Do I pay tax in Canada on money my parents sent me from abroad?
Gifts received are not income in Canada, so the transfer itself does not go into your income for the year. What matters is what happens next. From the day you own the money, or the property it buys, it is yours for tax purposes, and the income and gains it produces are taxable to you. Your cost base is the value of what you received on the day you received it, which is why that value is worth recording while it is still easy to establish. The gift being untaxed and the gift being unreportable are two different propositions, and only the first is true. Treat the arrival as the start of your own ownership record rather than the end of the matter.
My relative gifted me a flat abroad, what is my cost base?
Your starting cost is the value of the flat on the day it became yours, not what your relative paid for it years earlier. That figure decides the gain the first time you sell, and it feeds the capital cost calculations if you let the property out. The practical problem is evidence. A value fixed at the time by a local valuation, a municipal assessment, or a contemporaneous sale of a comparable unit in the same building is straightforward to defend, whereas a figure reconstructed years later is an argument. Get the transfer instrument, the date it was registered, and a written valuation into a file while the transaction is still fresh. The cost base you can prove is the cost base you get.
Does my bank report a large gift arriving from overseas?
Financial institutions report, and substantial inbound transfers are visible whether or not you mention them. That is not a reason for alarm, because a genuine gift is not taxable. It is a reason to hold an explanation that matches the bank record. The weakest position is a large deposit with nothing behind it, since the default characterisation of unexplained money arriving in your account is income rather than a gift. A short signed letter from the person making the gift, the date, the sum as it appears on the transfer, and the name on the sending account are usually enough. Where your own file matches what the institution already shows, the question tends to close quickly.
What documents should I get when a relative gifts me money?
Ask for a signed letter from the donor stating the date, what is being given, and that nothing is expected in return, together with proof that the funds left an account in their name. For property, you want the transfer instrument and a valuation dated at or near the transfer. Where the gift forms part of the donor's own estate planning, the instrument that effected it belongs in the file as well. Collect all of it at the time. Every one of these documents is easy to obtain in the weeks around the gift and awkward to obtain years afterwards, particularly if the donor has since died, moved country, or lost the records themselves.
Can the CRA treat a foreign gift as unreported income?
It can, if nothing in the file says otherwise. The CRA does not have to prove that a deposit was income before raising an assessment; it can assess on unexplained accretions to your wealth and leave you to displace the assumption. That is why documenting the gift at the time is the whole of the protection. With a dated letter from the donor, a matching bank record and, for property, a valuation, the transfer is plainly a gift and the enquiry stops there. Without them you are arguing about a transaction whose participants may be elderly, abroad, or no longer available to confirm anything. The tax result is identical either way. The difference is whether you can demonstrate it.
Do I have to report a foreign gift on my Canadian return?
The gift itself is not reported as income. The asset can be a different matter. Once you own foreign property, Canada's foreign property reporting regime may apply to you from that day, and it turns on what you hold and what it cost, not on how you came to hold it. So the answer depends on what the gift was and what you did with it. Cash brought into a Canadian account and spent is one thing. A foreign bank account, foreign shares or an overseas flat standing in your name is another, and the holding is disclosed annually for as long as you have it. Work out which you have before the first filing deadline after the gift.
What does "received a distribution from a foreign trust" mean on my return?
It is asking whether the trust conferred anything on you during the year — cash, property, or the use of trust property, including rent-free occupation of a house and, in some circumstances, a loan. Answering yes brings an information return, and where the distribution includes income accumulated in earlier years the tax computation can carry an interest charge for the delay. Trust accounts showing the composition of the distribution are what keep that computation from defaulting against you. See Form 3520.
How do I report the sale of a foreign property?
On your residence-country return, as a disposition, with proceeds and cost base converted at the rates for their own dates. Separately, the country where the property sits may require its own return and may hold back tax at closing until a clearance or certificate is issued — Canada does this for a non-resident vendor, and the United States withholds on a foreign seller of US real property. Those steps have their own deadlines, often before closing. See clearance certificates on a property sale.
