# Time to Harvest



## robfordlives (Sep 18, 2014)

IN prior years I had been buying VXC. IN about 2017 I switched to XAW (ex Canada etf) on new purchases for a variety of reasons. At this time I have a loss in XAW - not huge but worth harvesting I believe. I have a similar situation in VFV (S&P 500 unhedged)

At this time I would like to harvest and of course avoid the swapping provision disallowing a loss if similar property purchased and also not to miss out on any market movement in the underlying basket of securities. Some thoughts

-I do not think I could sell XAW and buy VXC as these are nearly identical. I was thinking maybe buy a globally diversified Mawer fund? My intention is after 30 days to buy back XAW
-I think I would be OK selling VFV and buying into my XAW position. These to me are clearly different ETF's

To be honest when I bought VFV I had this in the back of my mind. Valuations seemed very high to me but if they dropped I could sell to tax loss harvest so it's not a total loss.


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## OnlyMyOpinion (Sep 1, 2013)

_"in 2001 the CRA issued a bulletin (TI 2001-008038) stating that two index funds tracking the same benchmark are considered identical property."_
From: https://www.moneysense.ca/columns/tax-loss-selling-with-canadian-etfs/
Or: https://www.pwlcapital.com/wp-conte...-Selling-White-Paper_2013-OCT_hyperlinked.pdf


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## jdc (Feb 1, 2016)

The superficial loss rule applies to identical properties, not similar properties. 

VXC and XAW track different indexes and have different security holdings:

VXC tracks the FTSE Global All Cap ex Canada China A Inclusion Index, by investing primarily in the U.S.-domiciled Vanguard Large-Cap ETF, Vanguard Small-Cap ETF, Vanguard FTSE Europe ETF, Vanguard FTSE Pacific ETF, and Vanguard FTSE Emerging Markets ETF

XAW tracks the MSCI ACWI ex Canada IMI Index and owns 6 iShares ETFs,

In my opinion, these are definitely not identical properties.

--
EDITED to add, "in my opinion"....


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## james4beach (Nov 15, 2012)

I have a question about superficial loss across the non-reg / registered boundary but am unclear on the 'superficial loss' rule and 'separate denied loss' rule.

I have a portfolio of individual stocks in my non-registered account. Ideally, I want to shift this portfolio into my RRSP. I don't want to make an RRSP contribution (don't have room). It's not absolutely necessary that I do this, but I'd prefer to have the portfolio inside the RRSP due to how I'm arranging my asset allocation.

The non-reg stock portfolio currently has a loss, and it would be great to be able to keep this capital loss as a carry-forward. I would not be claiming this in the year; the intent would be to carry it forward to a future year.

Obviously, at some point I have to sell these stocks in the non-reg account. Do I then have to wait 30 or 60 days before I can buy the exact same securities inside my RRSP? The capital loss isn't huge at $900 but it would still be nice if I can make use of that for carry-forward.


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## peterk (May 16, 2010)

james4beach said:


> I have a question about superficial loss across the non-reg / registered boundary but am unclear on the 'superficial loss' rule and 'separate denied loss' rule.
> 
> I have a portfolio of individual stocks in my non-registered account. Ideally, I want to shift this portfolio into my RRSP. I don't want to make an RRSP contribution (don't have room). It's not absolutely necessary that I do this, but I'd prefer to have the portfolio inside the RRSP due to how I'm arranging my asset allocation.
> 
> ...


I think so yes. The carry-forward part is that the loss is used to modify the ACB of the shares that you repurchase shortly after, and then when those shares are sold at a future date their ACB incorporates the original loss-sell transaction. When you re-buy in RRSP, there is no ACB, thus no modifying the ACB or carrying forward, and the loss vanishes and is not claimable.
Disclosure: I've never done this. Just parroting what I've read previously here on CMF.


