Delean: Stocks moved to a TFSA are treated as a disposition for taxes

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Moving stocks to a tax-cost-free savings account (TFSA) and having to pay for the Quebec Prescription Drug Approach were being between the subject areas elevated lately by audience. Here’s what they preferred to know.

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Q: I have dividend shares in an unregistered expenditure account that I would like, if feasible, to go to my TFSA to lessen the tax bite. Can that be completed and, if so, are there tax penalties?

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A: It can be done, offered you have the contribution space in your TFSA, but there are a few of issues you require to take into consideration. The transfer from an unregistered account to a TFSA is handled as a disposition, even when you never sell the inventory. If it has absent up in worth, a taxable cash gain will be activated when you transfer, centered on the reasonable industry worth at the time. If the inventory has depreciated, nonetheless, you are not able to assert a funds loss on your taxes. You also will shed the dividend tax credit score on Canadian shares when you transfer them into a TFSA. Dividends from American stocks in a TFSA are lowered by a non-recoverable withholding tax of 15 for each cent (which is not the situation when they’re in an RRSP). The sum contributed to the TFSA when you transfer in shares is their real marketplace benefit.

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Q: I retired lately and, as a consequence, am no lengthier lined by a team well being insurance policy strategy. I recall a line on the provincial tax sort that asks for payment if you do not have well being protection. Looking at as I was protected for all of 2022, I really do not consider I have to pay out that, for me or my spouse. How do we join the provincial approach (Régie de l’assurance maladie du Québec)? And when do I fork out up?

A: Quebec grown ups not coated by employer well being coverage plans need to adhere to RAMQ. It is done instantly when you change 65. If you are youthful, you want to implement. Payment for the past 12 months is completed when you total Schedule K of your provincial money-tax return (High quality payable under the Quebec prescription drug insurance program). The charge is determined by revenue and can go as superior as $710 for each particular person. You will be exempted from the rate for any months in 2022 that you and your husband or wife were being lined by a personal health and fitness approach in your case, that would be all of 2022. So you’ll start shelling out for the general public plan when you finish your provincial tax returns future yr.

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Q: My husband or wife and I reside right here but worked in Belgium for 13 several years. I received my Belgian pension at 65, but she waited till age 72 to get it. In these kinds of conditions, Belgium pays the pension retroactively. For her Canadian earnings tax, does that get noted as a lump sum, or will it require amending tax returns heading back seven several years?

A: In the Canadian tax system, pension benefits normally are declared, and taxed, in the calendar year they are acquired. This applies to positive aspects from a overseas pension strategy, unless the amount, or a portion thereof, is exempted by a tax treaty. Overseas pensions are declared, in Canadian dollars, on Line 11500 of the federal return and 122 of the provincial one particular. A deduction, when relevant (as is the circumstance for Belgian pension payments), can be taken on line 25600 of the federal return and line 297 of the provincial. Underneath the Canada-Belgium tax settlement, pension added benefits paid to Quebecers from prior work in Belgium are taxed only in Belgium. You are necessary to file a Belgian tax declaration.

The Montreal Gazette invites reader concerns on tax, investment and private finance issues. If you have a query, you should deliver it by e mail to Paul Delean at [email protected].