Investment Q&A

Q: Hi 5i Team, and with income tax season upon us, if a mutual fund company chooses at their convenience to consolidate their (Dividend) Fund A into their (Dividend) Fund B going forward, does it create a reportable taxable capital gain for the holders of Fund A? In this case, the statements show Fund A as a "redemption" (for the fund that is being closed at their convenience) and Fund B as a "purchase" (for the larger fund that is going forward), on the identical trade date (i.e., there is no order date and no later settlement date, but the redemption and purchase occur on the same calendar date as in a substitution of fund products). In this case Fund Company A was acquired by Fund Company B, and presumably the funds overlapped, and the mutual fund company chose to consolidate the two overlapping funds into one larger fund going forward . Since this was initiated at the convenience of the mutual fund company and with no action initiated on the part of the taxpayer, and essentially the product that the taxpayer is holding is unchanged (i.e, Dividend Fund A replaced with Dividend Fund B from the same mutual fund company), would this be a reportable capital gain, or otherwise the taxpayer within their right to choose not to report in the year 2021 taxation year and retain the ACB of Fund A and declare the capital gain when Fund B is sold? It does appear on the T5008 form issued by the brokerage. Thanks to all your Team from an appreciative member.

Q: Good morning I have a TFSA tax question you might know the answer. If you are fully maxed out with no contribution room could you sell covered calls for stocks you own on the US side and not get a penalty for the premiums collected? I was thinking these would be view like a dividend but am I wrong?

Q: Good Morning.
With regards to ZIM shipping, I have read that they have a 25% holding policy. This stock is in my LIF account. Will Israël our non taxable account to distribute the full dividend amount to me? Thank you.

Q: Hi Peter and 5i,
This is always a misunderstood stock as far as the breakdown of the components of the distribution. For 2021 - $1.37 of the total $1.53 was eligible dividends. There was no ROC.
Post if you think it is informative.



Record date
Payment date
Full Year

Per Unit Distribution US$ 1.21500

Cdn$/Unit

Per Unit Distribution 1.52422

Box 113 Return of Capital

Box 135 Foreign dividend and interest income 0.10316
Box 132 Actual amount of eligible dividends 1.37120
Box 128 Interest from Cdn sources -
Box 030 Total capital gains (losses) 0.09904
Box 210 Carrying charges (0.04452)

Total taxable income and capital gains 1.52888

Thanks for your excellent service and always valuable input.

Q: Can you help by providing the average exchange rate acceptable by CRA for 2021 tax year when converting US$ to C$ for Canadian tax returns. I have looked but cannot find it on the CRA website.

John.

Q: With reference to Paul's question on 16 Mar,

If prior to selling the stock, you arrange through the broker to transfer the stock to the Charity . This is called a "donation in KIND". Not all charities accept smaller transfers of less than $5000.00.

This is relatively easy using a form from the Brokerage or the Charity.

At tax time you must complete formT1170 in order to pay NO TAX.

Ron

Q: 5i
Assuming that a stock is held only in a registered account does the 30 day rule apply since 100% of the withdrawals from a registered account are taxable and no benefit (ie. cap gain or loss) would exist.
Thanks

Q: I sold several stocks in a non-registered account because of decent gains from buying early in the covid plunge. I believe these gains separate from dividends will be taxed as income, is that correct? If so, I'm thinking of giving some to charity to avoid paying taxes while helping a charity and I believe also being able to claim the donation.
I've never done this before, so is it complicated to do with online brokerages (I'm with BMO Investorline)?

thanks for any advice regarding this!

Paul

Q: Peter and Co, I have enjoyed the tax benefit of donating stocks to registered charities, thus avoiding the capital gains tax. Often I will repurchase the stock after it has been sold by the charity or its agent. If I donate a stock from my cash account and immediately purchase in m y TFSA, am I correct in assuming that the adjusted cost base of the donated stock or the portion of the stock remaining in the cash account is not impacted? This question has been posed to me so I am looking for some assurance.
With appreciation,
Ed

Q: In a TFSA is their a withholding tax on American dividends?

Q: Hi there,

In terms of the US dividend withholding tax should any of these three be held in my non sheltered account?

Thanks,

Q: If you held zpay or zpayu during 2021 in a taxable account would you have to fill out a T1135 or is it considered a Canadian corp?

Q: If I buy aCDN ETF that includes 4CDN ETF, but with american and international Cies included: There will be no US witholding taxes in my account,OK for this point,But do all those ETF included in this unique ETF pay
already witholding taxes on the foreign Cies included?

Q: Is the transfer of shares from Interpipeline to BIPC shares considered a capital gain taxable event ? Shares are held in a non registered account.
Thanks ,Philip

Q: Hi Guys

I was really surprised by an answer to John Heinzl in the Globe and Mail in his March 5th column. The question was "I recently did an in-kind share transfer from my non-registered account to my tax-free savings account. This transfer was below the book value of the shares so I assumed it would be a capital loss, but I did not get a confirmation slip as a record. How do I record the loss"

The answer was "Sorry to be the bearer of bad news,but when you own shares with an unrealized loss and transfer them in-kind to a TFSA (or any other registered account) you cannote claim the loss for tax purposes. The CRA considers this a "superficial loss" because you still own the shares.

So my question is: if this is indeed the case then would this ruling also apply to shares that you had bought in a non-registered account at a certain price and were now transferring them at a higher prices than you bought them into a TFSA?

Or does CRA get you both ways?

Thanks

Stuart

Q: Hello team 5i,

I know very well that when a stock is sold with a loss, it must not be bought back before one month for the loss to be used as a tax loss.

But what if a stock is sold with a gain and then bought back before one month and this time it is sold with a loss. (Note that one month did not pass between the gain and the loss). Is this loss usable as a tax loss?

I donated shares of a company that was delisted to my broker. How can this loss be used for tax purposes? Is it different from an ordinary loss?

Thank you for your help

Q: I'm confused, because I've received two T5008 (statement of securities transactions) forms in relation to two stocks moved from one registered account (RIF) to another (TFSA) . All withdrawals from RIF (including the value of these stocks) are included in my income for 2021.
Why am I getting these forms - which seem to double count income ?

Q: Hello Peter and co.,

I have a follow-up to Simon's question about tax-loss selling of QQQ posted on March 4.

Would leveraged ETFs, such as QLD and TQQQ, also be considered the same as QQQ? While those two ETFs are based on the NASDAQ 100 index, they don't track it directly.

(Also, I do realize you don't endorse the purchase of leveraged ETFs.)

Thank you for your helpful advice!

Q: Unless I misread your reply, in a recent response you suggested that you can claim both the interest charges as well as the principal amount of a loan as a deductible expense when its used to purchase an investment. To my knowledge, only the interest portion of the loan is a tax deduction.

Q: When borrowing to invest interest paid is tax deductible. However, is the amount borrowed to pay the interest, tax deductible as well?