Ads keep this website free for you.
TaxTips.ca does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

Transfer of Shares to Registered Accounts TaxTips.ca
Canadian Tax and
Financial Information
TaxTips.ca Home

What's New

Links & Resources

Site Map

Need an accounting, tax or financial advisor? Look in our Directory.  Use above search box to easily find your topic!   Stay Connected with TaxTips.ca!

 

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 Registered Account
     - but not at a Loss (usually)!

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

What Accounts are Registered Accounts?

Tax Re Transfer of Any Shares to a Registered Account

Transfer of Shares With Unrealized Gains

Transfer of Shares With Unrealized Losses

In Kind Transfers to Registered Education Savings Plan (RESP)

In Kind Transfers Not On Your T5008?

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

TaxTips.ca Resources

Canada Revenue Agency (CRA) Resources

What Accounts are Registered Accounts?

Registered accounts include:

    - Registered Retirement Savings Plans (RRSPs),

    - Registered Retirement Income Funds (RRIFs),

    - Tax-Free Savings Accounts (TFSAs),

    - Tax-Free First Home Savings Accounts (FHSAs)

    - Registered Education Savings Plans (RESPs) (but s. 40(2)(g)(iv)(A) and (B) do not apply to an RESP)

    - Registered Disability Savings Plans (RDSPs), and

    - Deferred Profit Sharing Plans (DPSPs).

Tax Re Transfer of Any Shares to a Registered Account

If you hold investments in a non-registered investment account, you can use them as your Registered Retirement Savings Plan (RRSP) or First Home Savings Account (FHSA) tax-deductible contribution by transferring them to your account 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 the transaction will be treated as if you sold the investment at fair market value.

Transfer of Shares With Unrealized Gains

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

Transfer of Shares With Unrealized Losses

If you have a loss on investments transferred to any of the registered accounts noted below, the loss is not deductible.  This rule is called a stop-loss rule.

Losses are not deductible on dispositions of property to:

bulletDeferred Profit Sharing Plan (DPSP)
bulletEmployees' Profit Sharing Plan (EPSP)
bulletRegistered Disability Savings Plan (RDSP)
bulletRegistered Retirement Income Fund (RRIF)
bulletRegistered Retirement Savings Plan (RRSP)
bulletTax-Free Savings Account (TFSA)
bulletFirst 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:

  1. transfer the loss shares and not claim the loss,
  2. sell the loss shares and contribute cash to buy a different investment,
  3. sell the loss shares and contribute cash to buy the same investment after 30 days,
  4. transfer a different investment, or
  5. do nothing

Several factors could make the transfer in #1 above less costly than #2 or #3 above:

bulletbrokerage 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
bulletpossible loss of income from the investment during the 30-day period, or
bulletexposure 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.

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 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.

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 (CRA) 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, it won't be deductible if you transfer the shares to your registered account!

Revised: January 11, 2024

 

 

Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved.  See Reproduction of information from TaxTips.ca

Facebook  | Twitter  |  See What’s New, stay connected with TaxTips.ca by RSS or Email
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.