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## carson (Apr 28, 2011)

james4beach said:


> I have a question about superficial loss across the non-reg / registered boundary but am unclear on the 'superficial loss' rule and 'separate denied loss' rule.
> 
> I have a portfolio of individual stocks in my non-registered account. Ideally, I want to shift this portfolio into my RRSP. I don't want to make an RRSP contribution (don't have room). It's not absolutely necessary that I do this, but I'd prefer to have the portfolio inside the RRSP due to how I'm arranging my asset allocation.
> 
> ...


I have a very similar situation and was hoping someone on here can provide an answer. For me, I have a loss on a stock in my non reg account that I want to sell next month then re purchase in January in my TFSA once there is room available. Does the superficial loss apply in this case?

Cheers


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## OnlyMyOpinion (Sep 1, 2013)

james4beach said:


> I have a question about superficial loss across the non-reg / registered boundary but am unclear on the 'superficial loss' rule and 'separate denied loss' rule.
> I have a portfolio of individual stocks in my non-registered account. Ideally, I want to shift this portfolio into my RRSP. I don't want to make an RRSP contribution (don't have room). It's not absolutely necessary that I do this, but I'd prefer to have the portfolio inside the RRSP due to how I'm arranging my asset allocation.
> The non-reg stock portfolio currently has a loss, and it would be great to be able to keep this capital loss as a carry-forward. I would not be claiming this in the year; the intent would be to carry it forward to a future year.
> Obviously, at some point I have to sell these stocks in the non-reg account. Do I then have to wait 30 or 60 days before I can buy the exact same securities inside my RRSP? The capital loss isn't huge at $900 but it would still be nice if I can make use of that for carry-forward.


_"In most cases, unless the loss is very small, it would be best to sell the investment and contribute the cash to the registered account. *If you or your spouse wish to purchase the same investment in a registered account, do not do this in the period 30 days before or after the disposal*. Otherwise the loss will be considered a superficial loss and will be disallowed."_
https://www.taxtips.ca/personaltax/investing/transfersharestorrsp.htm


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## james4beach (Nov 15, 2012)

OnlyMyOpinion said:


> _"In most cases, unless the loss is very small, it would be best to sell the investment and contribute the cash to the registered account. *If you or your spouse wish to purchase the same investment in a registered account, do not do this in the period 30 days before or after the disposal*. Otherwise the loss will be considered a superficial loss and will be disallowed."_
> https://www.taxtips.ca/personaltax/investing/transfersharestorrsp.htm


Interesting, thanks. Unfortunately I can't contribute the cash in my case. Would the following sequence work, then? I'd sell the positions in non-registered today. Then wait 30 days, and after that, buy the same position inside the RRSP.

I realize none of us are experts in it, just trying to "crowd-source" the solution  For some reason I thought I had to wait 30+30 days, but it sounds like they just mean you should leave 30 days on either side of the events, spacing them out.


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## OnlyMyOpinion (Sep 1, 2013)

james4beach said:


> Interesting, thanks. Unfortunately I can't contribute the cash in my case. Would the following sequence work, then? I'd sell the positions in non-registered today. Then wait 30 days, and after that, buy the same position inside the RRSP...


Yes. Just remember the clock starts after the settlement date, not the transaction date.


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## james4beach (Nov 15, 2012)

OnlyMyOpinion said:


> Yes. Just remember the clock starts after the settlement date, not the transaction date.


Thanks. Ah, that's an interesting little detail.


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## james4beach (Nov 15, 2012)

I'm increasingly thinking that I may just sell, and then immediately buy again inside the RRSP -- foregoing the ability to claim the capital loss. It's not a huge loss anyway.

With these tax rules, _can_ I immediately re-buy? Is it just that I can't claim the loss, or are there other consequences?

For one, the securities are volatile and sitting "out" for 30 days doesn't strike me as a great idea. One of my worst positions, Interfor, just jumped +15% in a single day. It's going to drive me nuts if I sit out for a month and miss out on a big rally.


