Deemed dispositions not reported on T5008

This lack of reporting requirement for deemed dispositions is one excellent reason why it's necessary to account for your investments.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slps/fnncl/t5008/dmd-eng.html

Notice in the link above that one of the exemptions is when you transfer assets (shares or units) to a trust?

This means that when your broker suggests you move shares or mutual fund units from your regular brokerage account to a trust and TFSA, RRSP, RRIF,  RDSP accounts, those are trusts but they aren't the only types of trusts

Here's a list of the types of trusts you might run into (figuratively of course...)

http://www.cra-arc.gc.ca/tx/trsts/typs-eng.html

If you transfer assets to any trust, there's a deemed disposition, but it isn't recorded on your T5008 report.  Here's a complete listing of content relating to T5008 for further study:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slps/fnncl/t5008/menu-eng.html

If deemed dispositions aren't reported, that means it is necessary for you to account for and report on that deemed disposition, even though the bank or broker hasn't told you about the transaction.

If, for example, you were to take money out of your RRSP, and put in some stocks from your broker account to replace that money, and there was a gain on that date because the deemed proceeds were higher than the ACB (Adjusted Cost Basis) you'd have to report a capital gain, and if there aren't losses to use up, either accumulated in prior years, or from the current year, there will be some tax to pay on your current year return.

Now if there was a loss on that transaction, that loss would be permanently barred from a claim, so you can't set up a capital loss on your records for those types of transfers.

It's very confusing to most people, which is why, if you have a portfolio including registered and non registered accounts, you really need an accountant to help you with your accounting for your assets.

There are times when losses do accumulate, and it's necessary to report losses even though you may not think you'll ever have capital gains.  Why? When you die, those losses come to life and can be used to offset other types of income on your final return. Interesting huh?

This month I'm recording a series of 4 hour long talks on how and why we can use Quicken to account for your investment portfolio. For more information about how you could own these recordings, click here:

www.taxdetective.ca/quicken.html