Is There a Gift Tax in Canada? What Happens When You Give Money or Property

Canada does not have a gift tax. There is no Canadian statute that taxes a gift as a gift. You can give your child $500,000 in cash and neither of you owes tax on the transfer. The confusion comes from the fact that gifting property (stocks, real estate, a private company, anything with an accrued gain) triggers a capital gains consequence for the giver, even though nothing was sold. Section 69(1)(b) of the Income Tax Act deems you to have disposed of the property at its fair market value when you give it away, so the gain you built up while you owned it is realized in the year of the gift. The recipient is not taxed on receiving it; the giver is taxed on the deemed disposition.

Does Canada have a gift tax?

No. Canada has never had a gift tax at the federal level, and no province currently imposes one. The last provincial gift tax in Canada was repealed in 1972 when the capital gains tax was introduced. You can give any amount of money to anyone without either party owing tax on the gift itself. This is true regardless of the amount, the relationship, or the frequency: there is no annual limit, no lifetime limit, and no reporting form for cash gifts between Canadian residents.

The reason people think there is a gift tax is that property gifts do have a tax consequence, but it is a capital gains consequence, not a gift tax. It is the gain inside the property that is taxed, not the act of giving.

Are gifts taxable income in Canada?

Not to the recipient. Receiving a gift (cash or property) is not income under the Income Tax Act. There is no Canadian provision that includes gifts in the recipient’s income, and there is no reporting obligation on the person receiving the gift.

For the giver, cash gifts have no tax consequence at all. You do not deduct a cash gift (it is not a charitable donation unless it goes to a registered charity), and you do not include it in income. The money leaves your bank account and arrives in the recipient’s bank account with no tax event on either side.

The distinction matters when the gift is property with an accrued gain. A gift of property is a disposition for tax purposes under ITA 69(1)(b), and the giver is deemed to have received fair market value as proceeds. The recipient’s cost is the same fair market value under ITA 69(1)(c). So the gain accrued up to the gift is taxed in the giver’s hands, and any future gain on the property starts from the FMV at the time of the gift.

What if I gift property instead of cash?

The giver owes capital gains tax on the accrued gain. Section 69(1)(b) deems you to have sold the property at fair market value, even though you received nothing. Half of the resulting capital gain is a taxable capital gain under ITA 38(a), included in your income at your marginal rate.

This applies to all capital property: publicly traded shares, private company shares, real estate (other than the principal residence, which has its own exemption), and any other property with an accrued gain. The giver cannot claim a capital loss on a gift to a non-arm’s length person; ITA 40(2)(g)(i) denies losses on transfers to affiliated persons, and most family members are affiliated for this purpose.

For real estate that qualifies as the giver’s principal residence, the principal residence exemption can eliminate or reduce the gain, just as it would on a sale. The recipient’s cost is still the FMV, and the exemption is the giver’s to claim, not the recipient’s.

How much can I give tax-free in Canada?

There is no limit on cash gifts. You can give $1 million in cash to your child and the gift is not taxable to either of you. Canada has no annual gift exclusion, no lifetime gift exemption, and no gift tax return, because there is no gift tax to exclude from.

For property gifts, the question is not how much you can give but how much gain is embedded in what you give. A gift of property with no accrued gain (where the FMV equals the cost base) has no tax consequence, regardless of its value. A gift of property with a large accrued gain triggers a proportionally large capital gains bill.

The only limit that matters in practice is the attribution rules. When you give income-producing property to a spouse, common-law partner, or a minor child, the income (and in the case of a spouse, the capital gains) may be attributed back to you under ITA 74.1 and ITA 74.2. Attribution is not a tax on the gift; it is a rule that says the income earned on the gifted property is taxed in your hands, not the recipient’s, until the attribution period ends. For a spouse, attribution ends when the relationship ends or the transferor dies. For a minor, attribution on income (but not capital gains) ends when the child turns 18.

What about gifts between spouses?

Spousal transfers get a special rule. Section 73(1) of the ITA provides an automatic rollover: property transferred to a spouse (or common-law partner, or a qualifying spousal trust) is deemed to be disposed of at its adjusted cost base, not at fair market value. No capital gain is triggered at the time of the transfer. The spouse takes over the property at the original cost base.

The rollover is automatic (you do not need to elect it), though you can elect out of it if you want to trigger the gain (for example, to use a capital loss that would otherwise expire). The rollover applies to the capital property itself, not to cash.

The catch is attribution. Under ITA 74.1 and ITA 74.2, income and capital gains from the transferred property are attributed back to the transferor spouse as long as the relationship continues. If you give your spouse shares that pay $5,000 a year in dividends, those dividends are included in your income, not your spouse’s. If your spouse sells the shares at a gain, the gain is attributed back to you. Attribution stops on the breakdown of the relationship (separation, divorce) or on the death of the transferor.

This means the spousal rollover is not a tax-saving move in itself: you defer the gain, but the income and future gains come back to you through attribution. The planning that works around attribution (selling property to a spouse at FMV, lending at the prescribed rate, or contributing to a spousal RRSP) is a separate topic and depends on the specific situation.

Does the US have a gift tax I need to worry about?

If a US person is involved on either side of the gift, the US rules add a second layer that Canada does not have.

US person giving a gift. The US imposes a gift tax on the donor under IRC 2501. The annual exclusion for 2025 is $19,000 per recipient ($38,000 for a married couple electing gift splitting). Gifts above the annual exclusion reduce your lifetime gift and estate tax exemption ($15 million in 2026). A gift tax return (Form 709) is required for gifts exceeding the annual exclusion, even if no tax is owed because the lifetime exemption covers it. The gift tax is the donor’s obligation, not the recipient’s.

US person receiving a gift from a foreign (Canadian) person. No US income tax is owed on the gift, but if the aggregate gifts from a single foreign person exceed $100,000 in a calendar year, you must report them on Form 3520. The penalty for failing to file is 5% of the gift per month, capped at 25%. This is a reporting obligation, not a tax, but the penalty functions like one.

Canadian giving a gift to a US person. Canada has no gift tax, so the Canadian giver’s only consequence is the deemed disposition on property (same as any other gift). The US recipient has the Form 3520 threshold above.

For cross-border families, the interplay between the Canadian deemed disposition (giver’s capital gains) and the US gift tax (donor’s gift tax or exemption usage) and the US reporting threshold (recipient’s Form 3520) means both sides need to be analyzed. The inheritance and gift guide covers the US side in detail.

What should I do next?

For a cash gift between Canadian residents with no US connection, there is nothing to do. No tax, no reporting, no filing. For a property gift, get the property valued at fair market value as of the date of the gift, because that number sets both the giver’s proceeds (and therefore the capital gains tax) and the recipient’s cost base going forward. For gifts involving a US person on either side, check the US annual exclusion, the Form 3520 threshold, and the Form 709 requirement before the transfer happens, because all three have filing deadlines that are harder to fix after the fact.

• US tax on an inheritance or gift from a Canadian parent, the Form 3520 reporting side
• Cross-border estate planning: freezes, alter ego trusts, and bypass trusts, the broader estate and gift planning framework
• Canada’s departure tax, if you are giving property before leaving Canada (the deemed disposition on departure may interact with the deemed disposition on the gift)
• US estate tax for Canadians, the estate tax side for Canadians with US-situs assets

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.