Home -> Personal Income Tax -> RRSPs and RRIFs -> Stocks, Bonds etc. -> Transfer shares to registered account, but not at a loss (usually)!
Transfer Investments to Your
|Deferred Profit Sharing Plan (DPSP)|
|Employees' Profit Sharing Plan (EPSP)|
|Registered Disability Savings Plan (RDSP)|
|Registered Retirement Income Fund (RRIF)|
|Registered Retirement Savings Plan (RRSP)|
|Tax-Free Savings Account (TFSA)|
|First Home Savings Account (FHSA)|
under which the taxpayer is a beneficiary or annuitant or immediately after the disposition becomes a beneficiary or annuitant.
Losses are also 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, it would probably 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.
However, each taxpayer should consider all factors for their own situation before deciding whether to either:
Several factors could make the transfer in #1 above less costly than #2 or #3 above:
|brokerage costs of both the sale and purchase transactions may exceed the amount of tax you would have been able to save by deducting the loss, after calculating your marginal tax rate x 50% of the loss, or|
|possible loss of income from the investment during the 30-day period, or|
|exposure to possible price increase during the 30-day period|
Tax Tip: Depending on your circumstances, avoiding the transfer of loss shares may not be your best option.
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.
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 now on 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.
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.
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, it won't be deductible if you transfer the shares to your registered account!
Revised: October 26, 2023
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