In Trust for Accounts

Unlike tax-sheltered RESP's, In Trust For accounts are fully taxable. Dividends or interest income are taxed in the hands of the adult, but capital gains are taxed in the hands of the child. A child could receive up to $15,268 in capital gains each year and not pay any tax since the basic personal credit of $7,634 will offset the taxable portion of the capital gain ($15,268 x 50.00% inclusion rate = $7,634). Consequently, the degree to which investments generate capital gains will make a considerable impact on the after-tax return of In Trust Accounts