# Gold with no proof of ownership



## herbertb (Oct 23, 2011)

Hi, I have an elderly uncle who has 20 ounces of gold which was purchased 30-40 years ago. He has no proof of purchase/ownership documents,so for taxation I would presume that he would have to use the valuation date value as cost. 

*But....that's not my question*


he has net capital losses from other years which would easily cover the capital gains. * So my question is... if he has no proof of purchase (stating that he owns the gold bars) could he be able to use his net losses against the capital gains from selling the bars? *

He seems to think that it is a sure thing that this will be accepted, me on the other hand am more skeptical.


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## iherald (Apr 18, 2009)

If he sells the bars and assumes the adjusted cost base is 0, since he has no reciept, I can't imagine the government mad at him having a $1,800 an ounse capital gain.


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## herbertb (Oct 23, 2011)

iherald said:


> If he sells the bars and assumes the adjusted cost base is 0, since he has no reciept, I can't imagine the government mad at him having a $1,800 an ounse capital gain.


of course not, but would they allow him to use net capital losses from previous years to negate the taxes? that was my question


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## OhGreatGuru (May 24, 2009)

I don't see why not. Losses can be claimed against any capital gain. And he is proposing to declare the largest possible capital gain. He should probably add a note to his Schedule 3 explaining why he assumed an ACB of zero.


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## herbertb (Oct 23, 2011)

OhGreatGuru said:


> I don't see why not. Losses can be claimed against any capital gain. And he is proposing to declare the largest possible capital gain. He should probably add a note to his Schedule 3 explaining why he assumed an ACB of zero.



thanks for your reply

I don't know how strict revenue Canada is but I just see this situation as an opportunity for one person (with capital losses) to sell another persons appreciated asset, and avoid paying taxes.

eg

person A: has $50,000 of net capital losses (and will never be able to use them)

person B: has a $100,000 capital gain with gold with no paper trail

person B says to Person A , "hey sell my gold and claim it on your taxes and I would give you half of the tax that would normally be due at my rate".




I'm probably going to give revenue Canada a call and see if I can talk to someone knowledgeable about my uncles situation and v-day cases. I would hate for him to sell his gold,file his taxes,and claim his losses only to get a call later saying that they will need more information.


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## OhGreatGuru (May 24, 2009)

For your uncle's sake I think you should stay out of it. Or at the very least say you are calling about your own gold. Telling CRA you are calling because you are worried that what your uncle is planning may have a big tax liability is a sure way to get them to flag your uncle's return for an audit.


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## the-royal-mail (Dec 11, 2009)

Call centers are trained to ask you for your identity straight away. You need to fight back with the approach of "May I ask some general questions without identifying myself?" straight away. The answer is usually yes.


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## cardhu (May 26, 2009)

Proof of ownership has nothing to do with it. If he has carried forward losses on the books (on CRA’s books*), then those losses can and should be used to offset current gains. 

I’m not sure why others are assuming a zero ACB … that’d be silly … historical gold prices are easily obtainable. 

I wouldn’t bother calling CRA on this at all, but if you do, I agree with toolbox that you should keep the conversation generic and anonymous.


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## OhGreatGuru (May 24, 2009)

cardhu said:


> ...
> I’m not sure why others are assuming a zero ACB … that’d be silly … historical gold prices are easily obtainable.
> 
> ...


Except that according to OP, the Uncle can't remember within a decade when he purchased the gold. However I agree that if he could narrow it down to a year he could just use the historical price average for that year.


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## peterk (May 16, 2010)

Seeing as neither he nor the CRA can prove when the gold was bought, I would think CRA would be thrilled to have the uncle assume an ACB of the price of gold 40 years ago...


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## ghostryder (Apr 5, 2009)

peterk said:


> Seeing as neither he nor the CRA can prove when the gold was bought, I would think CRA would be thrilled to have the uncle assume an ACB of the price of gold 40 years ago...



Since there was no capital gains tax prior to 1972, if in fact this gold was purchased 40 years ago (1971) then the actual purchase price is irrelevant. The ACB would be the price of gold on Jan 1, 1972. 

Would it not?


On the other hand, as mentioned previously, CRA is not going to argue with someone who uses an ACB of zero.


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## MoneyGal (Apr 24, 2009)

Technically it is the value as at December 31, 1971. Here is the CRA form you would use to elect the value on December 31, 1971:

http://www.cra-arc.gc.ca/E/pbg/tf/t2076/t2076-00e.pdf

If the gold is in the form of coins, it can be sold with no capital gains tax payable in amounts smaller than $1,000 (as listed personal property, a form of personal-use property). However gold bars do not fall under the definition of listed personal property and are not exempt from capital gains tax.


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## ghostryder (Apr 5, 2009)

MoneyGal said:


> Technically it is the value as at December 31, 1971



Sorry. A little before my time.


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## MoneyGal (Apr 24, 2009)

Not mine...I would have turned four just a few days earlier.


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## Maybe Later (Feb 19, 2011)

MoneyGal said:


> If the gold is in the form of coins, it can be sold with no capital gains tax payable in amounts smaller than $1,000 (as listed personal property, a form of personal-use property). However gold bars do not fall under the definition of listed personal property and are not exempt from capital gains tax.


That's very interesting. I was left some gold coins from a great aunt. Is the $1000 per transaction, per individual piece of property (coin), or per year?


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## MoneyGal (Apr 24, 2009)

Per transaction, but don't "stack" many transactions in a year as a tax-avoidance strategy.

Useful CRA links:

http://www.cra-arc.gc.ca/tx/ndvdls/...m/lns101-170/127/cmpltng/prsnls/menu-eng.html

http://www.cra-arc.gc.ca/tx/ndvdls/...ncm/lns101-170/127/cmpltng/lstd/menu-eng.html


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## Maybe Later (Feb 19, 2011)

Thanks. That's good to know.


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## ghostryder (Apr 5, 2009)

MoneyGal said:


> Not mine...I would have turned four just a few days earlier.



MoneyGal's first book. Now available on the web:


http://laws-lois.justice.gc.ca/eng/acts/I-3.3/


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## cardhu (May 26, 2009)

toolbox said:


> Except that according to OP, the Uncle can't remember within a decade when he purchased the gold.


OP didn’t say his uncle can’t remember, he (OP) just wasn’t particularly specific ... the point appeared (to me) to be that the uncle has no documents to prove that the gold belongs to him ... not really the same thing. 

Its funny how these threads sometimes take on a life of their own ... the initial suggestion of zero ACB was conjecture only, and yet 3 subsequent posts, by 3 separate authors, have perpetuated the conjecture. 

Ghost ... good point about the 1972 introduction of cap gains tax ... I’d forgotten about that.


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