Giving securities as a gift during the holidays

The holiday season is upon us, and if you’re thinking of gifting an investment for Christmas or another December holiday you need to know that securities regulations may apply.

Under securities laws it is legal to gift securities such as stocks and bonds. These securities must be transferred from one person to another and classified as a gift. Depending on the type and value of the securities, the gift giver may face capital gains taxes. There is no gift tax in Canada so the receiver of the securities does not need to declare the securities as income and will not face any tax implications to accept the securities at the time of the transfer. The receiver may be subject to future taxes on any income or capital gains generated by the gifted securities.

Another thing that needs to be addressed when securities are given as a gift is how the receiver will hold the given securities. For example, if the recipient plans to contribute the gifted securities to their RRSP or TFSA they must be the age of majority, which is 19 years of age in Nova Scotia. If the receiver of the gifted securities is not old enough to open an account to hold the securities, they may need to be held in trust by a parent or guardian.

Before making any decision around gifting a security you should consult a lawyer, estate planner, or tax expert to fully understand any implications around taxes and securities laws.