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## peterk (May 16, 2010)

Hypothetically, you could buy now in your RRSP, sell short in unregistered to offset the double position, wait 30+ days and then close out the long and short unregistered positions. No?


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## humble_pie (Jun 7, 2009)

peterk said:


> Hypothetically, you could buy now in your RRSP, sell short in unregistered to offset the double position, wait 30+ days and then close out the long and short unregistered positions. No?



^^ alas i don't believe this will work. Cannot go both long & short at the same time. Steadfast broker rule in both canada & the US which dates back to the great depression.

rule is known as Cannot Short the Box. Applies when both accounts have the same root numbers or are at the same brokerage, even though annexed letters or numbers attached to the roots indicate different parts of the same account such as long, short, registered, non-registered, CAD, USD, etc.

it would be possible to carry the long position across the 30 days via a proxy position though. Something of a sophisticated concept, is practiced by institutional fund managers, mawer tax-advantaged balanced being one. Not much known by retail investors, although cmf's Numbersman is certainly one who would get it.

i'll explain the proxy structure in a moment, soon as i can write it up.

.


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## humble_pie (Jun 7, 2009)

here is a strategy for managing capital gains in a variety of ways, including carrying positions in proxy form across the 30-day rule involved in tax loss selling. Many institutional funds, for example Mawer Tax Advantaged Balanced, utilize a similar strategy.

me i've never seen the option modality of the strategy - which i'll describe here - set forth, although there's nothing new under the sun & i am positive that somewhere, in some forum like Elite Trader, it's already been well documented by one or more option traders.

strategy will roughly carry an investor across the 30-day wash rule gap but please underscore that roughly. The fact that the end result will vary unpredictibly, ie roughly, is part & parcel of the fun in finance!

how it works: identify a similar stock to the company A stock which the investor is planning to sell. This alternate stock will be company B. Same sector, more or less similar performance. The selection can even be a sector ETF, provided it has decent options. For example, if one is planning to sell TD, think of roybank or XFN.

the standard version of this goes: buy shares of company B outright.

but my version costs much less & goes: buy suitable call options in company B. I would go for DITM options because typically they have the least time value/theoretical value premium. In other words, one is buying a pure proxy for company B while paying nothing more than intrinsic value.

one should choose the option expiration date carefully. The farther out in time one goes, the more freedom one has in motoring the strategy to completion. However, farther out in time will always cost more.

investor now sells his company A shares to capture the loss. For the next 30 days, company A will trade roughly more or less like company B - keep in mind the word roughly underscored above - so whatever happens, the company B DITM call options wlll roughly correlate to the fluctuations in company A's market price. An investor can coast along the required 30 days, or 90 days, or whatever his term-to-option-expiration is, without having to give the situation a thought. For the simple reason that his hedge is already locked in.

once past the 30 day wash period, investor can sell his call options for a profit if stocks have risen, while buying back his original position in company A. It's true that the buyback will cost more; but the compensatory gain in the option calls will at least partially offset such higher cost (hint: buy extra calls. Costs more but potential rewards are greater)

on the other hand, the situation would be even better if stocks were to fall. Investor will not be holding any stock, he will only be holding leverage via an inexpensive - in aggregate dollar terms - inventory of calls. These calls will still have some value, although their market price will be less than what he had originally paid to buy them. He can sell the options for an eligible capital loss & buy back his original company A shares at a discounted cost, if he so chooses. 

another beauty of the option arrangement is that it's not limited to the 30 day wash rule, although investor does have to respect that limitation of course. But the final outcome will only be limited by the time-to-expiration of the option series which he selected.

good luck! happy representational derivative trading!


.


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## OnlyMyOpinion (Sep 1, 2013)

james4beach said:


> I'm increasingly thinking that I may just sell, and then immediately buy again inside the RRSP -- foregoing the ability to claim the capital loss. It's not a huge loss anyway.
> With these tax rules, _can_ I immediately re-buy? Is it just that I can't claim the loss, or are there other consequences?
> For one, the securities are volatile and sitting "out" for 30 days doesn't strike me as a great idea. One of my worst positions, Interfor, just jumped +15% in a single day. It's going to drive me nuts if I sit out for a month and miss out on a big rally.


