You don’t have to pay income tax or gift tax on most types of money transfers to Canada from friends and family. But you may have to pay capital gains tax if you’re receiving money by selling or disposing of an asset.
How Canada regulates large remittances
Canadian authorities do not regulate or tax most gifts of cash sent into the country. In short, residents can receive as much cash as they’d like without triggering a gift or capital gains tax. Because of this, you shouldn’t have to deal with cumbersome legal documents after accepting your remittance.
There may be exceptions if you receive money from selling or disposing of assets like stocks, bonds, real estate, inventory, vehicles, furniture, artwork etc. In that case, your funds may be subject to 50% capital gains tax, depending on the circumstances of your transfer.
How do I calculate capital gains tax?
In Canada, you pay tax on half of realized capital gains. This means that half of the money you earn from selling an asset is taxed, and the other half is yours to keep tax-free!
To calculate your capital gain or loss, follow these steps:
Determine the adjusted cost base of your asset. This is what you paid to acquire the asset plus related costs like transaction fees, brokerage fees and commissions.
Subtract the adjusted cost base from the Canadian-dollar value for which you exchanged or sold the asset.
Divide the resulting figure in half.
This amount counts as part of your income and will be taxed based on the amount you earn, the province or territory in which you live and any tax deductions you can get your hands on.
Remember that you’re only taxed on assets you dispose of. So, when calculating capital gains, don’t factor in the buying or selling costs of any assets you’re still holding onto.
Say you sell a painting for $5,000. You spent $500 on art supplies to create the piece, and you have to pay your broker a $20 transaction fee plus a 1% commission ($50) on the sale. Here’s how to calculate your capital gain:
Step 1. Determine your adjusted cost base.
$20 (transaction fee) + $50 (1% commission) + $500 (cost of art supplies) = $570 (adjusted cost base)
$4,430 (total capital gain) ÷2 = $2,215 (taxable capital gain)
Your taxable profit on the sale is $2,215, which would be added to the rest of your income and taxed accordingly by the CRA. The other half of your capital gain — also $2,215 — can be pocketed tax-free!
Is there a legal maximum to the amount that can be transferred to Canada?
There is no legal limit on the amount that can be transferred into Canada – but your money transfer provider or bank may impose its own maximums. For large transfers, encourage your sender to use a provider with no transfer limits like OFX or TorFX.
Are there any forms or documents for large money transfers to Canada?
If you go through a legitimate money transfer provider, you won’t need to provide any extra paperwork. The main legal considerations when sending large sums of money are the Anti-Money Laundering (AML) laws, but your money transfer provider will look after the necessary documents when you submit your identification for processing. As a good rule of thumb, keep all records and emails relating to the transfer in case you need them later.
If you’re travelling into Canada with CAD$10,000 or more, you’ll need to declare this using Form E311, a CBSA declaration card, an Automated Border Clearance kiosk or a Primary inspection kiosk. Alternatively, you can make a verbal declaration to a border services officer upon your arrival.
Who is most likely to be researching tax regulations on large money transfers?
Finder data suggests that men aged 25-34 are most likely to be researching this topic.
Response
Male (%)
Female (%)
65+
3.46%
2.06%
55-64
5.68%
3.72%
45-54
10.10%
5.88%
35-44
13.39%
7.71%
25-34
18.48%
11.13%
18-24
11.40%
7.00%
Source: Finder sample of 8,097 visitors using demographics data from Google Analytics
Is it possible to bypass regulations by splitting up a transfer into several small transactions?
Splitting transactions into smaller amounts is referred to as “structuring,” and is considered a punishable offense when used to avoid the $10,000 reporting threshold. Structuring is something money launderers do to avoid detection, but banks and money transfer services are trained to detect this and report it to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
What are the penalties in Canada if I fail to file?
If you repeatedly fail to report $500 or more of your income to the CRA, you may end up being slapped with a penalty of 10% on the unreported amount. This applies to individuals, businesses, corporations and trusts. A “repeated failure” means a failure to report all your income more than once in a 4-year period.
