Money loaned to parents and

Sent: Friday, October 13, 2006 9:46 AM
To: taxman at centa.com
Subject: Money loaned to parents and Regular Money Transfer from
overseas.
Hi David,
I've sent you a question (not sure if had a chance to took a look
into it or just think it's not a very interesting/important
question) but still I'm trying it one more time (sorry for spam
:)) and will be appreciate you answer (even a short one).
- We have loaned money to our parents (we have a formal
acknowledgment from them). And now they are paying it back to us
by portions (on some regular-irregular basis - whenever they can
do it) $1'000-2'000 a month or 2 months. Will it be considered as
an income by CRA (we actually borrowed those money from the bank
in a first place as well)??
- Also if later they will be able to help us out by sending us
some amount of money every few months - will it be considered as
an income in this case??
What and when I'll need to do or provide to you in order for you
to do my taxes for the year of 2006?? Do you work on Sat??
Thanks in advance,
--------------------------------------------
david ingram replies:
The usual situation would be that it would be assumed that your
parents are returning money to you at the interest rate it was
borrowed from the bank by you.
And the other presumption is that money repaid goes first to
interest and second to pay off the balance.
Your return should show the amount of interest you receive as
income and the amount you have paid out as a deduction.  Both
mounts go on schedule 4.
If your parents make a gift to you with no services provided, it
is just a gift and not taxable.
I am working at 5 AM this Saturday so the sad part is that i
usually work seven days a week but have no problem taking off a
Wednesday or a Tuesday, etc.
If you are in Vancouver, you are welcome to come and see me, if,
as is usually the case now, you are out of town, sending the
paperwork by courier or fax is fine.
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