Yes, you could sell your complete position in the non-reg acc at a loss and buy it immediately in your RRSP if you are willing to 'eat' the nondeductable superficial loss. 
Sometimes done by accident, I'm not sure I've heard of it done on purpose.

I suggest that you will need to report the actual sale proceeds on Scheduule 3 to match the T5008 that is reported to the CRA, but you should adjust your ACB so that the net result is no loss (or gain) for that security on Schedule 3. If you reported the loss on schedule 3 it would either be used (when it shouldn't) or will be picked up as a carryforward loss on your NOA (which you also don't want).

Note: this is specific to your scenario. Superficial losses can sometimes be used if the same securty was bought again in the non-reg acc.
---------------------------

Not a lot of link documentation. But see Q&A #8 at: https://www.adjustedcostbase.ca/blog/what-is-the-superficial-loss-rule/
jmc asks, _Do I report the sell on Schedule 3 with Proceeds of Disposition and Adjusted Cost Base being the same value resulting in a gain (or loss) of zero?

AdjustedCostBase.ca, April 22, 2016 at 3:38 pm answers: jmc, The CRA isn’t clear about whether they want transactions involving superficial losses to be reported on Schedule 3. In cases where the superficial loss rule reduces a capital loss to zero, I would suggest not reporting the loss as it could cause confusion. If you would like to still report the loss then the adjusted cost base can be changed such that it equals the proceeds of disposition less the commission.

And: https://www.financialwisdomforum.org/forum/viewtopic.php?t=100185_


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## james4beach (Nov 15, 2012)

Wow thanks, lots to think about here. Things are starting to look pretty complicated.

Interesting ideas, humble_pie! Thanks.


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## humble_pie (Jun 7, 2009)

OnlyMyOpinion said:


> Yes, you could sell your complete position in the non-reg acc at a loss and buy it immediately in your RRSP if you are willing to 'eat' the nondeductable superficial loss.
> Sometimes done by accident, I'm not sure I've heard of it done on purpose.
> 
> I suggest that you will need to report the actual sale proceeds on Scheduule 3 to match the T5008 that is reported to the CRA, but you should adjust your ACB so that the net result is no loss (or gain) for that security on Schedule 3. If you reported the loss on schedule 3 it would either be used (when it shouldn't) or will be picked up as a carryforward loss on your NOA (which you also don't want).
> ...


_



me i wouldn't do a non-deductible superficial loss unless i were positive that the broker would be able to carry forward the remains of the original cost base. I've never heard that they can.

on the other hand, a broker will be able to record, with dazzling perfection, all the acquisitions & dispositions of the proxy strategy described in a previous post.

i would stick faithfully to what the broker can do, because i believe that the day is coming soon when the tax authorities will rely upon the financial institutions for a national capital gain/loss data base, much like the national dividend/interest/other income data that the same institutions furnish to the tax authorities.

soon, the tax authorities will be assessing taxpayers according to what the brokers' gain/loss data will be telling them. So if a transaction such as non-deductible superficial loss is considered "gray" ^^ even by the CRA itself, i would avoid it. I would stick to transactions that a broker will treat as either black or white. In every transasction, i would be happiest knowing, upfront, exactly how a broker will be treating the transaction when it prepares its tax documentation in the early spring of the following year.

carrying positions across 30 days via other stocks in gain/loss transactions is a simple manoeuvre. It's the one that Mawer says it utilizes for its tax-advantaged fund.

carrying positions across 30 days via the options of other stocks is a fillip with a cherry on the top that some who are comfortable with derivatives can easily use. For all i know, this is what mawer is doing in reality. Every good institution does have the capable manpower on its staff; certainly mawer does.

