income in a tax-sheltered way for the future benefit of the child.
 

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The issue is attribution. The CCTB is non-taxable income, so it doesn't matter in whose name the money arrives in the household - it is not taxed. My understanding is that interest on CCTB and NCBS payments, when those funds are direct-deposited to an account owned by a child (and thus do not pass through the hands of the parent), is not attributed back to the child. (And thus legally belongs to the child, who takes ownership on their 18th birthday).

UCCB, on the other hand, is taxable in the hands of the lower-income-earning parent. I have not heard that UCCB funds, when direct-deposited to an account in the name of a child, can accrue non-attributed interest.

However - to be frank, the amounts in question are so small (I'm not talking about the original amounts; I'm talking about the interest amounts) that I have never bothered to do anything more than learn about this in a purely academic way.

From my POV, I have lots of tax-sheltered room available (I've never had and likely never will have a pension!) and gifts are non-taxable - if I want opportunities for money to grow tax-sheltered, I am not lacking them - and I can always gift my children with money if I want to. Just my $0.02!
 

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if you decide to use the RESP make sure you understand the rules. if the funds are not used they will become taxable AND there is a penalty (20%) to be paid on top of that.

the only place i know of to 'hide' from this is their RRSP clause, but this too has limits...
 

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if you decide to use the RESP make sure you understand the rules. if the funds are not used they will become taxable AND there is a penalty (20%) to be paid on top of that.

the only place i know of to 'hide' from this is their RRSP clause, but this too has limits...
thanks sprocket. these are the reasons that are driving me away from RESPs. also, being a new immigrant and yet to be a citizen, i am not sure if i will stay in the country long enough to be able to confidently lock my money in the RESPs.

anyways, thanks for all the advise guys. looks like the only option now is the parent in trust of child. any details on how i can go about doing this?
 

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CC: I read this post of yours earlier but the CRA link is broken.

Oooh! I just went and read the Red Flag Deals thread and found the correct link, which is here:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/121/menu-eng.html

(Actually, the RFD link is also incorrect. However, the link above is correct.)

And speaking of correct, I now stand corrected: interest income earned on UCCB amounts invested in a child's name is not attributed back to the parent.

One proviso: I understand that the monies must be direct-deposited, not just "deposited" for this rule to hold true. This is a trust rule, not specific to UCCB or CCTB. The issue is that the monies cannot pass through the parents' hands. (Although I doubt CRA would actually challenge this; I suspect this is more a "letter of the law" issue.)
 
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