The attribution rules in the Income Tax Act attribute income, and in some cases capital gains, earned on transferred or loaned property back to the person who transferred or loaned it, where the transfer or loan was made to a spouse or a minor child. The rules are designed to prevent the simplest forms of income splitting between family members.
For example, if a higher-income spouse gives investment funds to a lower-income spouse, the investment income is generally taxed back to the higher-income spouse rather than the recipient. A properly documented loan at the prescribed rate of interest can avoid spousal attribution. The attribution rules operate alongside the broader tax-on-split-income rules, and together they shape how families can and cannot share investment and business income.