Between friends — just as with money a parent gives an adult child — courts don't presume money was a gift, so the burden falls on your friend to prove it was. Your e-transfers, the messages around the transfer, and any partial repayments are your evidence; a demand letter and then Small Claims Court are the recovery route if talking fails.
You helped a friend out with money you both understood would come back. Now the friendship has cooled, you've asked for repayment, and suddenly they're saying it was always a gift. Often you can still recover it: Canadian law doesn't presume money handed to a friend was a gift, so your friend has to prove it was. Beyond that, it comes down to what you can prove.
The core question: was it a loan or a gift?
When money changes hands and there's no document, a court's job is to work out what you actually intended at the time — was this money meant to be repaid (a loan) or given freely (a gift)? Everything turns on that. The Supreme Court of Canada has made clear that in disputes over gratuitous transfers, the governing consideration is the transferor's actual intention at the time of the transfer, and a court weighs all the evidence to determine that intention on a balance of probabilities.
The good news for you is that the law does not simply assume money handed to a friend was a gift. Gifts are not presumed — quite the opposite. A person who receives money and later claims it was a gift generally carries the burden of proving that.
Who has to prove what
This is the part most people get wrong, and it's the part that may work in your favour. Canadian courts have repeatedly held that the onus sits on the recipient — the friend claiming a gift — to establish that you intended a gift.
In plain terms: your former friend can't just assert "it was a gift" and win. They have to actually prove that you meant it as a gift. If they can't, the money is treated as repayable.
What courts actually weigh
Because intention is the whole question, courts look at the surrounding circumstances. The widely-used list of factors (from the British Columbia case Locke v. Locke and applied across Canada) includes:
- Whether there were any documents evidencing a loan;
- Whether a manner of repayment was specified;
- Whether any security was taken;
- Whether there was any demand for repayment before the relationship broke down;
- Whether there has been any partial repayment; and
- Whether there was any expectation or likelihood of repayment.
Notice how these cut both ways for a friend loan. If you can show you asked for the money back early, or that your friend made even one partial repayment, or that a text mentioned paying you back — those point strongly to a loan. If there's total silence and you only asked years later when the friendship ended, your friend's "gift" argument gets easier.
Real Canadian authorities
The foundational Supreme Court decision on gratuitous transfers. It established that courts must focus on the transferor's actual intention at the time of the transfer, using legal presumptions only as a starting point and then weighing all the evidence on a balance of probabilities. It also confined the old presumption of advancement (that a transfer is a gift) to minor children, so between adults — friends included — a gift isn’t presumed. It's the backbone of every gift-vs-loan analysis in Canada.
A leading Supreme Court decision on unjust enrichment and money disputes between people in personal relationships. It confirms that "donative intent" — an intention to make a gift — is one of the things that can justify the other person keeping the money, and that the point of a resulting trust is simply that the claimant is asking for their own property back. It frames how courts think about money advanced outside a formal contract.
The Ontario Court of Appeal reaffirmed that the onus is on the recipient to establish, on a balance of probabilities, that the transferor intended the money to be a gift. The case was about a former couple's contributions to a home rather than a loan between friends, but it's a useful, relatively recent confirmation that the burden sits with the person claiming the gift — not with you.
So, practically — can you recover it?
Your legal starting point is reasonably favourable: the friend claiming a gift has to prove it, and mere assertion isn't enough. But "favourable starting point" is not the same as "easy win." With nothing in writing, these cases become credibility contests decided on the documents and conduct around the transfer. The stronger your evidence that repayment was expected, the better your position.
For amounts up to provincial small claims limits (for example, $50,000 in Ontario), small claims court is the usual venue, and you can often run it without a lawyer — though getting advice first is wise. Before going anywhere near court, a calm written demand for repayment is a sensible first step (and creates a useful record).
- A written loan agreement — decisive, ends the argument.
- Texts/emails referring to repayment, a date, or "paying you back."
- Bank/e-transfer records proving the advance.
- Any partial repayment your friend made.
- A witness to the original conversation.
Common questions
If I lent a friend money and they say it was a gift, can I get it back?
Possibly — and the law gives you a fair start. When money is handed over for nothing in return, Canadian courts don't presume it was a gift, so your friend has to prove, on a balance of probabilities, that you intended one. With nothing in writing it becomes a credibility contest, so your evidence — texts, transfers, any mention of repayment — is what decides it.
Who has to prove it was a gift or a loan?
Once you show you advanced the money, the friend who says it was a gift has to prove it, on a balance of probabilities. Their own belief isn't enough; they must show that you, the lender, intended a gift at the time. If you're relying on specific terms, like interest or a repayment date, you'll still need evidence of those terms.
How do I prove a loan to a friend if there's nothing in writing?
Gather every contemporaneous record: bank or e-transfer records showing the advance, any texts or emails mentioning repayment or a date, witnesses to the conversation, and any partial repayments made. Courts look at whether repayment was expected, whether any was made or demanded, and how the transfer was described at the time. A written loan agreement removes the dispute entirely, which is why it's worth doing even between friends.
The lesson for next time: write it down
Every one of these disputes exists because the loan lived only in two people's memories — and memories conveniently diverge once a friendship ends. The single thing that would have prevented the whole problem is a short written agreement saying it's a loan, how much, and when it's repaid. It feels unnecessary between friends, right up until the moment it's the only thing that would have protected you.
If you're lending to a friend now — or even formalising the loan that's currently in dispute, going forward — putting it in writing is the cleanest protection there is. Our guide on how to protect yourself when lending and the one on whether a verbal loan agreement is binding in Canada go deeper, and you can draft a clear agreement in a few minutes so this never happens again.
Don't let the next loan become your word against theirs
Put it in writing in a few minutes — who lent what, and when it's repaid — and both sign from your phones. The record that settles any "it was a gift" argument before it starts. Free to draft.
Create my loan agreement →- Pecore v. Pecore, 2007 SCC 17 — Supreme Court of Canada
- Kerr v. Baranow, 2011 SCC 10 — Supreme Court of Canada
- MacIntyre v. Winter, 2021 ONCA 516 — Ontario Court of Appeal
- Locke v. Locke, 2000 BCSC 1300 — gift vs loan factors
This article is general information about Canadian law, not legal advice, and LendRight is not a law firm. Laws differ by province and change over time. For your specific situation, consult a lawyer or licensed paralegal in your province.
We write plain-language guides on lending between family and friends in Canada, reviewed against current provincial and CRA rules. LendRight is not a law firm — this is general information, not legal advice.