Are you hoping Santa brings you cash this Christmas? If so, you may be wondering if the government will be wanting their share. Are cash gifts taxable in Canada?
It is exciting to open a wrapped present on Christmas day. Wondering and guessing what’s in a package is a thrill for children and adults alike. However, anyone strapped for cash during the holidays may see a packaged gift as a missed opportunity for the gift he or she really needs…the gift of money.
As more and more Ontarians are living paycheque to paycheque, and 60 to 70% have no disposable savings, cash gifts are becoming more common than ever. Which begs the question:
The simple answer is, no.
Canada does not have a gift tax. So, individuals can freely accept these gifts without worry of further obligation.
Additionally, cash gift givers can claim gift tax credits to lower their tax liability, and there are no limits on the amount of cash that can be given.
A cash Christmas gift to an adult may be an opportunity to make ends meet. However, some individuals may give larger gifts in lieu of inheritance. In this way, those with large estates can freely give their wealth to their offspring while they are still alive, which eliminates estate probate fees.
So, don’t worry about taxes on cash Christmas gifts. They don’t exist in Canada, contrary to tax laws in the United States.
Canadians can give freely without worry of liability on the part of the giftee and with a tax benefit to the gifter. It is a win-win situation for both parties, and one that mirrors the spirit of the holidays for those who need cash more than a new sweater.
Need a quick gift for someone on your holiday list? Our Pay2Day locations have a wide selection of gift, phone, novelty and Mastercard® prepaid cards.
Please note that this article is meant to advise and the information is accurate the to best of our knowledge.