._


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## OnlyMyOpinion (Sep 1, 2013)

humble_pie said:


> me i wouldn't do a non-deductible superficial loss unless i were positive that the broker would be able to carry forward the remains of the original cost base. I've never heard that they can.


Nor have I. And I tend to agree, why 'eat' a loss. I was just trying to respond to Jame's specifics. I could see doing this if the amount was minor (as he indicated) and I was trying to 'clean up' my account holdings so they were structured to better suit my long term plans, and if for some reason I could/would not wait out the 30 day clock.

There is no evasion or misrepresentation occurring, reporting no loss (and no gain) is accurately reflecting the nondeductable nature of the loss. The CRA is likely to flag a sale whose proceeds are not reported per the T5008. But the purchase details and acb (box 20) in my experience are still reported by the taxpayer from their records. I agree that if/when brokers are required to be more granular, the CRA better have thought about and provided better guidance to the many nuances investors run into. 

Humble, your option plan is an imaginative solution, but it may be more complicated than desired.


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## humble_pie (Jun 7, 2009)

i've never done a non-deductible superficial loss so have no experience. But i would imagine that the original per share cost base would slide forward in some fashion, to be used in some averaged manner, together with the cost base of the new shares of the same company that will quickly be re-purchased (?)

i had thought that was what peterk was referring to upthread. Day traders must go through all of this every single day. Their gains are income, but their shares are counted as inventory, so some sort of constantly-adjusting cost basing has to go on.

i think my notion of trying to stay clear of broker confusion in its "cost base" calculations - what brokers like to call "book value" - is highly practical & sensible. I do believe the tax authorities are going to rely more & more on brokers' book values. Alas i also see the brokers making mistakes; so i for one wish to avoid giving them "gray zone" opportunities for mistakes when the same can easily be avoided.






OnlyMyOpinion said:


> Humble, your option plan is an imaginative solution, but it may be more complicated than desired.



indeed it might look complicated to someone who never does options; but jas4 is proficient at shorting & other representational trades.

there is a simple non-option version that calls for buying shares of company B immediately before or after selling company A in order to capture A's tax loss. If, during the next 30 days, company A should rise dramatically, then its cousin company B will most likely undergo a similar rise. Mawer has said this is the strategy it utilizes.

an elaboration on the basic strategy is to deploy options in lieu of actual shares of company B. This is cheaper & more fun. It's also perfectly suited for derivatives markets because it has a built-in time frame, namely the 30 days.

let's not allow fear of flying to tell us that flying is an imaginative way to get from toronto to winnipeg but driving might be less complicated ... each:


.


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## OnlyMyOpinion (Sep 1, 2013)

humble_pie said:


> i've never done a non-deductible superficial loss so have no experience. But i would imagine that the original per share cost base would slide forward in some fashion, to be used in some averaged manner, together with the cost base of the new shares of the same company that will quickly be re-purchased (?)


James had mentioned, and I'm assuming the securities are sold in a non-reg acc and repurchased 'immediately' in a RRSP acc. Superficial loss rules would apply to the sale in the non-reg acc, but acb does not carry across non-reg and reg accs.



> let's not allow fear of flying to tell us that flying is an imaginative way to get from toronto to winnipeg but driving might be less complicated ... each:.


Sorry, no imagination here, I actually prefer to drive YYZ to YWG :apologetic:


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## humble_pie (Jun 7, 2009)

you're right, jas4 did say he was selling in non-reg'd & buying in RRSP as a way to move his shares from the one account to the other ... i was writing off topic to a general reader who might realize a non-deductible loss in non-reg'd & wish to buy back in non-reg'd ... so sorry about the off-topic ... will certainly be grateful if you'd kindly refrain from calling in the LTA police over the OT ...

in general though i think the Mawer strategy to hedge against sudden rise in price of a stock while investor is temporarily out of the market for any reason - including but not limited to tax loss selling in non-reg'd - is a simple but elegant strategy. Many practice this. It simply involves swapping company A for company B. Selling/dumping A because alas he has turned out to be a hard-drinking money-losing soab.

will she ever take him back? who knows? our investor could end up liking clean-living company B much better & so they get married & live together happlly ever after


.


