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US stock: do we have disqualifying disposition to worry about?

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  • Jul 3rd, 2021 1:17 pm
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[OP]
Member
Mar 18, 2006
271 posts
258 upvotes

US stock: do we have disqualifying disposition to worry about?

Situation:
  • wife works for a US firm in Canada
  • part of her total compensation includes company stock, which she must elect to participate in
  • a %age of her paycheck is withheld each pay period to purchase company stock at the end of each quarter
  • their purchase price is a 5% discount off market price (forget if it's discount on day of purchase or last x days average)
  • the plan only buys whole shares, so there is always some USD left with broker (plus dividends, minus 15% withholding tax)
  • company selected broker is US based, and this is a non-registered account

What we have done so far is to transfer these shares annually from US broker --> Questrade margin --> Questrade RRSP. Questrade records cost basis in margin account and contribution amounts to RRSP, which we report to the CRA at tax time. Her annual contributions to share purchases are sufficient for what we want to contribute to her RRSP annually.

Any US cash from broker is requested as a cheque, as they only buy whole shares with new money only (not new money + available cash).

Question: Do we need to worry about any US disqualifying disposition in our pan? We are not selling the shares (nor do we plan on for at least 5 years), but not sure if the transfer from a non registered account to an RRSP is considered the same as deemed disposition with CRA.
3 replies
Deal Addict
User avatar
Dec 8, 2010
2561 posts
990 upvotes
Not 100% sure what you're asking - AFAIK the US (IRS) has absolutely no interest in this, assuming the US brokerage account is registered to your Canadian address - cap gains are done where you are tax resident (except for 'real' property, ie houses).

https://fairmark.com/compensation-stock ... reporting/ - none of this applies if your wife is Canadian resident, pays tax to the CRA - gets T4 etc etc not IRS forms and pays US tax (why would she, working in Canada?).

When you move shares into a tax wrapper it's as if you sold them. Again AFAIK, it makes zero difference from a tax perspective if you sell and rebuy or transfer. The effect is the same. Shares unless held specifically in your name are fungible, you don't hold these specific x shares you just hold any x shares.
Deal Addict
Mar 3, 2018
3150 posts
3520 upvotes
GTA
If you transfer shares from an unregistered account on which you have a loss to an RRSP, the loss will not be deductible. Or if you transfer shares from an unregistered account on which you have a gain to an RRSP, you will have a taxable capital gain.

Any gain can be offset by the RRSP deduction.

As already mentioned gains on US stocks are reported in the country you are resident in by tax treaty.
[OP]
Member
Mar 18, 2006
271 posts
258 upvotes
Thanks to you both for confirming. I was thinking along the same lines as being a Canadian resident, this situation would not apply to us. It was just that the broker now has a pop-up warning of unqualified disposition for the shares we hold, and that was what threw me off yesterday.

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