CDN TAX Laws

[Maxpowers]

Just wondering what other memebers are doing about Capital Gain in this portfolio?  Are any of you sheltering these trades in your RRSP, or just paying out the profits?  (I believe it's around 50%)
Max Powers

[bryanmcn]

The bulk of my Portfolio is in my RSP.

[LuckyWon]

Because of capital gains, I keep 100% of this portfolio outside any registered plan.

I am wondering what the tax concerns are for buying a stock that I have sold within the last 30 days.  I think that if you sell a stock and repurchase it within a 30 day time period, you are not allowed to claim the earnings as capital gains.  I am not 100% sure of this, so if anyone knows otherwise please advise.

So, for those of you who do not keep these portfolios in registered plans, I am wondering what you do in this situation?  Do you just repurchase the stock and pay income tax rather than capital gains tax? Do you wait until the 30 days has been reached to repurchase, and maybe loose any gains that have been acquired since buy recommendation?

I am questioning this as I have been following SSP v3 since Jan.  There has been a buy recommendation on FNI which was just sold in April.  I believe its past the 30 day limit, but I am not sure if the limit is 30 trading days or just plain 30 days.

Cheers,
LW

[burd]

Hey Luckywon,

   I think you pay capital gains on all money you make from stocks unless you tade stocks for a living. The only one month rule I know of is if you sell a stock for a loss at the end of the year, you have to wait before you can buy it back.
  Dont worry about buying back FNI.

[bryanmcn]

Although most of my trading is done inside an RSP, I do trade outside of it at times. In that case I get a report at the end of the year showing my proceeds and costs. Rather than list out every trade, I simply record those numbers on the lines as if it was one transaction. I've been doing that for over 7 years now and Rev Canada doesn't seem to mind.
As previously noted, Rev Canada will deem your trading to be ineligible for the capital gains rules if they believe you are trading for a living.
Thats not happening for me yet ... maybe some day ... soon I hope!

[kevin]

I am pretty new to investing.  But, I would think that if you weren't able to trade full time, why wouldn't you invest through your rsp and when you are almost ready to start trading full time, draw the money out of the rsp to invest and save your lifetime capital gains for later?  It would seem to me that way you could invest the tax savings while you grow. 

If you give it to the government now then you don't get to use their free money to make more money.  You also avoid the inflation trap.  I will give the feds their money in 20 years when it is actually worth 40 percent less and I have doubled or tripled that investment in my portfolio.

Of course who knows what the capital gains exemption is going to be in 20 years. 

[LuckyWon]

I am no accountant, but I prefer to keep my capital gain investments outside RRSP's.  The biggest reason I do this is because any gains inside an RRSP are considered as income for tax purposes, which means that you are paying your highest marginal rate when you cash out your RRSP.  In fact you are paying tax on both the initial investment as well as the gains.  Yes you can defer the tax payments on the initial investment

Even if you wait until retirement you may be forced to convert it to an RRIF which means that you may have to pull out more than you actually need, causing you to pay tax on money that you don't need and possibly getting your gov't pension clawed back.

So I prefer to keep only income bearing investments inside RRSP's and capital gains outside.  The capital gains tax has historically been a fraction of the marginal rate.  Also if you are of the "buy and hold" strategy, then you are not paying taxes on the gains until you cash out, which could be in your retirement if you can hold'em long enough.

There are probably still times when it might be beneficial to hold capital gains inside an RRSP, you should always do your due diligence and learn as much as you can.  www.taxtips.ca is a great website for Canadians.

Cheers,
LW