If your child’s bank account earns interest, you need to know how this income is taxed, or whether you’ll need to file a return at all. Canada Revenue Agency (CRA) rules require your child to report any income he or she makes on a separate tax return from yours. Keep reading to learn more about the ins and outs of taxing youth bank account balances.

Are there any tax implications for having a children’s bank account?

There are no tax requirements just for opening a kids’ bank account. But you may be required to pay taxes if funds in your child’s bank account earn interest.

According to CRA guidelines, all Canadians must pay tax on earnings regardless of the person’s age or the type of income (whether interest, dividends or through an appreciation in value, known as a capital gain).

Even if your child doesn’t earn employment income, the interest earned in their bank account may be taxable.

When is interest earned on children’s bank accounts taxable?

A parent can avoid the need to declare and pay income tax on a child’s bank account or investment earnings if the child elects to file an income tax return and the bank account or investment is in the child’s name.

How tax must be declared will depend on the type of account held by your child, but in general, the following guidelines apply.

Basic personal amount

The basic personal amount (BPA) is a non-refundable tax credit that lets individuals earn a certain amount of income before paying federal income tax. This means a child can earn interest in their savings account and not pay income tax if the amount earned is below the basic personal amount.

For the 2026 tax year, the maximum federal basic personal amount is $16,452, and the minimum is $14,829. If you earn $181,440 or less, you can claim the full BPA, but the tax credit gradually decreases for higher-income earners, reaching the minimum BPA at an income of $258,482 or more. You and your child can claim the federal BPA on line 30000 of your tax return.

You can also claim a provincial or territorial basic personal amount on line 58040 of Form 428, as income is taxed at both federal and provincial or territorial levels. Here’s the 2026 BPA for every province and territory:

The government has made an exception to the basic personal amount tax credit, however, and this is known as the “kiddie tax.”

What’s the kiddie tax in Canada?

In the past, parents could give children corporate dividends to cover expenses like tuition or extracurricular activities, effectively shifting income to reduce their taxes. But this changed in 2000 when the government amended the Income Tax Act, making such dividends taxable.

Under section 120.4 (known as the “kiddie tax”), dividends sent from a private company to children under the age of 18 are taxed at the highest federal tax rate, so long as those children have a parent residing in Canada. For perspective, the highest federal income tax rate for the 2026 tax year is 33%!

On a positive note, the kiddie tax in Canada doesn’t apply to regular interest or capital gains. Plus, children can use the dividend tax credit to lower the amount of tax they owe. No other tax credits can be similarly used, though, including the basic personal amount.

If you intend to use your child’s savings account to house dividends from a private company, make sure you understand the tax obligations this will cause.

Who declares interest income from a child’s bank account?

Under CRA rules, declaring income and paying income tax on interest earned is no different for children than it is for adults. If a child earns money in their bank account and owes taxes, they must file a tax return. A parent cannot include the income earned on a child’s tax return on their own T1 return.

However, if the money deposited into your child’s bank account is a gift, then the rules change, even if the gifted money is in non-cash forms like stocks, bonds or GICs. Under these rules:

• First-generation income, which is any interest earned directly from the gifted money, is attributed back to the parent for tax purposes, even if the investment is in the child’s name.
• Second-generation income, which is any interest or investment earnings generated from reinvesting the first-generation income, is taxed to the child.

In short, if you gift your children with money to put in their bank accounts, be aware that you may be on the hook for interest earned on those funds.

Do minors pay income tax?

Minors typically don’t pay taxes in Canada, and your child isn’t required to file a tax return if they haven’t earned income or they earned less than the basic personal amount, but there are some advantages to filing anyway.

Filing a tax return establishes a record of earned income, which contributes to building registered retirement savings plan (RRSP) contribution room — calculated as 18% of the previous year’s earned income. Contributing to an RRSP early allows your child to accumulate contribution room over time and take advantage of tax benefits, as contributions reduce their taxable income and the money grows tax-free until it’s withdrawn.

Additionally, your child could get a tax rebate if the money they received had income tax or CPP premiums deducted at the source.

Do minors pay any taxes in Canada?

Yes, minors have to pay taxes in Canada if their total taxable income is above the basic personal amount (which is $16,452 federally). This income can come from a part-time job or investment interest, as well as post-secondary scholarships, fellowships and bursaries if they don’t qualify for an exemption.

This means once a minor earns taxable income above the basic personal amount, their income is taxed according to the standard federal and provincial or territorial tax rates.

Does my child need a tax identification number?

A “tax identification number” is an American term used to describe an individual number assigned to a tax filer or American resident. In Canada, the tax identification number is known as a Social Insurance Number (SIN).

Canadians use their SIN to apply for jobs, determine eligibility for grants and programs and file their individual tax return.

This means a child needs a SIN to:

• Work and earn employment income
• Earn investment income that needs to be reported on a tax return
• Open registered accounts (such as a Registered Education Savings Plan)
• File a tax return if they have taxable income or want to claim credits and refunds

You can apply for a SIN on your child’s behalf as soon as they’re born, or they can do it themselves when they turn 12.

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Kids bank account tax FAQs

• Should I add my kids to my bank account?

  Adding a young child to your bank account can help you easily monitor their spending and let you avoid the inconvenience of managing two separate accounts. But it'll be harder to track their transactions versus yours, and if their deposits earn income under your name, you'll be responsible for any income tax obligations.

  Instead, you can open a bank account for kids on your child's behalf to teach them financial independence while still being able to monitor their finances and set parental controls. For older children, you can even open a kids debit card account and set a spending limit so they can buy necessities on their own.

• Should I add my adult child to my bank account?

  Adding an adult child to your bank account makes it convenient for them to help you manage your financial affairs as you grow older. This is particularly useful if they have Power of Attorney privileges and may need to act on your behalf. Bear in mind that giving your child access to your account makes you financially vulnerable — a transparent, trusting relationship is required to keep both you and your assets safe.

• Can a child have a Tax-Free Savings Account?

  No, you need to be at least 18 years old to open a TFSA. You also need a valid SIN. If you want to help your child save for the future, consider opening a Registered Education Savings Plan (RESP) or RRSP, neither of which has minimum age requirements.

• Can I put money in my child's bank account?

  Yes, you can put money in your child's bank account. But, under the CRA's attribution rules, income earned from gifted funds deposited into your child's account is considered "first generation" income on which you — not your child — will be taxed. Income earned from first-generation income that has been reinvested is considered "second-generation" income, which is attributed to your child for tax purposes.

  When deciding whether to put money in your child's account, remember that they'll be taxed on any account earnings over and above the federal and provincial/territorial basic personal amounts.

• What is the best bank for a kid's bank account?

  The best bank in Canada for a kid's account depends on your child's age, financial goals and how involved you want to be in managing the account. Look for accounts with no monthly fees, low minimum balance requirements and parental controls that let you monitor spending and set limits.

Written by

Stacie Hurst

Associate editor

Stacie Hurst is an editor at Finder, specializing in loans, banking, investing and money transfers. She has a Bachelor of Arts in Psychology and Writing, and she has completed FP Canada Institute's Financial Management Course. Before working in the publishing industry, Stacie completed one year of law school in the United States. When not working, she can usually be found watching K-dramas or playing games with her friends and family. See full bio

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Rebecca Low

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Rebecca Low is a writer for Finder. She has contributed to a range of digital publications, including income.ca, Indeed, and Expatden, writing on topics like personal finance, career development, and travel. See full bio