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Transfer Investments to Your Registered Account
     - but not at a Loss!

Income Tax Act s. 40(2)(g)(iv)(A) and (B), 248(1)

Registered accounts include:

    - Registered Retirement Savings Plans (RRSPs),

    - Registered Retirement Income Funds (RRIFs),

    - Tax-Free Savings Accounts (TFSAs),

    - Registered Education Savings Plans (RESPs),

    - Registered Disability Savings Plans (RDSPs), and

    - Deferred Profit Sharing Plans (DPSPs).

If you transfer shares or other investments on which you have a loss to a registered account, the loss will not be deductible.

If you transfer shares or other investments on which you have a gain to a registered account (or to someone else's account), you will have a taxable capital gain, but see below re the tax documents provided by your brokerage.

If you hold investments in a non-registered investment account, you can use them as your Registered Retirement Savings Plan (RRSP) contribution by transferring them to your RRSP as an in kind contribution, as long as they are qualified investments.  You can also use them as a contribution (not tax deductible) to your Tax-Free Savings Account (TFSA), or some other registered accounts.  Your contribution amount is the market value at the time of the transfer.  If the investment being transferred is foreign shares, the contribution amount is the market value converted to Canadian funds at the exchange rate at the time of the transfer.  If you are transferring a bond, the market value will include any accrued interest.  For tax purposes, you have effectively disposed of the investment (deemed disposition), so any gain will be taxable to you.  However, if you have a loss on investments transferred to any of the registered accounts noted below, the loss is not deductible.

Losses are not deductible on dispositions of property to

under which the taxpayer is a beneficiary or annuitant or immediately after the disposition becomes a beneficiary or annuitant.

Losses are not deductible on dispositions of property to a registered retirement savings plan (RRSP) if the taxpayer or taxpayer's spouse or common-law partner is an annuitant, or becomes an annuitant within 60 days after the end of the taxation year.

In most cases, unless the loss is very small, it would be best to sell the investment and contribute the cash to the registered account.  If you or your spouse wish to purchase the same investment in a registered account, do not do this in the period 30 days before or after the disposal.  Otherwise the loss will be considered a superficial loss and will be disallowed.  

In Kind Transfers to Registered Education Savings Plan (RESP)

Note that although losses on in kind transfers to an RESP are not affected by s. 40(2)(g), these losses will be considered a superficial loss and thus not deductible, according to Tax Interpretation 2010-0352921E5 - Transfer of securities into an RESP.

In Kind Transfers Not On Your T5008?

Your brokerage will issue a T5008 and a trading summary showing your purchases and sales of investments in your non-registered account, to help you prepare Schedule 3 of your tax return.  In kind transfers may not be shown on these documents - they weren't in prior years, but at least some brokerages are including these on 2020 and 2021 T5008s.  You are still required to report these disposals on Schedule 3 if they are in kind transfers to your registered accounts, or to someone else's account.

According to CRA, deemed dispositions do not have to be reported on a T5008.  This would include in kind transfers.  They are still dispositions for tax purposes.  See link below re in kind transfers to a TFSA.

Recording the In Kind Transfer of a Loss Investment on the Tax Return

You may decide for some reason to make a transfer of a loss investment to this type of account.  If so, when completing your tax return, do not enter this disposal on your Schedule 3, as the loss cannot be claimed.  If you still want to enter the disposal on Schedule 3, you must not show a loss for it.

TaxTips.ca Resources

Attribution Rules re Gifts, Transfers, or Loans to a Spouse or a Related Minor Child

Capital Gains and Losses

Deemed Disposition of Property

Tax Issues re Investing, and Tax Treatment of Different Types of Investments

Canada Revenue Agency Resources

In kind contributions to your TFSA - this is followed by Transfers from your RRSP, which would also apply to transfers from your RRIF.

Tax Tip:  If you have a loss on shares, don't transfer them to your registered account!

Revised: September 21, 2022