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## james4beach (Nov 15, 2012)

I'm thinking of using the TD Canadian Index (e-series) TDB900 as my portfolio tracks the TSX Composite pretty well, and it's cheaper to use the e-series with no trade fees compared to XIC with $9.99 trades. My portfolio is too small to bother with an options strategy.

I'm thinking:


 Sell my individual non-reg stocks and incur the capital loss
 Immediately buy TDB900 inside the RRSP to approximate the same of exposure
 Wait for superficial loss rule's 30 day timeout
 Sell TDB900 and buy the original individual stocks again
Does that method look right?

To make sure I avoid all fees on this, what is the minimum holding period for the e-series funds? From the information sheet it seems to be 30 days but I thought mutual funds generally have longer minimum holding requirements.

Are there any other penalty fees or caveats for the strategy I outlined? It seems like I should have a regular, acceptable capital loss this way with normal Schedule 3 reporting. The index fund is absolutely a different security than the individual stocks.


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## DavidW (May 27, 2016)

OnlyMyOpinion said:


> Yes, you could sell your complete position in the non-reg acc at a loss and buy it immediately in your RRSP if you are willing to 'eat' the nondeductable superficial loss.
> Sometimes done by accident, I'm not sure I've heard of it done on purpose.
> 
> I suggest that you will need to report the actual sale proceeds on Scheduule 3 to match the T5008 that is reported to the CRA, but you should adjust your ACB so that the net result is no loss (or gain) for that security on Schedule 3. If you reported the loss on schedule 3 it would either be used (when it shouldn't) or will be picked up as a carryforward loss on your NOA (which you also don't want).
> ...


I phoned CRA asking them about the need to report a superficial loss on Schedule 3 a couple months ago as I have a few this year. I was told NOT to report the sale on schedule 3 - so eat the loss. 

This was a verbal instruction over the phone and I haven't seen any documentation saying this. It wouldn't be the first time I was steered on an issue by the CRA, previously they told me to track the cost base for an identical issue bought in Canadian and US accounts when they could have told me to check the CUSIP numbers for the stock example that I gave them.

I feel the need to point out again that the T-5008 is from one brokerage and can't responsibly be used for a definitive cost base.



OnlyMyOpinion said:


> Nor have I. And I tend to agree, why 'eat' a loss. I was just trying to respond to Jame's specifics. I could see doing this if the amount was minor (as he indicated) and I was trying to 'clean up' my account holdings so they were structured to better suit my long term plans, and if for some reason I could/would not wait out the 30 day clock.
> 
> …


I choose to eat the loss for the same reason I chose to sell the stock, I wanted to get out of the investment. My activity is all in non-registered accounts which is a little different than what the thread is discussing but I think the decision reasoning is the same as you mentioned, will doing this align with my investment plan. 

There have been times when I have sold a stock and then bought it back after a dip in price and it was only the knowledge that I had sold it not long ago that facilitated a 30-day cost base check. Last year I know I did some thinking about using the superficial loss rule to move a loss to the next year. This year I have had thoughts about buying within the 30 day period so I didn't have to eat the loss - have made a couple purchases for this reason and chosen to take the loss on a few other instances. I like the look of the portfolio now and would like to trade less and get some new money for the account.


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## fireseeker (Jul 24, 2017)

james4beach said:


> I'm thinking of using the TD Canadian Index (e-series) TDB900 as my portfolio tracks the TSX Composite pretty well, and it's cheaper to use the e-series with no trade fees compared to XIC with $9.99 trades.


