From: AlanBaggett@volcanomail.com   
      
   Personal Investor: How tax-loss selling can work with RRSPs, TFSAs :CRA SOTW    
      
   By  Dale Jackson - Your Personal Investor   
      
   We hear a lot about tax-loss selling at this time of the year. But for the   
   bulk of Canadians who invest in their registered retirement savings plans and   
   tax-free saving accounts, the tax-saving tool does not apply.   
      
      
      
   It’s a blessing in disguise because tax-loss selling is a way to recuperate   
   capital gains taxes – and the capital gains tax is not applied to RRSPs and   
   TFSAs.     
      
      
   For investors with equities outside RRSPs and TFSAs, and contribution space to   
   spare, there is a way to take advantage of both tax breaks.   
      
   First, it’s important to know how tax-loss selling works. Any capital loss   
   incurred during 2016 in a non-registered account can be applied against   
   capital gains in a non-registered account going back three years or forward   
   indefinitely. In other words,    
   if you have a money-losing stock, the loss can help wipe out taxes you paid on   
   other stocks that gained.      
      
      
   Now, for the second tax windfall. Contribute the cash from the sale of the   
   losing security into your RRSP or TFSA and invest from that account. If the   
   stock goes up in value, you do not have to pay a capital gains tax.   
      
      
   If it is in an RRSP you can deduct the full contribution amount from your 2016   
   taxable income or carry it forward to use in future years when the tax saving   
   could be greater. While the investment can grow tax free for several years,   
   it’s import to know    
   that the original contribution and gains are fully taxed when withdrawn –   
   preferably in a low tax bracket in retirement.   
      
      
   If a stock is purchased in a TFSA the contribution cannot be deducted from   
   taxable income, but the gains it makes through the years are never   
   taxed.           
      
      
   There is one important restriction: If you wish to repurchase the same   
   security from a tax-loss sale (whether it is inside or outside a registered   
   account) you must wait at least 30 days or the Canada Revenue Agency will   
   consider it a superficial loss.    
      
      
   ----------------------------------------------------------    
   Miss a Tax Tale Miss a lot!    
   Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com    
      
   ------------------------------------------------------------    
   Alan Baggett - http://www.taxcollectorsbible.com/ - Tax Collector's Bible    
      
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