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An in-trust account is a great way to save for a child's
higher education. With an in-trust account, the investor manages the
money for the child until the child reaches the age of majority. At that
point, the trustee can make any necessary arrangements.
You can contribute as much money as you want. All capital gains may be
taxed in the hands of the child. You, as the investor, are taxed on all
income including interest, dividends, foreign, and other income if earned
while you are a resident of Canada during the applicable
year.
If the money for an in-trust account comes solely from Child Tax Benefit
payments or an inheritance, income is taxed in the hands of the child.
Money stays in the hands of the child if he/she decides not to pursue a
post-secondary education. Some benefits of an in-trust account include:
- There is no maximum limit
to what can be contributed on an annual or total basis through an
in-trust account.
- If the child does not go
on to post-secondary education, the child may use the money for any
other purpose.
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