FAQs Tax Implications

I have to transfer assets to my spouse as part of our Separation Agreement. Will the transfer trigger immediate income tax consequences for me?

Whether property can be transferred to your spouse without triggering immediate income tax liability depends on the type of property being transferred. In most cases, property can be transferred between spouses on a rollover basis, meaning no gains or losses arise, and the recipient receives the property at the transferor’s costs for income tax purposes, assuming both spouses are Canadian residents.

Some examples of assets which can be transferred on a rollover basis are: Registered Retirement Savings Plan (RRSPs); Tax-Free Savings Accounts (TFSAs); and, other forms of capital property. Note, in the case of a TFSA, the transferor’s contribution limit is not reinstated. Some assets which may not be transferred on a rollover basis are: Inventory or capital assets, in the case of a spouse who owns a business; or, speculative assets such as land holdings acquired to be resold at a profit.

For more information on potential income tax consequences of asset transfer to your spouse, contact a lawyer or consider obtaining an advance tax ruling for a proposed transaction from the Canada Revenue Agency.

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About the author

Russell Alexander

Russell Alexander is the founder of Russell Alexander Collaborative Family Lawyers and is the firm’s senior partner. At Russell Alexander, our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues, including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. We have locations in Toronto, Markham, Whitby (Brooklin), Lindsay, and Peterborough.

For more information, visit our website, or you can call us at: 905-655-6335.