Date: Sunday
July 29,
2007
Time: 01:19 PM -0400
QUESTION:
My (soon to be ex) husband is Canadian (green card) and I am a U.S. citizen. We were married 15 years.
In 1999 his parents bought the grandmother's home after her death. My mother-in-law wanted to live there in old age. They rented it out for 5 years then decided to sell it.
In 2004, my husband told me his parents were gifting he and I $22,000, his brother and his wife $22,000, and their single brother, $22,000.
In our divorce proceeding he is now claiming it was not a gift, but an inheritance to him.
At trial he testified he was given $22,000 in 2004 and $9000 in 2005 (which I was unaware of) for "tax reasons."
It is my understanding there is no gift tax in Canada. Is this correct?
Thank you for any insight you might provide.
-------------------------------------------------
david
ingram replies:Time: 01:19 PM -0400
QUESTION:
My (soon to be ex) husband is Canadian (green card) and I am a U.S. citizen. We were married 15 years.
In 1999 his parents bought the grandmother's home after her death. My mother-in-law wanted to live there in old age. They rented it out for 5 years then decided to sell it.
In 2004, my husband told me his parents were gifting he and I $22,000, his brother and his wife $22,000, and their single brother, $22,000.
In our divorce proceeding he is now claiming it was not a gift, but an inheritance to him.
At trial he testified he was given $22,000 in 2004 and $9000 in 2005 (which I was unaware of) for "tax reasons."
It is my understanding there is no gift tax in Canada. Is this correct?
Thank you for any insight you might provide.
-------------------------------------------------
I want to make it clear that I am NOT a lawyer although 'way back when' I did own a divoce service in Vancovuer, BC Canada. However, that was 30 years ago and there have been a lot of changes since then. Also, be advised that even though I had offices in 30 states and 5 provinces, I do not know where you live and these laws change for each and every state and province. Even Community Property states have about seven different interpretations of Community property.
If you type INCOME TAX and Divorce Help into Google today, I am number 10. If you type in INCOME TAX AND DIVORCE EXPERT, I am number one and if you type in Income Tax and Divorce help US canada, I am back up to number 1.
That shows you that you can NOT trust what you find on the Internet because I assure you that there a few thousand people who know more about Divorce than I do.
However, few have been involved in more divorces in terms of property settlements form more jurisdictions than I have so I guess I 'can' comment. Just do not make a move taking what I say here as gospel because it may not have any bearing on the state you and your husband were living in at the time of the gift. / advance inheritance (which sounds like a US limited gift anyway if they (the parents) were still alive).
The amounts of the gift imply that someone was looking at US gift tax laws when the gifts were made and that the brothers were both living in the US as well Or, because they wanted everything equal and they thought (incorrectly) that they could only give their son in the US $11,000 each, they gave the same limited amount to his Canadian resident brothers as well.
The rules then were that although under Canadian Law, the parents could have made any amount of a gift that they wanted, they chose to give $11,000 each to each of their sons becauxe someone told them that they could only give the US son $11,000 each without gift tax having to be paid.
This makes me think that if your husband told you his parents had given both of you $22,000, he was being polite or trying to make his parents look better at the time because the facts would seem to say that each brother got $22,000 whether they were married or not.
Then you end up with the problem of whether the gift became a family asset and is subject to a split in a divorce.
If you were living in British Columbia as one example, the $22,000 would have become a family asset (and dividable) if it was used for a family purpose. If your husband put it in the bank and used the interest to buy groceries or took $5,000 and bought a second car for the family or used $4,000 for a family vacation, it became a family asset and you are entitled (IN BC) to claim half of what is left as a family asset.
If, on the other hand, hubby put it into a mutual fund in his name and the earnings were re-invested in the mutual fund, and he did not spend any of it on family matters, the gift or inheritance is his alone and not subject to dividing it up as a family asset.
This is not definitive but will give you something to think about and may help you with your decision as to what to ask for and what you are entitled to but "YOU" HAVE TO CHECK your local family law rules and regulations. Under the circumstances, I do not think that Canadian Law has anything to do with the situation since we do not have either inheritance tax or gift tax here.
David Ingram
However, I regularly search for the words"PAYING CUSTOMER" and
always answer them first if they did not get spammed out. As an example, as I
write this on June 28th, since June 16th (12 days), my 'spammed out' box has
7,118 unread messages, my deleted box has 2630 I have actually looked at and
deleted and I have answerd 63 email questions I have answered for clients and
strangers. I have also put aside 446 messages that I am maybe going to try
and answer because they look interesting.
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office)
$1,600 would be for two people with income from two countries
David Ingram expert income tax and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty
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Disclaimer: This question has been answered without detailed
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comment. Nothing in this message is or should be construed as advice
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David Ingram gives expert income
tax & immigration help to non-resident Americans & Canadians from
New York to California to Mexico family,
estate, income trust trusts Cross border, dual citizen - out of
country investments are all handled with competence &
authority.
Phone consultations are $400 for 15
minutes to 50 minutes (professional hour). Please note that GST is added if
product remains in Canada or is to be returned to Canada or a phone consultation
is in Canada.
This is not intended to be definitive but in
general I am quoting $800 to $2,800 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only - no self employment or rentals
or capital gains - you did not move into or out of the country in this
year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no
rental
$1,200 would be the minimum with a move in or out
of the country. These are complicated because of the back and forth foreign tax
credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,500 would be the minimum with a rental or two in
the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,600 would be for two people with income from two countries
$2,800 would be all of the above and you moved in
and out of the country.
This is just a guideline for US / Canadian
returns
We will still prepare Canadian only (lives in
Canada, no US connection period) with two or three slips and no capital
gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely
$450
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate a
couple)
Capital gains *sales) are likely $50.00 for
the first and $20.00 each after that.
Just a guideline not etched in
stone.
This from "ask an income trusts tax and immigration expert"
from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily
basis with expatriate tax returns with multi jurisdictional cross and
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