Investment Q&A

Q: I had trouble explaining tax loss selling to my sister. If I sell a company for a tax loss and buy it back in 30 days and it goes up I have a capital gain that I will have to report sometime that I would have to use the capital loss to cover offset. Tax-wise wouldn't that be the same as not doing anything? That would also be the scenario if I bought a parallel company that went up in a similar manner to the one I sold.
I always hope to have a capital gain on something so the capital loss may come in handy but in this market I probably won't be using the capital loss anytime soon so the tax savings is a bit theoretical. As near as I can see the only way to come out ahead is if I sell a company that is down and buy a similar company that is also down but likely to recover more or faster than the one I sold. In other words, sell a lousy company and buy a quality company. But then should I be doing this all the time anyways. I'm not too sure that I can reduce my taxes in the long run. So I am just standing by in a holding mode hoping for better times because I liked the companies that I had before all this craziness although I don't like the losses. Only if I have or recently had a capital gain is the tax loss selling worthwhile Does that sound about right or am I missing something.

Q: Hi there, I had 100 Detour gold which was taken over by KL at 0.4343 KL for every Detour. I received 43 Detour and now received $39.94 cash in lieu. I suspect this is payment for the fractional amount of KL shares I did not receive. How do I treat this $39.94 please? Is it a capital gain, dividend? Does it affect the ACB of either? Thank you.

Q: I have a large capital gain on Boyd for the 2020 tax year which I am considering offsetting by taking Capital losses which I have on the above mentioned stocks, including BYD. What is the best way to do this? Sell and wait 30 days to re-buy? Sell now and buy proxies (what would they be?)? I’m also considering using stop losses to take advantage of any increase in stock prices I might otherwise miss. Would appreciate you comments and advice. Michael

Q: Hi,
I hope everyone is well. I am doing some tax management. We have a sizeable loss in Great Canadian. I’d like to sell it for a capital loss. What similar company would you recommend to replace for the 30 period should there be a bounce in the sector or should just set sit on the cash for 30 days?
Thanks,
Kerri

Q: I sold some securities today in my personal account at a loss to offset some CG's I had. I know I can't buy the shares back for 30 days in my personal account; but do you know if can I buy the same security in a Corporate account that I own?

Q: Please suggest replacements for the above stocks. I want to harvest some capital losses.

Q: Hi 5i,
Just a comment. Print if you like it. Regarding Tom's question (March 24) about ways to "lock in" an FX gain realized through holding US stocks in a US dollar account, but wanting to continue holding US stocks. Another way to do it might be to switch the cash to CAD (ideally through a Norbert's Gambit to avoid paying exchange fees) and then to use the Canadian cash to purchase a hedged S&P 500 index ETF like VSP or XSP. The FX gain would be harvested in moving to Canadian cash while the CAD is relatively low. The currency-hedged ETF would provide the percentage return of the underlying index while protecting against the longer term likelihood of the CAD swinging back to higher levels. Owning e.g. VSP would preserve investment exposure to US stocks. They would not be exactly the same stocks as were owned in the first place, so the shift from specific stock holdings to an index product would be one aspect to consider. Another would be the tax aspect, if the investments are in a taxable account. If, in his circumstances, exchange fees were unavoidable and there were a significant tax hit in the mix, that might count heavily against this approach. On the other hand, if the FX gain is in an RRSP and the account format and brokerage policies will allow Norbert's Gambit, it might be a decent way to go.
Cheers!

Q: I have 2 non-reg accts (Accts X and Y). I have held ENB in Acct X for some time, and it is now in red. I bought more ENB last week in Acct Y. If I sell ENB in Acct X now to use the loss (ie, after purchase in Acct Y), can I assume that I can use the loss because I bought the "new" ENB before selling the old ENB. FWIW, I put the new ENB in diff acct just to keep the 2 separate.

Q: Are the "dividends" paid by these two Purpose ETF's taxed as eligible dividends? Thanks.

Q: In some of your recent replies you are encouraging investors to harvest tax losses in this market. Why??

I have no capital gains to offset this year, nor do I have gains from the last 3 years that I can carry losses back to offset. I have been mostly a buy and hold investor.

Why should I sell some of the good quality companies that you hold in your BE portfolio or have strongly recommended in the past just to generate a loss? E.g. I am now down on all of these despite holding some of them since 2011: ENB, BNS, TD, SLF, FTS, BCE, T, CCL.B, DOL, PPL

Q: Last year, I purchased a number of ETFs to reduce risk. With the recent stock turmoil, they are all in significant loss positions. If possible, I would like to crystallize my losses now for tax purposes. However, I am comfortable longer-term with my portfolio's geographic and sectoral allocations, and do not want to change my set-up.

