# Capital Gain on Gold/Silver



## kid5022 (Nov 14, 2010)

Firstly, my friend told me that he read on the tax act that gold and silver are consider as MONEY. An exchange of money from legal tender to gold/silver (which he consider as money) and vise versa is only a change of medium of exchange and should not be subject to tax. Can anyone comment on that?

Second, assuming there is a capital gain, I could buy gold/silver trust and redeem them in physical. Most likely my broker will not consider storing the bullion, I probably have to keep them somewhere in a bank safe. Is that consider as withdrawing money from the TFSA? If it isn't, I probably don't have to pay the CG on the bullion when I sell. 

Any input is welcome, really appreciate all the help I could get.

PS, I think the gold/silver consider as money is some old rules, there aren't any silver coins minted in Canada after 1968.


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## Charlie (May 20, 2011)

not sure on the MONEY definition -- but it's moot anyways. Currency gains are taxed too. So there's no tax free gold investments. If you buy at one price, sell at another, you'll realize taxable income of some sort. No special deals for gold.

Not sure what you're getting at with the TFSA. If you withdraw the fund to buy bullion -- it's a withdrawal, otherwise it isn't. Maybe I'm missing something.


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## kid5022 (Nov 14, 2010)

Hey Charlie,

Thanks for the input. Some public traded trusts allow you to redeem in kind. So lets say each share is 1/10 of a bullion, and you have 10 shares. You could ask the trust to give you one bullion. Basically my question would be, in such scenario, does it count as a withdraw from TFSA? (If not then i am not subject to cg tax)


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## OhGreatGuru (May 24, 2009)

I think there is a thread somewhere that talks about how to invest in gold in a TFSA. 

The financial institution holding a TFSA account has to report all deposits and withdrawals to the government, in order to keep track of your TFSA room. So they can't let you buy physical gold, hand it to you to store yourself, and still consider it as being held in the TFSA - you could sell it without their knowledge.

I believe you can buy gold certificates in a TFSA, but your TFSA would have to be with an institution that sells them. There are gold companies (like Barrick) that advertise on the net that you can buy physical gold for a TFSA or RRSP - but I suspect you have to set up the TFSA with them, and they hold the gold in trust for you. I believe there are gold ETFs if you have a trading account.


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## kid5022 (Nov 14, 2010)

OhGreatGuru, the situation is similar but not exactly the same, lets say i buy gold certificates (redeemable) in my TFSA. I choose to redeem the certificate for a bullion. 

My question would be is the bullion consider to be inside my TFSA, or does it count as I withdraw it from my TFSA. Hope that clear the question up.


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## OhGreatGuru (May 24, 2009)

And my answer is the same. I don't see how you can physically possess the commodity, and still have it inside the TFSA - there is no accountability from the point of view of either the financial institution or CRA.

However, if you don't follow the logic, then ask CRA.


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## kid5022 (Nov 14, 2010)

I see what you mean, guess I can only own it in paper and not physical when its inside my TFSA


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