Contributing to RESP opened by grandparent

Ingtar17 · Post by **Ingtar17** » Mon Aug 10, 2009 8:47 pm

I'm Dual US/CAN. My parents, wife and son are all Canadian only. I recently transferred my sons RESP out of my name into an account created by my dad. I tried contributing to it, but they say I need to be added as an official contributor. If I am added as a contributor then am I back in the same boat of owing tax on his RESP?

Thanks,
Ingtar

nelsona · Post by **nelsona** » Tue Aug 11, 2009 4:24 am

Obviously, the RESP is to be funded by your father to avoid any of the problems associated with YOU having this trust. Obvious too, is the way to get around this: Give him the money to fund it.

Ingtar17 · Post by **Ingtar17** » Wed Aug 12, 2009 5:26 am

Thanks. But wouldn't he owe tax on what I give him since it's technically income to him?

Ingtar17

nelsona · Post by **nelsona** » Wed Aug 12, 2009 6:48 am

Huh? Since when is a transfer of money from one person to another "income"?

Transfers are never taxable. And because the person reciving the money is not your spouse or minor child, even the income ARISING from the transfer is not taxable in the giver (your) hands, but in theirs. By putting it in an RESP, there is no income generated, thus no tax to him either.

In canada there is no limit to any gifts. For IRS purposes, you can only give ~$11K per year before Gift tax rules apply.

Giving him monrey to put in an RESP, is not different than giving him money to pay the rent, go on a trip, or buying him necktie for Father's Day.