Sample Source

#17 - Government Funded In-trust Account

Description

An in-trust account is a account established at a financial institution to manage another person’s assets, Use this informal trust to save money for education. The “trustee,” typically donor parent, manages the assets and you do not turn over the account to the child until they reach eighteen. CRA attributes taxable income from investments to you, the parents, except funds from government’s Canada Child Benefit (CCB), and inheritances and gifts not from parents.

Canada Child Benefit - Payment Amounts

The CRA administers CCB’s monthly payments to eligible families to help with costs of raising children under eighteen. CRA adjusts payments annually, every July, based on previous tax returns. For the period, July, 2026 to June, 2027, families receive up to:[69]:

  • $8,157 per year ($679.75 per month) in CCB per child under six.
  • $6,883 per year ($573.58 per month) in CCB per child aged six to seventeen.

Actual CCB payments entail a complex formula based on:

  • Adjusted family net income from previous year.
  • Number and age of your children and If applicable, child disability benefits.
  • Marital status and custody of children.
  • Province you reside in, since some provinces provide a top-up to the federal amount

Use CRA’s online child and family benefits calculator to estimate payments you should receive. [70]

Types

Two types of in-trust accounts are:

  • Funded exclusively with Canada Child Benefit (CCB) payments
  • Funded with CCB payments and/or inheritances and/or gifts not from the parents.

Tax Status

Parents and student split first-and-second generation income and capital gains.

Key Benefits

Long-term growth
Risk management
Coordination
Debt management
Flexibility
Family relationships.

Parent Eligibility [71]

At least one parent must be one of:

  • Canadian citizen or permanent resident.
  • Temporary resident who lived in Canada for previous eighteen months.
  • Protected person.
  • Indigenous person.

CCB payments stop when one of the following happens:

  • The child reaches eighteen.
  • The child ceases to live with parent.
  • The child dies.
  • The parent moves out of Canada.

Primary Demographic Applicability

Parents for dependents.

Process for Parents

  1. Open an In-trust account at your bank for each child (you’ll need their social insurance numbers).
  2. Deposit CCB cheques into the account(s). If you have several children, divide cheque amongst accounts.
  3. Do not mix other money into these accounts except for money belonging to the child, and not from you.
  4. When sufficient funds accumulate, invest them, based on professional advice if needed.
  5. Annually, your bank sends you a T4 slip for each in-trust account. Submit a letter with your tax return, attributing income earned from “in-trust” investments to your children.

Increasing CCB Received

Saving for retirement and your children’s education may complement each other by following this strategy:

  1. Contribute an amount to your Registered Retirement Savings Plan or Registered Pension Plan, which
    reduces your net income and reduces your income tax.
  2. The Government adjusts CCB amount(s) annually, based on your latest income tax. If your contribution moves you to a lower tax bracket, the government increases your CCB amounts for every eligible child.
  3. When you receive increased CCB payments, deposit the incremental amount in the child’s trust account.
  4. Alternatively or in combination, you could deposit any income tax rebate into the trust account.

Resources

  • CCB at www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit.html
  • Provincial Programs at www.canada.ca/en/revenue-agency/services/child-family-benefits/provincial-territorial-programs.html

AB www.alberta.ca/alberta-child-and-family-benefit.aspx#jumpWeb Links-4 
BC www.gov.bc.ca/gov/content/family-social-supports/affordability/family-benefit
NB www.gnb.ca/content/gnb/en/departments/finance/taxes/child_tax_benefit.html
NL www.gov.nl.ca/fin/tax-programs-incentives/personal/nlchildbenefit/
NT www.fin.gov.nt.ca/en/services/licences-taxes-and-fees/nwt-child-benefit
NS novascotia.ca/coms/families/ChildBenefit.html
NU www.gov.nu.ca/en/social-supports/nunavut-child-benefit-nucb
ON www.ontario.ca/page/ontario-child-benefit
QC www.rrq.gouv.qc.ca/en/programmes/soutien_enfants/paiement/Pages/paiment.aspx
YT yukon.ca/en/yukon-income-tax