# Capital gains on US stock



## upstream (Mar 22, 2012)

I searched and didn't find this info in the forum:

I've only ever held US stocks in my RRSP before with one exception. Costco. I've had them for many years adding along the way in my TDwaterhouse margin trading account and would like to sell it now. My question is not with the dividend. On that I've always received a withholding tax receipt and paid the rest of the taxes owed to the Canadian Government come tax filing time. Small amount involved. My question is about the capital gains. As a Canadian; would I owe the US gov't some capital gains tax on profits from selling a US stock held in a Canadian trading account, or does everything go to the Canadian Gov't? Also would the 50% capital gains exemption apply to this stock like Canadian stocks? It is a large enough sum that it could create problems if I mess this up.

upstream


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## Nerd Investor (Nov 3, 2015)

Hello,

The capital gain on the sale of US stock (including effects of foreign exchange) is treated just like a capital gain on a Canadian stock for taxes purposes. Meaning it is only taxable in Canada and still benefits from only 50% of the gain being subject to tax.

Cheers,


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## humble_pie (Jun 7, 2009)

upstream said:


> I've only ever held US stocks in my RRSP before with one exception. Costco. I've had them for many years adding along the way in my TDwaterhouse margin trading account and would like to sell it now ... My question is about the capital gains.
> 
> As a Canadian; would I owe the US gov't some capital gains tax on profits from selling a US stock held in a Canadian trading account, or does everything go to the Canadian Gov't?



nothing to the IRS. All capital gains taxes to the CRA & provincial tax authority if applicable.





> Also would the 50% capital gains exemption apply to this stock like Canadian stocks? It is a large enough sum that it could create problems if I mess this up.



yes, the 50% taxable rule applies to all capital gains taken anywhere in the world (from the CRA's point of view.)

but be careful about your cost base. Brokers - certainly the TD - are notorious for messing up what they call "book value" so one can never be sure their figures are correct. Investors should keep their own gains/losses spreadsheets.

have you been keeping your Costco records? your cost base will be the US dollars, expressed to the CRA in CAD at the spot rate exchange of the day that you purchased your costco shares. I hope you have your records & can find this USD figure easily.

a frequently-used archive for checking prior daily USD/CAD exchange rates is the Bank of Canada noon rate archive. From this source, you will be able to obtain your Costco cost base expressed in canadian dollars.

if Costco has split, spun off an entity or undergone any other major capital reorganization since your purchase, these events have to be taken into the calculation (again, use bank of canada FX rate as of the record date of the capital reorg event.)

now you'll have your ACB ready for the CRA tout comme il faut. When you do sell, carry out the same BOC FX rate check procedure. Obtain the BOC noon rate for the day of your sale, convert your USD proceeds from the Costco sale & there you will be. Proceeds in CAD less cost in CAD = capital gain. Of which only half will be taxable, exactly as you say.

without knowing any details, I rather expect the result will please you. You should have a CAD capital gain that, in addition to any gain in Costco itself, will be greatly augmented by the rise in CAD since your original purchase! but notice, though, that so far this is a reportable taxable gain only. To concretize the actual gain dollars in CAD, you would have to convert the proceeds into CAD using the familiar currency gambit trading strategy.

mille félicitations for the successful investment, best wishes for many more.


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## upstream (Mar 22, 2012)

Thanks. That is what I hoped. I'm reaching the end of investing in the markets and am selling off what I have in favor of some steady income instead. Costco is the first to go. It is a good stock and I'd keep buying if I was at a different stage in life. I see here the first ones I've bought were for $39.10 US in 1990. They split twice, 2 for 1 each time and I'd wager they're going to do the same soon. On average I've bennefitted from a low CAD, but sometimes it was higher. There we're lots of very down years for Costco as well. I've had a habbit of buying the same 10 shares for the last 30 years every month. A little at a time. Sometimes I would change which shares, but I've never bought more than 20 different companies over the time and always the 10 I selected for that year. Here is the current list COST, SAP, T, BYD.UN, TRP, ACO.X, ATB.B (my best long term investment I still have), KEY, BIP.UN, ENB. Unless big changes happen I'd just keep putting in a little each month to each. Past honorable mentions that serve as a template for good companies during appropriate business cycles are CCO, VET (while still a trust), SU, CNR. Now I'm going to build some 8-plex and 6-plex apartment buildings where I live over the next 5 years so there can be steady income and I can have a job in retirement eventually.


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