Who can claim a capital gain realized in a joint investment account?

Gena Katz, a chartered accountant and principal with Ernst and Young, has the answer.

Gena Katz 29 March, 2005 | 2:00PM
Dear Expert,

My wife and I have a joint non-registered investment account. We recently sold some of our mutual funds, which generated a capital gain. My question is, can my wife (who is in a lower tax bracket) claim this capital gain or do we have to share the gains equally?

Expert Answer:

The gain actually belongs to the spouse who provided the capital to make the investment, regardless of the legal ownership of the account. You are not free to choose how to allocate the income for tax purposes. If you contributed equally to the purchase of the investments, then the gain should indeed be split between the two of you. However, if one spouse funded the entire purchase, it is that individual who should report the annual income from the investment and any capital gains or losses on disposition.

Do you have a question?

All Ask the Expert questions are read and considered. Unfortunately we can't provide individual responses or respond to every question. Please note that questions about specific securities cannot be considered. Click here to Ask the Expert.

No statement in this article should be construed as a recommendation to buy or sell securities or to provide investment advice or individual financial planning. Morningstar Canada does not provide specific portfolio advice and recommends the use of a qualified financial planner when appropriate.

About Author

Gena Katz

Gena Katz