Investment Q&A

Q: I have a "tax" question for you.

I'm thinking of selling BTE with a $10,000 loss. I don't have any realized capital gains to offset the loss, and don't want to dispose of any of my gainers, but I don't want to carry the loss forward either.
So I'm wondering: Could I crystallize the equivalent in gains by selling BCE shares, for instance, and then buying them back immediately?

I'm aware that the superficial loss rules would come into play by not waiting 30 days, but that shouldn't be a concern with a stock like BCE.
I also realize that there may be a small cost involved with commissions and price spreads, but at the same time my ACB would be reset at the new BCE purchase price and may well save me some cap. gains taxes down the road.

What do you think?

Q: From Report on Business, Sept.10 - "Concordia Healthcare Corp. is planning a
major equity raise to help pay for its latest acquisition – but instead
of relying on Canadian investors, it will seek out the funds it needs in
the U.S.“We will not be doing a
Canadian bought deal. We are doing a U.S. institutional raise,” said
chief executive officer Mark Thompson in an e-mail."

This would appear to validate the 5i observation that Tuesday's selloff from the open was caused by institutions looking to replace their holdings with the cheaper new issue shares and that for the individual long term holder the wobble in the share price shouldn't matter a year from now, particularly with street analysts bumping their target prices by 15-20%.

I believe this company has most of its revenue internationally sourced and since it is likely Canadian based only for tax reasons, what would the long term picture look like for CXR and VRX should we elect a federal government determined to raise corporate taxes? Thanks, J.

Q: Hello,

when does most of the tax loss selling happen? I am looking to pick up some oil stocks and was wondering if I should wait till then?

Thanks

Q: If I wanted to crystallize a capital gain on a gold or silver coin(s), could I just say I sold them at the closing price on a specific day and say I bought them back at the same price on the same day. Report the capital gain on my income tax. This would be instead of paying the exorbitant fees to sell the coins and buy them back from a dealer. If this would not fly, could I sell them to a friend at the closing price and buy them back from him at the same price on the same day an declare the capital gain? Thanks.

Q: This is just an example used to hopefully make sense of what I'm trying to ask:

If I purchased 100 shares of Magna at 50 dollars and 100 more at 70 dollars, then sell 50 shares at 60 dollars, how do you determine if it's capital gain or lose? I get confused with this, because at one price it would be a lose and at the other a gain.
I guess the real question here is how do you determine the Adjusted cost base (ACB)?

I'm presently in a similar situation and before I sell, I want to make sure it's not a lose so I won't have to wait 30 days to purchase again.

Thanks,

Paul

Q: I TRANSFERRED some stocks (Phm) from a non registered account to my tfsa taking a loss in my non registered account
I would like to re purchase Phm in the non registered account at the current lower price
Re: CRA rules--- will I be allowed to take in the non registered acc or do I have to wait for 30 days before I repurchase Phm in the non registered acc thank you

Q: If I purchase a dual listed Canadians stock such as Td bank in U.S. Dollar in New York do I get the preferential dividend treatment from CRA as if I had bought the stock in Canadian dollar on the TSX ?
Thank you for your advice

Q: Peter I just took (Aug 21 ) some substantial profits on Byd.un / Linamar ($70,000). Now I have capitol gains to pay. Any strategy you can suggest to lessen the impact. I would like to buy both of them back at some point is there any quick calculator that figures this out at what point it makes sense to reinvest? - I am concerned about eating up profits and paying tax ..Thanks for your advise it is much appreciated

Q: re Joe's suggestion. Is there any US/CDN tax consequences whether in an RRIF or straight cash account?

Q: Hi Peter & Team:

I heard that ETFs & Mutual funds that hold foreign companies are not required to report on T1135. If this is true, would it be good to invest in foreign companies but avoid reporting the T1135? Thank you.

Q: With the recent CRA crackdown, and the heavy fines involved for not filing, do you know of an easy way to determine if a company is considered foreign property for filing form T1135? I contacted my broker and they did not know of a straightforward way to determine this.

Q: For fixed asset allocation in ones portfolio, can an allocation of say 20% of cash availble for investment be put in paying off a portion for mortgage (for those of us who still have one!)..The remaining 80% would be invested in stocks..does this make sense or is a combination stocks and bonds recommended.

Also in instances where one gets a lumpsum of cash for investment (long term), can flow through shares be used? Note: This lumpsum will result in one being put in the highest tax bracket. How does one effectively use Flow through share it as it is very risky in nature?

Q: Considering how low interest rates are, what is your opinion to prescribed annuities with the mortality table changes at the end of next year impacting the tax free status past age 70?

Q: I understand some us stocks held in etf rif rsp tfsa are exempt from reporting on form 1135. Please clarify . thanks James

Q: Do you only have to wait 30 days to repurchase a stock if the sale will be used as a loss?

I sold a half position in a company "for a gain", if this company drops in price over the next few days can I buy it back?

Thanks as always,

Paul

Q: 3:37 PM 5/3/2015

Hello 5i

The Thomson Reuters website says : "Notice for Canada Revenue Agency purposes: all dividends paid by Thomson Reuters Corporation are eligible dividends unless indicated otherwise".

Is Thomson Reuters a "Canadian" Company or is owning shares considered to be a "Foreign Property" and would a T1135 declaration be required?

Many thanks.... Paul K

Q: In the US, there is different tax treatment for "long term" capital gains versus "short term" ones. Does such a differentiation exist in Canada?

Q: Due to past circumstances and bad advice the majority of our investment portfolio is in Registered Accounts leaving our TFSA's with plenty of room. Would it be wise to gradually over the next 10 years of retirement move (I am not sure if I can move stocks directly in kind) some of the registered $$ which consist of 5i Balanced and Income portfolio stocks to max out the TFSA allowing the stocks I own to grow tax free. I would of course have to pay the tax on RSP withdrawals along the way. I do realize that I would have to manage income accordingly in order not to jump into the next tax bracket. The stocks I would move would be higher growth stocks in order to take advantage of the flexibility of the TFSA. Any advice is appreciated. Many thanks!

Q: A member had asked on the tax treatment for options trading. It is not as straight forward as your answer indicated. It is detailed on http://www.taxtips.ca/personaltax/investing/taxtreatment/options.htm

Q: Your answer on tax loss selling was straight forward. but I would like a bit more clarification on average cost / ACB, as I think there may be two averages costs. The first being the "Bucket Method" What is the average cost of your holding in the bucket at time of sale. This method seems to follow all of the CRA's publications on Capital Gains. The second method could be your average cost of your holding for the year. I think whatever method you choose you have to be consistent in application forever. I would appreciate comments on both of these average costs, or is the second average cost just incorrect. Further on taxes is the question pertaining to selling options that carry over December 31. Do you have a Capital Gain when you sell the option / receive the cash or is the Capital Gains deferred until the option expires. As you can buy back the option any time until expiration date and therefore the contract is not closed. I am sure many readers can express comments on the above.