Am I allowed by the CRA to claim a tax loss in a non-registered account if I sell an index ETF (e.g. VSP - Vanguard S&P 500 index hedged) and immediately purchase an ETF from another company which represents the same index (e.g. ZUE - BMO's equivalent S&P 500 hedged index ETF), or is this considered a superficial tax loss?

Thanks again for all of your excellent advice and insights.

Q: Hi,

What type of account (cdn, us, rsp, tfsa) should I hold reits in to minimize taxes?

Thanks

Q: Thank you to all at 5i for all your efforts and guidance.
I am contemplating some tax loss selling and would like your input regarding the following,
sell ENB, PPL, SYZ and replacing in order with TRP, KEY and ABT. After 30 days I will consider (and probably) revert back to ENB and PPL. Not sure if I will do the same with ABT back to SYZ.
Comments, suggestions input please (suitability of replacements, plan to revert back, etc.) that will help me move forward. I like to buy, hold and rebalance as necessary but I can use the tax losses to good advantage. Retired income investor with 3 to 4 years already covered as this plays out.
Thank you so much for your help!

Q: would any of SHOP GSY or CSU be suitable for a RRIF ? or should they be in a TFSA ?

Thanks

Q: Am I right in thinking that I can carry forward any tax loss I incur? Given that I've no current gains to offset, I'd like to prepare for some selling later on. Is this wise?

Q: Hello 5i team
Thanks for working through this mess.
I have BCE, ENB, EIF, FSZ, MG, PBH, SPB in a non registered. I can sell these for a tax loss presently but should I, and if I do should I replace them with similar dividend players or risk 30 days to buy them back? This might fall into the personal decision category but if there is any comments or advice that you could provide please.
Thanks
Jeremy

Q: What do you think about tax loss selling of shares of Lightspeed? My purchase price is significantly higher than the current share price.

Q: How would you approach the situation where you want to "buy into the dip" but you also have an attractive tax-loss selling opportunity on the same security? Is there any rule of thumb here or it's really a judgment call?

Q: With this massive sell off, I am considering selling positions in to crystallize the tax loss, and immediately purchase similar companies to not miss out on future gains or realize any actual losses. Do you see any issues in this strategy and if not, do you have a couple suggested equal (or relatively equal) swaps in each sector? The banks are an obvious one, what about swaps for the tech, industrial, healthcare, utility companies in your model growth portfolio ?

Thanks for the great service!

Scott

Q: Hi 5i,
I am not 100% clear on stock and ETF's allocations for investment plans. Take as many points as needed to answer the questions below. I apologize in advance for the length of the question.

As a Canadian investing through a Canadian site (RBC in this case), split into CDN and US sections (moved CDN funds to USD and paid the exchange), which stocks and ETF's should be allocated to RRSP (CDN or US sections), TFSA, & Non-Registered accounts?

As an example, an RBC RRSP account is split into CAD and USD segments. If I purchase VWO in USD on the US segment instead of VEE on the CDN segment do I retain the 15% withholding tax? If I purchase VWO in CDN funds on the CDN side of the RRSP, what happens to the 15% withholding tax?

Is there a tax difference when filing a CRA 1135 form. e.g if VWO or VEE are 100+k CDN value: VWO on the USD segment or VEE on the CDN segment or VWO on the CDN segment.

If a US stock has a dividend, should this ever be purchased on the CDN side of the RRSP or in a TFSA? .. e.g. CRM with a small dividend or AMGN with a larger dividend

Can you please assign the best allocations (RRSP, TFSA, Non-Registered) to examples a the bottom of the question.
e.g. Non-dividend Growth US stocks (Googl, AMZN): TFSA, RRSP
This tells me that AMZN is best in the TFSA for growth, and in an RRSP purchased in CDN or US funds is the same effect other than currency at the time of purchase.
If a stock or ETF should be in CDN or US sections can you note that as well? e.g. RRSP(CDN or US).
It is a lot to ask so limited examples below will hopefully reduce the effort.

5i recommendations
Non-dividend Growth US stocks (e.g. Googl, AMZN):
US small Dividend Growth (e.g. IWO):
US Foreign ETF (e.g. VWO):
CDN ETF with US stocks and other int'l stocks (e.g. VEE):
CDN High Dividend (e.g. CDN Utilities/Reits/ETF's):
US High Dividend (e.g. US Utilities/Reits/Medical/ETF's)
All World ETF (VT):
All World ETF (XAW):

I very much appreciate your service and time to answer questions.

Jerry