Opening an Account for a Minor (In Trust For or ITF)
At ModernAdvisor, legal account owners must meet the age of majority in their province or territory. If you wish to invest for a child who has not yet reached this age, you can open an "In Trust For" (ITF) account.
Age of Majority by Province & Territory
Age of Majority | Provinces and Territories |
18 Years Old | Alberta, Manitoba, Ontario, Prince Edward Island, Quebec, Saskatchewan |
19 Years Old | British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia, Northwest Territories, Nunavut, Yukon |
Tax Considerations (The Attribution Rules)
Because an ITF is an informal trust, the Canada Revenue Agency (CRA) has specific rules regarding who pays the tax on investment income.
Interest and Dividends: Generally, if the funds were gifted by a parent or grandparent, any interest or dividend income is attributed back to the contributor and must be reported on their tax return.
Capital Gains: Realized capital gains (profit from selling an investment at a higher price) are typically taxed in the hands of the minor. Since children usually have little to no other income, this often results in zero tax owing.
Second-Generation Income: If the account earns interest on previous interest (compounding), that "second-generation" income is usually taxable to the minor, not the contributor.
Exceptions: If the funds in the account come solely from Canada Child Benefit (CCB) payments or an inheritance, all income (including interest and dividends) is typically taxed in the hands of the minor.
Pro Tip: To maximize tax efficiency, many parents focus on growth-oriented investments (ETFs that prioritize capital gains) within an ITF account to keep the tax burden on the minor rather than the parent.
How to Set Up an ITF Account
To establish an ITF account, the parent or guardian must first open a Non-Registered Individual account in their own name to act as the trustee.
For New Clients
Onboard: Complete the standard registration for a Non-Registered Individual account.
Request ITF: After submitting, email support@modernadvisor.ca or send a dashboard note requesting the "In Trust For" designation.
Provide Minor's Details: You must include the following for the child:
Full Legal Name
Date of Birth
Social Insurance Number (SIN)
Gender
For Existing Clients
Open New Account: Log in and open a new Non-Registered account from your dashboard.
Notify Support: Immediately message us to flag this as an ITF account.
Submit Details: Provide the minor’s Name, DOB, SIN, and Gender.
Important Account Limitations
Legal Ownership: The parent/guardian is the legal owner/trustee; the minor is the beneficial owner.
No Automated Recurring Deposits: These accounts cannot be linked for automated recurring pulls from the parent's bank account.
Manual Funding: You must fund the account via bill payment. Please allow 1–2 extra business days for manual processing by our custodian.