A couple provided their tax slips and among them was a T5 in their very young child name (6 yr old).
The tax slip has a generic SIN on it as well. The amount is small - $122.00
Has anyone seen anything like this before?
And the parents did not ask you to include this income in their name or explain it at all?
If so, more than 50% of the time the parents are hoping that CRA and the tax preparer are dumb enough not to catch the attribution.
Enquire into it further (and for that matter, double check and verify everything that they provide you).
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Record it on the parents return where it belongs which would be what they intended. One of my clients has T5s for all of their children - even younger than 6. An aunt passed away and left all of the children a small financial inheritance.
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Doesn’t Revenue Canada require that the income be taxed in the name of the person to whom the money belongs regardless of which name is on the slip? What if the kid received money at his birthday from family or family allowances for the child were saved for the child.
What’s a generic SIN?
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After reviewing the slip again I see under RECIPIENT’S NAME on the T5 slip is the child’s name listed first then a parent name listed underneath it.
@joe.justjoe1 - will do!
@obhorst - Ok thank you for clarifying. By the looks of the slip, it will be included in the father’s income because he is listed under the child’s name on the recipient’s name section of the T5.
I checked both parent’s tax accounts with the CRA through rep a client and did not find the slip under the tax information slips section.
@benoit.associes1 The parent is listed under the child’s name on the T5.
What I was referring to when saying generic SIN is one that is not real e.g. 555 555 554 or something similar
You should be asking where the investment came from?
That will help you determine where/who reports.
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I have clients with no SI# so we use 9 zeroes. I do the same for a child where I don’t have the SI#. I didn’t realize until recently that SI#s are or can be assigned at birth.
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Not necessarily - in the case I mentioned above, the investment came from an inheritance.
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Duh.
Well that will help you make the determination then wouldn’t it.
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Well, OOPS - I just knew because they were my grandchildren.
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Some parents put the Child Tax Credit money in an account in the child’s name (I did when I had littles - back then it was called Family Allowance - I’m getting old) and the bank then preps a T5 in the Child’s name. They are supposed to have a SIN to set up the account though.
The same would be true for the investing of an inheritance, allowance, etc. The important thing is to be able to trace the money back to being legitimately the child’s. ie: No giving the kid a big chunk of your savings just to avoid the tax man.
With a generic SIN, income defaults to the named parent. They should take a few minutes to get the kid a SIN and provide the number to the bank.
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@dklassencga You are correct, there are situations where the income would actually be reportable by the child like by investing the CCB or the child receiving an inheritance in their name. The account is likely an “in trust for minor” investment account since a minor cannot legally have an investment account. Most institutions by default use the parents SIN for the tax reporting.
Careful record keeping is required.
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