Comments on: Trading Stocks And Income Tax http://blog.taxresource.ca/tax-implications-shares-of-public-companies/ Canadian Tax Help & Financial Planning Resources Sun, 12 Feb 2012 02:53:18 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Tax Guyhttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-7338 Tax Guy Sat, 04 Sep 2010 02:18:10 +0000 http://blog.taxresource.ca/?p=519#comment-7338 No. The ACB is the weighted average per share of all of the shares of a company. No. The ACB is the weighted average per share of all of the shares of a company.

]]> By: b edwardshttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-7336 b edwards Fri, 03 Sep 2010 15:37:46 +0000 http://blog.taxresource.ca/?p=519#comment-7336 I have been looking for the answer to this one for a while (probably would have spent less time waiting on the phone for a CRA rep, actually): I have shares in the same company in two different non-registered trading accounts. If I sell shares from just one of those accounts, can the ACB be calculated from the share purchases made in that account, or must I calculate from both accounts? I have been looking for the answer to this one for a while (probably would have spent less time waiting on the phone for a CRA rep, actually): I have shares in the same company in two different non-registered trading accounts. If I sell shares from just one of those accounts, can the ACB be calculated from the share purchases made in that account, or must I calculate from both accounts?

]]> By: Tax Guyhttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-2167 Tax Guy Tue, 24 Mar 2009 01:09:14 +0000 http://blog.taxresource.ca/?p=519#comment-2167 Hi John,Being de-listed does not mean you can claim a loss. The company must stop operating or be wound up in order to claim the loss. If the company has ceased operating or is wound up you make an election to claim the loss: You are deemed to have disposed the shares for nil value and the immediately reacquired them again for nil. If the company is revived and begins operation your new ACB is nil.If the company has not ceased operations or is wound-up, then the only way to claim the loss is to sell the shares or transfer the ownership to an unrelated third party (or donate them to a charity willing to take the shares). Hi John,

Being de-listed does not mean you can claim a loss. The company must stop operating or be wound up in order to claim the loss. If the company has ceased operating or is wound up you make an election to claim the loss: You are deemed to have disposed the shares for nil value and the immediately reacquired them again for nil. If the company is revived and begins operation your new ACB is nil.

If the company has not ceased operations or is wound-up, then the only way to claim the loss is to sell the shares or transfer the ownership to an unrelated third party (or donate them to a charity willing to take the shares).

]]> By: John Leehttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-2136 John Lee Mon, 23 Mar 2009 03:12:41 +0000 http://blog.taxresource.ca/?p=519#comment-2136 Just a question regarding bankruptcies:If I bought company A in year 2000 for $1000 and the company went bankrupt and they became delisted from the stock exchange in year 2006, is this considered a capital loss, even though I haven't technically sold them? Just a question regarding bankruptcies:

If I bought company A in year 2000 for $1000 and the company went bankrupt and they became delisted from the stock exchange in year 2006, is this considered a capital loss, even though I haven’t technically sold them?

]]> By: Philip Madoniahttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-1849 Philip Madonia Tue, 10 Feb 2009 01:14:09 +0000 http://blog.taxresource.ca/?p=519#comment-1849 I understand what you say above, therefore, if I buy back the shares within 30 days, I am left with he capital gain of $1500 and the disallowed loss is added to the ACB of the purchased shares, correct? I understand what you say above, therefore, if I buy back the shares within 30 days, I am left with he capital gain of $1500 and the disallowed loss is added to the ACB of the purchased shares, correct?

]]> By: Tax Adminhttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-1636 Tax Admin Wed, 17 Dec 2008 16:04:39 +0000 http://blog.taxresource.ca/?p=519#comment-1636 I'm a little confused as to which of the 500 shares you have sold.If you sell the remaining 500 shares for $29 you will have a loss of $3,000 and if both trades occurred in the same year you will have a net capital loss of $1,500.If you buy back the shares within 30 days of the sale the amount of the gross loss per share is added back to new shares acquired. I’m a little confused as to which of the 500 shares you have sold.

If you sell the remaining 500 shares for $29 you will have a loss of $3,000 and if both trades occurred in the same year you will have a net capital loss of $1,500.

If you buy back the shares within 30 days of the sale the amount of the gross loss per share is added back to new shares acquired.

