# tax loss in RRSP



## bflannel (Apr 21, 2013)

If I have a loss in my RRSP is it possible to sell for a loss and use this against CG's in another account via moving the shares into a non-registered account?


----------



## makemerich (Oct 1, 2015)

bflannel said:


> If I have a loss in my RRSP is it possible to sell for a loss and use this against CG's in another account via moving the shares into a non-registered account?


No. The loss will need to be realized in the RRSP.


----------



## Davis (Nov 11, 2014)

You will pay less tax when you will withdraw from your RRSP as you will have less money to withdraw, but that's it.


----------



## bflannel (Apr 21, 2013)

That's what I thought I had just read something else that made me possibly think otherwise.

Thanks,

please everyone go buy 3d printers for the holidays.


----------



## peterk (May 16, 2010)

Hey, at least the RRSP is the best place to hold your losers... I got tons of losers in my TFSA, the worst place for them!


----------



## Eclectic12 (Oct 20, 2010)

I'd have ranked it as ... best taxable account, second best RRSP and worst TFSA.

Of course, if I could figure out consistently in advance which were losers, I'd avoid them. :biggrin:


Cheers


----------



## Eclectic12 (Oct 20, 2010)

makemerich said:


> No. The loss will need to be realized in the RRSP.


In terms of the loss to the point of withdrawal ... then yes - there is no way to avoid it in the RRSP.
Where one does hold the same stock in one's TFSA, one may be able to end up with income tax to pay plus a smaller CG in the taxable account.

Say the stock was bought for $20 and at $8 one withdrawals. There will be $8 of income to report, the RRSP withholding tax to pay and eventually filing the tax return for that tax year will fix any over or under payment of income tax.

Say the stock is eventually sold for $2 ... there will then be a $6 CL for use against other 


Unless one is in a period of low income ... likely the income tax means this is not worthwhile (I haven't run the numbers).

When there was no "advantage rules" for RRSP and financial institutions allowed swapping cash for stocks for a fee, this might have been worthwhile.


Cheers


----------



## peterk (May 16, 2010)

Eclectic12 said:


> I'd have ranked it as ... best taxable account, second best RRSP and worst TFSA.
> 
> Of course, if I could figure out consistently in advance which were losers, I'd avoid them. :biggrin:
> 
> ...


I think it's best to hold losers (or the smallest gainers) in your RRSP. The RRSP is fully taxed upon withdrawal, so minimizing it's overall size will result in the smallest tax bill in the future. In addition to the favorably taxed capital gains and dividends from stocks in an unregistered account, this is the other reason why it is often advised to hold your GIC and Bond allocation inside the RRSP.


----------



## CPA Candidate (Dec 15, 2013)

You already received a tax benefit when you didn't pay tax on the money you lost. Any losses in an RRSP are shared with the government to the extent of your marginal rate. It's one aspect of losing money that feels good.


----------



## makemerich (Oct 1, 2015)

peterk said:


> I think it's best to hold losers (or the smallest gainers) in your RRSP. The RRSP is fully taxed, so minimizing it's overall size will result in the smallest tax bill in the future. In addition to the favorably taxed capital gains and dividends from stocks, this is the other reason why it is advised to hold your GIC and Bond allocation inside the RRSP.
> 
> View attachment 7570


This is misleading. You do NOT pay tax on income earned in your RRSP as you earn it. You pay tax on your RRSP generally when withdrawals are made and/or when you start drawing on the RIF. Capital gains, dividends, interest, etc. is tax-free as long as the investments remain in your RRSP.


----------



## makemerich (Oct 1, 2015)

Eclectic12 said:


> In terms of the loss to the point of withdrawal ... then yes - there is no way to avoid it in the RRSP.


I'm not 100% sure where you're going with this. The original question was if the OP could trigger a capital loss outside of the RRSP in order to take advance of capital gains that are also outside the RRSP. The definitive answer is no. If a financial institution were to allow you to 'transfer' the shares out of the RRSP, this would be a deemed disposition of the shares with an immediate repurchase in a non-registered account. You will get taxed on the withdrawal from the RRSP which will equal the proceeds/FMV at the time of the deemed disposition. Therefore, the capital loss would be triggered in the RRSP (which is no good, because you don't pay tax on the capital gains in the RRSP in the first place) and then your new PUC would be whatever the FMV of those shares were when the deemed disposition occur. If the shares continued to fall in price and you disposed of them lower than the new PUC, you would have a capital loss in your non-registered account. But that is neither here nor there.


----------



## peterk (May 16, 2010)

makemerich said:


> This is misleading. You do NOT pay tax on income earned in your RRSP as you earn it. You pay tax on your RRSP generally when withdrawals are made and/or when you start drawing on the RIF. Capital gains, dividends, interest, etc. is tax-free as long as the investments remain in your RRSP.


Sorry for misleading you. To clarify, I meant "The RRSP is fully taxable _upon withdrawal_"

and

"In addition to the favorably taxed capital gains and dividends from stocks _in an unregistered account_"

I'll edit my post to make sure no one else misunderstands.


----------



## Eclectic12 (Oct 20, 2010)

makemerich said:


> I'm not 100% sure where you're going with this.


My point is that where one can get the shares out of the RRSP while there's still value - there might be a way to have a smaller CL in the taxable account.

From what I recall when I did a swap years ago ... there was no taxable event as the RRSP hadn't changed in value and the taxable account didn't either. All that changed was the assets held in each account.

With fewer financial institutions allowing swaps - it is much more difficult as the only choice left is an "in-kind" withdrawal which does trigger a taxable event.




makemerich said:


> ... If a financial institution were to allow you to 'transfer' the shares out of the RRSP, this would be a deemed disposition of the shares with an immediate repurchase in a non-registered account. You will get taxed on the withdrawal from the RRSP ...


I'm not following the concern.

I did say "There will be $8 of income to report, the RRSP withholding tax to pay ..." as well as "Unless one is in a period of low income, likely the income tax means this is not worthwhile (I haven't run the numbers)". I thought this made it clear that one would have to factor in income taxes.




makemerich said:


> ... If the shares continued to fall in price and you disposed of them lower than the new PUC, you would have a capital gain in your non-registered account. But that is neither here nor there.


Say what?

Going back to my example, the transfer out at FMV of $8 that sets the ACB to $8 and a following sale for $2 results in a *capital gain*?
How does that work? 


Cheers


----------



## makemerich (Oct 1, 2015)

Eclectic12 said:


> Say what?
> 
> Going back to my example, the transfer out at FMV of $8 that sets the ACB to $8 and a following sale for $2 results in a *capital gain*?
> How does that work?
> ...


This was a typo - meant to say capital loss not capital gain (edited)


----------

