These days, buying or selling any investments is a difficult decision. If you investigate the tax rules first, it may help to make that decision a lot easier.
“You may even be able to save money if you understand the rules,” advises Chartered Accountant Bruce Ball, Tax Partner, BDO Dunwoody LLP, National Office in Toronto.
If you have an investment with an accrued loss, certain tax rules can prevent you from claiming a capital loss if you do one of the following:
Sell the investment for a loss, and buy it (or an identical one) back within 30 days.
Sell the investment for a loss, and your spouse buys that investment from you (or an identical one) within 30 days.
Transfer the loss investment to a Registered Retirement Savings Plan (RRSP) or, beginning in January 2009, a Tax-Free Savings Account (TFSA), as a contribution.
Sell the investment for a loss, and your RRSP or TFSA buys that investment (or an identical one) within 30 days.
In the first two situations, the denied loss is added to the cost of the asset either for yourself or your spouse. In the last two situations, however, that loss disappears forever.
Brought to you by the Institute of Chartered Accountants of Ontario.
The Institute of Chartered Accountants of Ontario is the qualifying and regulatory body of Ontario’s 33,000 Chartered Accountants and 5,000 CA students. Since 1879, the Institute has protected the public interest through the CA profession’s high standards of qualification and the enforcement of its rules of professional conduct. The Institute works in partnership with the other provincial Institutes of Chartered Accountants and the Canadian Institute of Chartered Accountants to provide national standards and programs that are used as examples around the world. </em>
