Comments on: In-Kind Contributions and Superficial Loss Rules

By: chiropody manchester

chiropody manchester — Fri, 02 Apr 2010 09:38:21 +0000

Excellent ideas here, have emailed my mum so expect a big reply!!

By: storage stockport

storage stockport — Fri, 02 Apr 2010 09:33:30 +0000

Thanks for posting this, lifted my day.

By: Gary

Gary — Thu, 07 May 2009 12:52:06 +0000

Does the superficial loss rule means that if I have a capital loss on my stock in self direct RRSP that I can sell it inside theRRSP, repurchase the same stock in my taxable trading account within 30 days to trigger superficial loss. Then eventually sell the same stock in my taxable trading account and claim capital loss?

If that’s the case, I have some Nortel stock in my self directed RRSP that I would like to get rid for some use.

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Fri, 27 Feb 2009 08:25:36 +0000

[...] Canadian Capitalist discusses In-Kind Contributions and Superficial Loss Rules [...]

By: gene

gene — Wed, 25 Feb 2009 01:00:58 +0000

Novice, thanks for your interpretation and your soccer examples. I had to smile at the thought of a guy punching out his teammate or booting the ball into the stratosphere.

After my post, I was thinking of legitimate ways to avoid taxes. One is to work less, incurring fewer income taxes. Another is to buy goods from ebay, second hand, or from out of province. I think we are supposed to remit taxes to our provincial governments in the latter case, but I don’t.

By: Novice

Novice — Tue, 24 Feb 2009 21:37:48 +0000

Gene — in my opinion GAAR acts a defence that allows the government to enforce the rules fairly, not to make avoiding taxes illegal per se. RSPs are a legitimate way to avoid paying taxes that are available to many. The very wealthy have access to resources that the average person doesn’t, and it’s not entirely fair that they should use that advantage to work loopholes that just because they aren’t specifically laid out as against the law makes them valid and fair by default. (And they can fight the courtcase if they feel strongly otherwise). To use a sports analogy, in soccer there’s a rule against ‘ungentlemanly conduct’ which referees use when a player does something against the spirit of the game, if not the law — for instance punching out a teammate, or kicking the ball miles out of bounds to waste time. GAAR is the ungentlemanly conduct of the accounting world I think.

By: gene

gene — Tue, 24 Feb 2009 19:53:56 +0000

By using the term “General Anti-Avoidance Rule”, they make it sound like avoiding taxes is illegal.

Actually, I guess that’s true. I was thinking I use RSPs and buy and hold investing to avoid taxes, but really, I’m _deferring_ taxes, no?

By: Tax Blogger

Tax Blogger — Tue, 24 Feb 2009 19:11:53 +0000

@ Earl

Yes the loss is denied. If the transactions were both non-RRSP/RRIF, then the loss is added to the cost base of the re-acquired securities.

If the re-purchased security is inside a TFSA or RRSP/RRIF, then the loss is gone and denied forever.

By: Earl

Earl — Tue, 24 Feb 2009 18:48:14 +0000

With a superficial loss, will the CRA deny you the capital loss?

By: Canadian Capitalist

Canadian Capitalist — Tue, 24 Feb 2009 16:20:57 +0000

0xcc: Good point. If the spouse has a lot of capital gains and the taxpayer has capital losses, the strategy you outlined can be used to transfer capital losses.

Thicken: I agree with Tax Blogger. I think the superficial loss rules applies to TFSAs as well.