If you haven’t reported all your income to the CRA — whether intentionally or by accident — you can avoid prosecution and maybe even some of the penalties and interest fees you owe by reporting through the CRA’s Voluntary Disclosure Program.
Do I have to report large transfers into Canada?
Any transfer over $10,000 CAD needs to be reported to FINTRAC, but that responsibility generally falls on banks and money transfer companies, not individuals. Financial institutions may also report any transactions deemed suspicious, regardless of the amount being received.
Is dealing with the CRA a hassle when transferring large amounts?
If you follow the law and submit any required legal documentation timely and accurately, you shouldn’t experience hassles with the CRA.
Although many types of transfers don’t count as taxable income, some transfers might – for example, if you’re receiving money related to income-producing activities outside of Canada.
If you don’t report taxable income, you may be on the hook for stiff penalties including a percentage of the income you failed to report (possibly around 10-50% of that income) plus an additional percentage for every month you avoided paying taxes (possibly around 1-2% of that income). Speak with a Canadian tax professional to find out exactly what tax rules apply to you.
How can I receive money in Canada?
Depending on the provider, options for receiving money include bank-to-bank transfers, cash pickups and deposits to mobile wallets.
To pick up your transfer in person, you may need to provide photo ID or a confirmation number to receive your funds. If you own an account with a Canadian bank or money transfer company, you may not be required to provide this information every time you receive money.
Compare providers for sending money to and from Canada
Our table below lets you compare services you can use to send money abroad. Compare fees, exchange rates and discounts from different money transfer services, and when you have made your choice, click Go to site.
The absence of a gift tax in Canada makes it easy for Canadians to receive money transfers from acquaintances or loved ones. While you won’t have to worry about any forms, transfers over $10,000 CAD will be reported to FINTRAC by the company processing the transfer.
As with all international money transfers, be wary of potential fraud and only receive money for verifiable reasons from people you know. Using a reputable provider can safeguard you from potential scams.
FAQs about tax on overseas money transfers into Canada
We’ve rounded up some commonly asked questions about the tax implications of receiving money from abroad in Canada so you can easily find answers here.
If I receive money from overseas, is it taxable in Canada?
If you receive money from overseas, it's usually not taxable in Canada. The CRA does not charge income tax or gift tax on most international money transfers, like from friends or family. However, if the money was transferred to you from overseas after you sold or disposed of an asset, you'll need to pay capital gains tax.
Is there tax on sending money from India to Canada?
The CRA does not charge tax on money sent from India to Canada in most cases, like where the money is a gift from another person. There are tax implications if you get the money after selling or disposing of an asset – you'll have to pay capital gains tax in Canada.
Keep in mind that the sender will have to pay a 20% tax in India on any transfers out of the country (excluding transfers intended for medical treatment or education).
How much money can you receive as a gift from overseas in Canada?
There is no maximum amount of money you can receive as a gift from overseas in Canada to trigger a tax event, because the CRA does not charge a "gift tax." That said, if you got the money after selling or disposing of an asset overseas, you'll have to remit capital gains tax to the CRA.
What is the maximum money transfer without tax?
The maximum amount of money you can transfer without triggering a taxable event is $10,000 if the money is income, like from an employer or from selling an asset. There is no tax for money transfers of any amount where the money is a gift.
Banks and other financial institutions are required to report all money transfers over $10,000 to both FINTRAC and the CRA within 5 days of the transfer.
Does Canada have a gift tax like the US?
No. The Canada Revenue Agency does not charge a gift tax on monetary presents. Bear in mind that any funds you receive could potentially trigger other types of tax depending on the circumstances. Speak with a Canadian tax professional to make sure you understand your obligations.
Do e-transfers count as income in Canada?
E-transfers don't necessarily count as income, unless the money is considered taxable income (which typically comes from your paycheque or selling off assets). On the other hand, if the money you're e-transferring is a gift, you don't need to pay taxes on it.
Leah Fallon is a freelance journalist and editor, specializing in personal finance and small business. She owns Birch Tree Bookstore in Leesburg, Virginia. See full bio
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
An international money order may not be the best option for sending money overseas. Learn more about money orders in Canada, and find out about other ways to transfer funds abroad.
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