Will I save on taxes if I open a custodial or a trust account rather then a regular account to buy stocks?

Question

I'm 13 and am ready to be on my own account as for buy/sell stock , as of today I am on my parents account, will I save on taxes?

How do I go about filing... minimum gains?

What happens when I turn 18?

Answer 1

If the funds are yours (e.g., earned through houseworks, or through inheritance from your grandfather), there is no difference in tax whether  the funds are in a trust account of your parents, or in a regular investment account of yours if the brokerage house or financial institution allows you to open one.  You report the income and taxable capital gain in your tax return.

On the other hand, if the funds belong to your parents, the attribution rules would apply to require your parents to report the income, but not the capital  gains because you are a minor.  You report the capital gains and "income on income" on your tax return. Wlhen you turn 18, the attribution rules would cease to apply.

Your income and taxable capital gains would affect your parents claiming you as a dependant.

Answer 2

When it comes to capital gains/losses, it doesn't matter how much of a gain or loss you have generated. You MUST file an income tax return for each year in which you sell stocks. Get a Social Insurance Number if you don't already have one. The investment company / bank has the right to ask for it. If you are investing money that has been given to you, the capital gain is taxable in your hands.

The story is different if the stocks generate any interest or dividends. Up until you turn eighteen, this type of income generated on the original investment would be taxed in the hands of whoever gave you the money. Income generated on previously generated income is taxed in your hands.

If you have never worked before, DO NOT put the money into an RRSP registered in your name. Doing so will make you subject to overcontribution penalties. Banks and other investment companies tend to not care about your tax implications. They just want your money. Don't take tax advice from the same person who is acting as your investment broker.

Good luck with your investing.