So I'm confused when attribution rules come onto play and how to avoid paying extra. I'll write a scenario:
Me - no RRSP, TFSA room - extra savings (good problem) of $25K/year for the next 5 years
Spouse - low income, currently on mat leave (possibly SAHP in the near future)
2 kids - UCCB goes to spouse (assume $9,000/year) - I have a claw back on UCCB of 5.7% (every $1000 our household earns decreases benefits by $57, its tricky to predict accurately)
1) Can I loan money to my children (at the CRA 1%) and have them claim capital gains on their taxes? The principle could be paid back at age 15, the gains could be transferred back as sub-market rent (non-taxable to recipient), the rent is legal to charge but unusual. This would give them at least $10K in RRSP room when they turn 18.Is this legal or allowed at all? Putting gains in a minors hands seems like an awesome strategy, my 3 year old is on board.
2) My spouse uses the UCCB to invest in non-registered stocks. I top up her TFSA from my income. Is the $9000 loan free? I read that I can top up the spouses TFSA, tax free since there's no taxable gains the attribution isn't a loan.
3) I then loan/use $10-20k/year to her, who pays the dividends and capital gains? (ideally her in the lower tax bracket). I was thinking about harvesting capital gains periodically, not sure if that's smart or if its better to wait till retirement when it competes with RRSP income.
Its the attribution rules that are tripping me up. I don't want a tax bill 4 years later with interest accrued and taxes payable by me (higher income).