]]> By: Philip Madoniahttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-1634 Philip Madonia Wed, 17 Dec 2008 09:18:20 +0000 http://blog.taxresource.ca/?p=519#comment-1634 I'm a little confused about last answer, maybe an example will help.Assuming I buy 500 shares of X at $32.00 and 500 at $38.00, ignoring commissions for now. Then I sell 500 at $38.00. I will have a gain of $1500.00 to declare and 500 shares with an ACB of $35.00. Assuming I sell the 500 at $29.00 just before end of year and buy them back within 30 days for $29.00. Will I then still declare a gain of $1500 and have an ACB of $35.00 ($29.00 plus $6.00 per share loss)?If on the other hand I wait 30 days to re-purchase at $29.00, I declare no gain and an have an ACB of $29.00/share.Phil I’m a little confused about last answer, maybe an example will help.

Assuming I buy 500 shares of X at $32.00 and 500 at $38.00, ignoring commissions for now. Then I sell 500 at $38.00. I will have a gain of $1500.00 to declare and 500 shares with an ACB of $35.00. Assuming I sell the 500 at $29.00 just before end of year and buy them back within 30 days for $29.00. Will I then still declare a gain of $1500 and have an ACB of $35.00 ($29.00 plus $6.00 per share loss)?

If on the other hand I wait 30 days to re-purchase at $29.00, I declare no gain and an have an ACB of $29.00/share.

Phil

]]> By: Tax Adminhttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-1600 Tax Admin Tue, 02 Dec 2008 01:49:14 +0000 http://blog.taxresource.ca/?p=519#comment-1600 The adjusted cost base is the price paid, plus any commissions paid to the broker. The adjusted cost base per share is the total cost paid plus the total commissions paid divided by the total number of shares owned.If shares are re-purchased within 30 days of disposition, the loss is added to the adjusted cost base but the gain is taxable. If the shares are re-purchased after 30 days, then the price paid plus brokerage fees is added to the weighted average adjusted cot base. The adjusted cost base is the price paid, plus any commissions paid to the broker. The adjusted cost base per share is the total cost paid plus the total commissions paid divided by the total number of shares owned.

If shares are re-purchased within 30 days of disposition, the loss is added to the adjusted cost base but the gain is taxable. If the shares are re-purchased after 30 days, then the price paid plus brokerage fees is added to the weighted average adjusted cot base.

]]> By: Philip Madoniahttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-1599 Philip Madonia Fri, 28 Nov 2008 04:45:05 +0000 http://blog.taxresource.ca/?p=519#comment-1599 Is the average adjusted cost base applied to shares purchased within a tax year? Do we effectively calculate an average cost per share to determine gain/loss on partial sale of same shares, and if so, do re-purchased shares (outside of 30 day rule) also effect average price so that it is ineffectual to sell and re-purchase in same calender year in order to take capital loss. If so, what is the point of the superficial loss rule, does it not do exactly the same thing as the average adjusted cost formula.Phil Is the average adjusted cost base applied to shares purchased within a tax year? Do we effectively calculate an average cost per share to determine gain/loss on partial sale of same shares, and if so, do re-purchased shares (outside of 30 day rule) also effect average price so that it is ineffectual to sell and re-purchase in same calender year in order to take capital loss. If so, what is the point of the superficial loss rule, does it not do exactly the same thing as the average adjusted cost formula.

Phil

]]> By: Tax Adminhttp://blog.taxresource.ca/tax-implications-shares-of-public-companies/comment-page-1/#comment-1029 Tax Admin Thu, 06 Nov 2008 21:41:17 +0000 http://blog.taxresource.ca/?p=519#comment-1029 Any corporation can invest in shares of another public company. However, the income earned from these investments are considered passive investment income and excluded from income of the corporation for the purposes of the small business deduction. If the dividend income is flowed out to you via a dividend in the same year, then there is no little difference between investing inside the corporation that outside. Leaving dividend income inside the corporation could cost you approximately 15% more tax in BC (the range for all provinces 5% to 17%).Capital gains earned on passive investment income result in slightly higher tax. Any corporation can invest in shares of another public company. However, the income earned from these investments are considered passive investment income and excluded from income of the corporation for the purposes of the small business deduction. If the dividend income is flowed out to you via a dividend in the same year, then there is no little difference between investing inside the corporation that outside. Leaving dividend income inside the corporation could cost you approximately 15% more tax in BC (the range for all provinces 5% to 17%).

Capital gains earned on passive investment income result in slightly higher tax.

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