Yeah! It is a wedding season.Brides and grooms are busy planning the wedding ceremony and reception.
These days, as Wedding reception venue booking gets more expensive, family financial support becomes critical in the process for a lot of newlyweds.Generally, those financial supports are expected to be cash gift.
Some may have a concern if depositing all the cash to the bank is being considered money laundry.
What a great question! Banking managers will ask one simple question, why there is so much cash on hand? After the newlyweds explain that it came from the families and guests from their wedding,the banking manager would be happy to help with the deposit.
Another concern generally arising is that whether this deposit being flagged and attracts the taxman-the CRA’s attention?
Maybe. As a standard banking procedure, banking manager is required to ask the source of the fund over certain dollar amount and report to the regulator. Meanwhile, the CRA has various ways to select the individual cases for audit purpose.What the CRA concerns is the fund received by individuals is income, which may not be reported and tax dollars are not collected accordingly.
What should you do on the wedding money?
First of all, don’t panic.There is no tax on the gift in Canada. Newlyweds receiving a cash gift are not required to report such in their tax returns as their income. Secondly,cash is hard to trace to the source. Assign someone in the family to take the responsibility in documenting the amount in the cash gift and individual’s name during the wedding(guarantee you will have no time to do it by yourselves.) The document can serve well when the CRA sends you the question about the deposit.
Things can be a bit complicated when parents/grandparents gift capital property(real estate,investments,etc) to the newlyweds.The tax impact resulting from the gift cannot be ignored.In other cases,employer provides cash/cash-equivalent gifts to employees, who just gets married. Those gifts are always considered as a taxable benefit to the employee.
Happy Wedding!
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