Do kids pay tax on bank accounts?

If your child’s bank account has a balance that is earning interest, you need to know how this income is taxed, or whether you’ll need to pay tax at all. Canada Revenue Agency (CRA) rules require your child to report any income he or she makes on a separate tax return from yours. Keep reading to learn more about the ins and outs of taxing youth bank account balances.

Are there any tax implications for having a children’s bank account?

There are no tax requirements just for opening a kids’ bank account. But you may be required to pay taxes if funds in your child’s bank account earn interest.

According to CRA guidelines, all Canadians must pay tax on earnings, regardless of the person’s age or the type of income (whether interest, dividends or through an appreciation in value, known as a capital gain).

Even if your child doesn’t earn employment, the interest earned in their bank account may be taxable.

When is interest earned on children’s bank accounts taxable?

A parent can avoid the need to declare and pay income tax on a child’s bank account or investment earnings if the child elects to file an income tax return and the bank account or investment is in the child’s name.

How tax must be declared will depend on the type of account held by your child, but in general, the following guidelines apply.

Basic personal amount

A child can earn interest in their savings account and not pay income tax if the amount earned is less than the ” basic personal amount.”

For the 2025 tax year, the federal basic personal amount is $16,129, which is claimed on line 300 of your child’s tax return. Below are the 2025 provincial and territorial basic personal amounts:

The government has made an exception to the basic personal amount tax exemption, however, and this is known as the “kiddie tax.”

What’s the kiddie tax in Canada?

Years ago, parents would give their children money as corporate dividends, which were then used to pay for the child’s living expenses like private school and extracurricular activities. Between certain tax credits and the fact that children don’t usually have enough taxable income to begin with, parents could use these contributions to shift a significant portion of their income onto their children to avoid paying income tax.

But this changed in 2000 when the government amended the Income Tax Act, making such dividends taxable.

Under section 120.4 (known as the “kiddie tax“) dividends sent from a private company to children under the age of 18 are taxed at the highest federal tax rate, so long as those children have a parent residing in Canada. For perspective, the highest federal income tax rate for the 2025 tax year is 33%!

On a positive note, the kiddie tax in Canada does not apply to capital gains. Plus, children can use the dividend tax credit to lower the amount of tax they owe. No other tax credits can be similarly used, though, including the basic personal amount.

If you intend to use your child’s savings account to house dividends from a private company, make sure you understand the tax obligations this will cause.

Who declares interest income from a child’s bank account?

Under CRA rules, declaring income and paying income tax on interest earned is no different for children than adults. If a child earns money in their bank account, they must file a tax return. A parent cannot include the income earned on a child’s tax return on their T1 tax return.

If, however, the money deposited into your child’s bank account is a gift, then the rules change. When you give money to your child as a gift, any interest earned by investing that money counts towards your income for taxation purposes, according to the CRA’s “attribution rules.” This allows you to claim the interest and skip the process of filing a separate tax return for your child.

According to the CRA attribution rules, money earned from invested gift funds to your child is considered “first-generation income” and is attributed to you, even if the investment is in your child’s name. If those funds are reinvested, the subsequent earnings are considered “second-generation income.” These secondary earnings are not attributable to the parent and the child is then required to file a separate tax return.

In short, if you gift your children with money to put in their bank accounts, be aware that you may be on the hook for interest earned on those funds.

Do kids and teens under 18 pay income tax in Canada?

Minors typically don’t pay taxes in Canada, and your child isn’t required to file a tax return if they haven’t earned income, but there are some advantages to filing anyway.

According to the Canada Revenue Agency (CRA), a Canadian citizen does not have to file an income tax return if their earnings are less than the basic personal credit amount.

Once your child starts to earn an income, consider helping them file a tax return. Even if, as a minor, they won’t end up paying taxes, there are benefits. For example, your child could get a tax rebate if the money received had income tax or CPP premiums deducted at the source.

Since there’s no minimum age for opening a Registered Retirement Savings Plan (RRSP), your growing teen could also open an RRSP once they start earning. Every dollar your child earns goes towards building their RRSP contribution room. However, they must be 18 or older to contribute more than $2,000 a year.

Does my child need a tax identification number?

The tax identification number is an American term used to describe an individual number assigned to a tax filer or American resident. In Canada, the tax identification number is known as a Social Insurance Number (SIN).

This means, Canadians use their SIN to apply for jobs, to determine eligibility to grants and programs and to file their individual tax return. A Canadian can apply for a tax identification number from the Internal Revenue Service (IRS), just as non-resident Canadians can apply for a Canadian tax number.

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Kids bank account tax FAQs

• Should I put my kids on my bank account?

  Putting a young child on your bank account can help you easily monitor their spending and lets you avoid the inconvenience of managing two separate accounts. But it will be harder to track their transactions versus yours, and if their deposits earn income under your name, you'll be responsible for any income tax obligations.

  Putting an adult child on your bank account makes it convenient for them to help you manage your financial affairs as you grow older. This is particularly useful if they have Power of Attorney privileges and may need to act on your behalf. Bear in mind that giving your child access to your account makes you financially vulnerable—a transparent, trusting relationship is required to keep both you and your assets safe.

• Can a child have a Tax-Free Savings Account?

  No, you need to be at least 18 years old to open a TFSA. You also need a valid SIN. If you want to help your child save for the future, consider opening an Registered Education Savings Plan (RESP) or RRSP, neither of which have minimum age requirements.

• Can I put money in my child's bank account?

  Yes, you can put money in your child's bank account. But, under the CRA's attribution rules, income earned from gifted funds deposited into your child's account is considered "first generation" income on which you—not your child—will be taxed. Income earned from first-generation income that has been reinvested is considered "second-generation" income, which is attributed to your child for tax purposes.

  When deciding whether to put money in your child's account, remember that they will be taxed on any account earnings over and above the federal and provincial/territorial basic personal amounts.

To make sure you get accurate and helpful information, this guide has been edited by Romana King as part of our fact-checking process.

Written by

Stacie Hurst

Associate editor

Stacie Hurst is an editor at Finder, specializing in loans, banking, investing and money transfers. She has a Bachelor of Arts in Psychology and Writing, and she has completed FP Canada Institute's Financial Management Course. Before working in the publishing industry, Stacie completed one year of law school in the United States. When not working, she can usually be found watching K-dramas or playing games with her friends and family. See full bio