Before lending money to anybody ask yourself. Does he really need money from you?
If you lend somebody 10K for 2-3 months.. while you consider it as help of 10K in need, other person may consider it as help of 50-100$(The same money he would have got from line of credit with 50-100$ interest).
Most likely this is the reason you are anxious and other person is not so thankful and not responding.
In his mail he has acknowledged and thanked me for lending him. He mentions that I am one of the many other who have lent him and supported him.
He had never mentioned this to me earlier. Looks like he is surviving on BORROWED money.
My son a Canadian wants to borrow some money from me to buy a house. I propose to lend him the CAD 95K without interest/ expecting return in say One year or so.
I am canadian resident for the last few years; a retiree/no income but do have enough of my own funds for a living. I file my IT returns every year.
Question: are there any Tax implications? are there any prior steps that i must take to avoid questions when my money is being returned?
Thankful for advice/suggestions.
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Many
A Father can gift any amount of money to his Son, and it holds good if you are living here or in India. The return of such funds are also permitted in India and and also in Canada.
BUT...
If this money was brought in by you into Canada and you were receiving a petty sum of say 1.5% interest and you reported the same as interest derived from investments and for the next year you show that there is NO interest income and money just evaporated from your fold/or your Bank accounts and investments, if and when they get smart and upon audit they find that they also noticed the same and raise a question, you will be asked to account for it. More on it later. (Any large transaction attracts attention. FINTRAC)
If you did not have any interest income, because you did not invest it properly and only got a 0.25% as investment income, it will only show, a very negligible income and will not attract any attention and will not show up in their audit. So, what ever you want to do with such a sum will not attract any body's attention., when you also lend at a very low interest.
SO, here is an easy way of taking care of it. Ask your son to write a letter saying that he is receiving some funds out of you for say @ 1% interest from you per year, and he will return the same back at the end of 365 days with the Principal and Interest and when you receive the same, add the interest portion to your returns, which is a sum of $1,000. interest income generated from investments and submit all of the copies of the transactions etc., to them, then, it should satisfy them.
This is the LEGAL way. There may be other methods also and I am not privy to it.
Just as a side note, If you have no income either in Canada or in India and when you file an Income Tax Return here in Canada, you can claim up to $10,000 or so as income and still pay NO Taxes to the Canadian Government. If it is a couple, then, it surely doubles. So, having come to CD, you now know that you can shelter a large amount of income from investments and a good grasp of the tax system is well worth your troubles. Also if you can research or get hold of a friendly tax consultant, you can get a lot of tips from them. Alternately look into a few of the websites from well known Auditors websites and read a few articles on this subject matter. That will provide you a lot of good information. Also they change from year to year, so keep in touch with such sites.
If you need additional help, please get back to us with specific details, if you so wish to open up this topic to us.
FH.
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Quote:
Originally posted by Many
My son a Canadian wants to borrow some money from me to buy a house. I propose to lend him the CAD 95K without interest/ expecting return in say One year or so.
I am canadian resident for the last few years; a retiree/no income but do have enough of my own funds for a living. I file my IT returns every year.
Question: are there any Tax implications? are there any prior steps that i must take to avoid questions when my money is being returned?
Thankful for advice/suggestions.
Dear FH,
Thank you for the very useful response.
My money is in a financial institution(savings account) in Ontario; surely less than 1% interest; funds were wired-in few years ago and since then i am filing returns with CRA, relying on T5 slips i get from the bank.
I will visit some Auditors sites to get additional information. Grateful.
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Many
Just to add: was not successful in getting useful/pertinent info from auditors sites. In any case, moving forward to lend money to my son.
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Many
Location: Fort McMurray
Posted on: 29-12-15 16:41:06
You helped a friend in need. Now he is a little tight with money but is too proud to accept it. I would go to him and offer some more money to help him out. After all if friends don't help then who would? Take it easy and give him some more.