At least twice, I have directed my broker to transfer non-reg securities to my TFSA (as contributions at FMV into available room). Once I had a small gain, which I reported to CRA, and once I had a small loss (~$400) that I ate. I did not report the losing trade.
The upshot was I filled TFSA space without ready cash using securities that I still wished to own. And I did so at zero cost (no buys/sells), other than the tiny foregone capital gain loss. The benefit of using up the TFSA space and putting the securities into a sheltered account at what I thought were good prices (i.e. low prices) more than outweighed the lost $100 tax benefit.


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## james4beach (Nov 15, 2012)

fireseeker said:


> At least twice, I have directed my broker to transfer non-reg securities to my TFSA (as contributions at FMV into available room). Once I had a small gain, which I reported to CRA, and once I had a small loss (~$400) that I ate. I did not report the losing trade.
> The upshot was I filled TFSA space without ready cash using securities that I still wished to own. And I did so at zero cost (no buys/sells), other than the tiny foregone capital gain loss. The benefit of using up the TFSA space and putting the securities into a sheltered account at what I thought were good prices (i.e. low prices) more than outweighed the lost $100 tax benefit.


Unfortunately I can't use my TFSA at all right now, and have limited RRSP contribution room. These are unfortunate consequences of my cross-border work arrangement and US taxation.

However I do have cash available inside my RRSP and would rather place equities inside the shelter, both due to higher expected long term returns, and because it helps enforce long term investment. Do you have any thoughts on my idea about using TDB900 (Canadian index e-series) as a placeholder to wait out the 30 day superficial loss period? My portfolio acts pretty similarly to the Canadian index.

My loss is currently $800, so it's big enough that I'd like to use it if possible. If I went ahead with this, I'd sell the non-registered securities now and buy TDB900 using cash available inside my RRSP. It seems to me that this should then make that $800 capital loss allowable.


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## OnlyMyOpinion (Sep 1, 2013)

Yup. That will work.
Not sure if you DRIP. If so, make sure you don't sell just after record date and get stuck with a few shares.


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## fireseeker (Jul 24, 2017)

james4beach said:


> Do you have any thoughts on my idea about using TDB900 (Canadian index e-series) as a placeholder to wait out the 30 day superficial loss period? My portfolio acts pretty similarly to the Canadian index.


Your idea sounds solid. There is a small risk one of your individual holdings leaping or plunging, diverging from the index fund return. But you'd still be exposed to equity class that is part of your IPS, so who cares.
I'm no tax expert, but waiting 31 days after settlement should put you fully in the clear.


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## james4beach (Nov 15, 2012)

Thanks OnlyMyOpinion and fireseeker, and that's a good warning about the DRIP. Yes my portfolio may diverge from the index but this still seems better than just sitting "out" for 31 days.

These capital losses are nice to have. I hold discount bonds in my non-registered fixed income portfolio which are already pretty tax efficient (small coupon payments). The rest of their yield comes as a capital gain at maturity. Applying a capital loss against those gives me some _really_ tax efficient fixed income returns... it feels like "wiping out" interest income


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## humble_pie (Jun 7, 2009)

james4beach said:


> It seems like I should have a regular, acceptable capital loss this way with normal Schedule 3 reporting. The index fund is absolutely a different security than the individual stocks.



good choice. The index fund is certainly a "different security" & this is a vital point when it comes to claiming capital losses. The "differentiation" is why i mentioned roughly so many times upthread; the proxy carrier will never be able to track the stocks that were sold for a loss perfectly. Part of the Fun in Finance.

.


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## james4beach (Nov 15, 2012)

Thanks humble_pie. I sampled a few time periods to choose an ETF with the best correlation to the behaviour of my portfolio. I played with a scaling factor and found, interestingly, that (0.7 x WXM) has the best correlation to my high growth stocks. Apparently WXM is higher beta so I might get more bang-for-the-buck using this compared to a TSX index fund for proxy.

Today I liquidated my non-registered positions and bought the proxy ETF position inside my RRSP, maintaining (approximately) similar exposure. I think it was a good swap, because my portfolio was slightly up on the day whereas my proxy was slightly down.


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