CRA reassessed and attributed my spouse's investment income back to me — why?

Canada's income attribution rules in the Income Tax Act are federal provisions designed to prevent income splitting between spouses or with minors. If you transferred or loaned property to your spouse and they earned investment income from that property, the attribution rules may require you to include that income in your return rather than your spouse's.

The attribution rules apply when a transfer or loan of property occurs between spouses at less than fair market value consideration, or when a loan bears no interest or interest below the prescribed rate. If attribution applies, income (dividends, interest, capital gains from sold property in some cases) earned by your spouse on the transferred property is included in your income for tax purposes.

There are exceptions: the attribution rules do not apply to earned income (salary), business income earned by the transferee, or income on reinvested income. Loans made at or above the prescribed rate at the time of the loan (and on which interest is actually paid annually) also avoid attribution.

If CRA has attributed your spouse's income back to you, review the original transfer or loan to determine whether it was at fair market value and whether interest was paid. If the attribution rules apply, the reassessment may be correct; if not, you have grounds to object with supporting documentation of the transaction terms.