Principal Issues: In Technical Interpretation # 9812245 (dated June 22, 1998) the CRA indicated that the social insurance number (SIN) of a child (under age 18) is not required if the child's income is expected to be $2500 or less. The CRA also commented that the SIN to be recorded on the information slip would depend on whether the attribution rules apply - if they apply, the parent's SIN must be used; if they do not apply, the child's SIN is to be used. Does the above represent CRA's position, and if so, how is the issuer of the information slips to know which SIN should be used?
Position: Where the funds are held in the child's name only, with the parent acting as agent or guardian of the child's property, the financial institution would issue the appropriate information slip in the name of the child. If the parent is also listed as a joint account holder, the financial institution would issue the appropriate information slip in the name of both the parent and the child in the same manner as for other joint account holders. In either case, the child's social insurance number would not be required where a beneficiary is under 18 and the beneficiary's total income is expected to be less than $2500. If the parent is listed as a joint account holder, the parent's social insurance number will be required in all cases.
Reasons: The application of the attribution rules does not impact on whose social insurance number is required on the information slip as the payor is not normally in a position to determine the extent to which the attribution rules apply.
2007 STEP Round Table
Q. 2 Requirement for a Social Insurance Number
In Technical Interpretation # 9812245 (dated June 22, 1998) the CRA indicated that the social insurance number (SIN) of a child (under age 18) is not required if the child's income is expected to be $2500 or less. The CRA also commented that the SIN to be recorded on the information slip would depend on whether the attribution rules apply - if they apply, the parent's SIN must be used; if they do not apply, the child's SIN is to be used. Does the above represent CRA's position, and if so, how is the issuer of the information slips to know which SIN should be used?
Response
The answer to this question depends in part on which issuer of information slips is being referred to and on the nature of the legal relationship between the parties. Where the funds held in the account are trust property, the financial institution holding the funds may be required to issue a T5 Information Slip or a T5008 Statement of Securities Transactions to the trust and the trustee will be required to issue a T3 Information Slip to the beneficiaries for such portion of the trust's income as became payable to them during the year. As stated in the relevant guides for preparing T5 Information Slips and T5008 Statement of Securities Transactions, a social insurance number is not required for an information slip that is required for a trust. As noted in the previous question, the determination of the legal relationship between the parties may not be obvious but for the purpose of determining whether the financial institution must obtain a social insurance number in respect of the account, the exception for trusts only applies where the trust is governed by a trust indenture or trust deed and not simply in the investment contract. This position is set out in paragraph 8 of Information Circular 82-2R2, Social Insurance Number Legislation that Relates to the Preparation of Information Slips.
As noted in the previous question, where the funds are held in a trust, a T3 Trust Income Tax and Information Return will normally be required. The trustee must provide the social insurance number of the beneficiaries to whom income has been allocated, except where the conditions in Information Circular 82-2R2 are met - that is, where the child is under 18 years old and is expected to have a annual income of $2,500 or less.
Where the funds are held in the child's name only, with the parent acting as agent or guardian of the child's property, the financial institution would issue the appropriate information slip in the name of the child. If the parent is also listed as a joint account holder, the financial institution would issue the appropriate information slip in the name of both the parent and the child in the same manner as for other joint account holders. In either case, the child's social insurance number would not be required where a beneficiary is under 18 and the beneficiary's total income is expected to be less than $2,500 as noted in Information Circular 82-2R2. If the parent is listed as a joint account holder, the parent's social insurance number will be required in all cases.
The application of the attribution rules does not impact on whose social insurance number is required on the information slip as the payor is not normally in a position to determine the extent to which the attribution rules apply.