Personal Finance

I want to gift my parents in Canada $100k — are there tax implications I should know about?

Aaron Webber

Published: December 17, 2024 10:30 am

There are taxes on everything, and even when you feel like you have a handle on what they are and how much you owe, they change or you get surprised by something new. It can be hard calculating your tax burden while companies like TurboTax and H&R Block spend millions to keep you confused.

24/7 Wall St. Key Points:

• There are no taxes on gifts in Canada, and the tax on gifts in the United States begins on gifts of much larger value.
• Even if you aren’t doing anything illegal, adjusting your transfers to avoid a report or flag is against the law.
• Also: Take this quiz to see if you’re on track to retire (Sponsored)

One person in particular was planning on giving their parents a generous gift of $100,000 and had trouble finding out what the tax implications would be of such a transaction. They took their question to the people in the r/fatFIRE community. Here is what they said.

The Question

The author of the post in question lives in Canada and says they want to send a gift of $100,000 to their parents. The money is in a high interest savings account that was funded from a ETF that the author cashed out. They did not provide any additional details beyond these.

Before we continue, please remember that any advice you find online, including this article, are opinions. You should speak with an expert before making any financial decision, especially when it comes to tricky tax laws.

The Community Response

According to the handful of responses the post managed to receive, there are no tax implications for the sender or the recipient of gifts. However, a few mentioned that the large amount of money will probably trigger a flag that will cause the bank to report the transaction (and the people connected to it) to the Canadian government for investigation. There was no word that the transaction would be canceled, though.

Of course, these are laws (allegedly) in Canada, not the United States. If either party lives within the United States, there are a few more hoops to jump through. Most importantly, there are reportable gift limits that determine how much money you can give to someone without having to report it on your taxes.  If you pass this amount you have to file a special report with the government. However, because the recipient is family, it will be unlikely to trigger any kind of investigation or cancellation.