Canadian Money Forum banner
1 - 4 of 4 Posts

· Registered
Joined
·
546 Posts
Discussion Starter · #1 ·
Cesnick in the G&M today claims you can:
"3. Trigger tax losses. If you're thinking of selling a security that has dropped in value in order to use the capital loss, but you like the future prospects of the investment, consider selling the security outside your TFSA, then contribute the cash to your TFSA and repurchase the investment inside the TFSA. The future growth of the investment will be tax sheltered."

Now my tax knowledge is very old, but still I question this, mainly because I have heard the same advice applied to transfers in kind, or repurchases, to RRSPs. I am not going to look up the exact wording yet again about superficial losses, which I am sure have not changed. It says the loss is denied when there is a transfer to a RELATED PARTY.

Certainly the RRSP owner is related to you and the TFSA owner is related to you. So I can only conclude this not only will not allow the loss, but will make the loss forever lost.

Anyone with up-to-date tax info?
 

· Registered
Joined
·
546 Posts
Discussion Starter · #7 ·
There are no losses/gains within TFSA. The loss/gain from your personal holding is calculated and triggered at the time of transfer ( or outright sale and repurchase) to the TFSA. There is what is called a deemed disposition. The superficial loss rules apply to THAT transaction.
 

· Registered
Joined
·
546 Posts
Discussion Starter · #10 · (Edited)
OK I just figured out what you two are referring to.

Sparky, No your idea won't work because the government already thought of it. The rules say you cannot buy the 'replacement' security before (preemptive) OR after (30 days both ways) the sale that triggers a tax loss.

Humble, waiting a few days won't cut it. But you can always get away from the superficial loss rules by either
* waiting the 30 days with no position before buying the replacement, or by
* doubling your position for 30 days and then making the sale of half that will trigger the tax loss.
Neither probably makes investing sense and neither needs an RRSP or TFSA to do it.

There is no exception that allows you to sort of allocate the shares you sell back to a specific purchase as you implied: "because they came from the older holding". They are all the same security in the same pot. The superficial loss rules would catch the guy twice in your scenario. Once because he bought the 'replacement' 500 shares within the 30 day window before the sale triggering the tax loss. And again when he buys another 'replacement' 500 shares within the 30 day window after the sale.

The government does not treat each situation according to people's intent as you imply: "merely responding to market circumstances". The rules are specific. There is only one 'strategy' using the superficial loss rules that works for income splitting. This won't.
 
1 - 4 of 4 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top