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Tax question about stocks in TFSA bought/sold within 30 days

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  • May 30th, 2020 11:15 pm
[OP]
Newbie
Nov 12, 2008
37 posts
1 upvote

Tax question about stocks in TFSA bought/sold within 30 days

Hello,

I have a bit of a convoluted question on capital gains tax....

This is what I understand about transferring stocks to a TFSA account:

  • Any stocks transferred from a margin account to a TFSA account will be considered sold at market value at time of transfer.
  • Any gains at time of transfer is subject to capital tax.
  • Any loss at time of transfer can not be claimed.
  • A loss can be claimed if a stock is sold outside a TFSA first, before being purchased within the TFSA, however, you have to wait 30 days before purchasing the same stock otherwise it is considered a superficial loss and can not be claimed.

Okay, got that.

So what about this scenario, What if:

  • I purchased 50 shares of ABC for $100 in 2019 in my margin account
  • ABC then fell to $20 because of Covid
  • I thought ABC is a great deal @ $20 so I purchased another 50 shares in my margin account, for 100 shares in total

I then realized I should have purchased ABC in my TFSA account, not my margin account.

If I transfer 100 shares in to my TFSA, then I can not claim the tax loss of the first 50 shares I purchased at $100
If I sell the 100 shares, then I have wait 30 days before rebuying in my TFSA account

So how can I end up with as much ABC in my TFSA and still claim the loss for first 50 shares I bought for $100?

What if:

  1. I purchase another 100 shares in my TFSA account first, and then sell the 100 shares from my margin? Would that trigger the 30 day rule if I purchased first in TFSA, and then sold from my margin?
  2. If the scheme of buying first in my TFSA, and then selling from my margin doesn't work. Then would it be possible to transfer 50 shares in to my TFSA instead of 100? Since I purchased 50 shares in 2019, and then 50 shares last week, if I transferred 50 shares in to my TFSA, and assuming my accountant uses the 'first in, first out' rule of accounting, then would the 30 day rule not apply? And I could still claim a tax loss for the shares I purchased at $100.? (Albeit I realise I will still have 50 shares in my margin @ $20, but I will also have 50 shares in my TFSA at $20 and a tax loss) Is that correct?

Does anyone have any other suggestions?
Thanks for your help.


EDIT:

Now that I think about it, maybe I over thought too much.

If I transfer all 100 shares to my TFSA, then wouldn't the two lots of 50 shares be treated differently? I mean, the first 50 share I purchased for $100 in 2019, I could still claim a loss against, and the second lot of 50 shares I purchased for $20 last week wouldn't matter if it was less than 30 days because the price hasn't changed much. Is that correct?
1 reply
Member
May 2, 2019
410 posts
469 upvotes
Vancouver
ajdedo wrote:
  1. I purchase another 100 shares in my TFSA account first, and then sell the 100 shares from my margin? Would that trigger the 30 day rule if I purchased first in TFSA, and then sold from my margin?
Per CRA "superficial loss" definition, your purchase in TFSA counts as the substituted property even if bought up to 30 days before the disposition in your non-registered account.
ajdedo wrote: If the scheme of buying first in my TFSA, and then selling from my margin doesn't work. Then would it be possible to transfer 50 shares in to my TFSA instead of 100? Since I purchased 50 shares in 2019, and then 50 shares last week, if I transferred 50 shares in to my TFSA, and assuming my accountant uses the 'first in, first out' rule of accounting, then would the 30 day rule not apply?
No accountant in Canada will use "first in, first out". That's a US method. CRA only accepts ACB (adjusted cost base) calculations. With ACB, there are no separate lots; your 50 shares plus 50 shares will become 100 shares purchased at (whatever your total cost of purchase was). Transferring 50 shares to TFSA still would be done at a loss, which cannot be claimed.

Bottom line, CRA intentionally closed as many loopholes as they could think of. You cannot claim a loss in non-registered account and get the same property cheap at a registered account. Your best bet is to purchase a similar but not identical property in your TFSA: a similar company, or maybe you could get away with some call options. Options are not an identical property to stocks they represent, though I cannot tell exactly what would be allowed. At minimum, you'd need to not exercise call options within 30 days to avoid the superficial loss rule.

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