Transfer Of Stocks To Spouse

by Tax Guy - Burlington Accountant on February 23, 2009 Print This Post Print This Post

Question: Can you transfer stocks to a spouse so that the spouse could take advantage of the spouse’s tax losses from previous years (assuming that that the stocks will go higher in the future)? The stocks being transferred are at the price they were purchased.

Income Splitting Rules

When you transfer, give, or lend property to your spouse, the property is transferred at its original cost base. There are no immediate tax consequences at the time of the transfer.

To prevent married couples from splitting income by transferring property from a high-income spouse to a lower-income spouse, there are income tax attribution rules. Under the attribution rules any income received from the transferred property is taxed in the hands of the original spouse as are any capital gains or losses.

Transfer Of Stocks At Cost

The stocks transferred to your spouse would automatically transfer at its original cost base. When they are subsequently sold by your spouse the capital gain would be your. Therefore, it’s not possible to transfer the stocks to your spouse to take advantage of their losses carried forward.

Fair Market Value Transfer

If your spouse purchases the stocks from you at their fair market value and pays for the stocks with his or her own money (or if you lend your spouse the money to purchase the stocks) and waits 31 days before selling them, then the spouses losses may be used to offset some of the gains.

This may not be desirable since the transfer would result in an immediate capital gain at the time of transfer, which is really what we are trying to avoid in the first place!

Conclusion

There is little anyone could do to use losses carried forward by a spouse or other family member.

Suggestions or Questions

Do you have any feedback you’d like to share? Perhaps you have a question. Please fee free to comment on this article.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

Print This Post Print This Post

{ 1 comment }

Steve September 17, 2013 at 10:12 am

Hi Dean,
My question is similar. I have several hundred shares of stock in a Canadian Corporation that I have accumulated during my employment with that company prior to my retirement. My wife and I each have a TFSA. Can I use those existing stocks and transfer them into the TFSA’s, both for myself and for my wife? If so, are there any rules, cost’s or tax implications that kick-in for my wife?
Steve

Comments on this entry are closed.

Previous post:

Next post: