Columnist image
Dale Jackson

Personal Finance Columnist, Payback Time


If you have investments outside a registered retirement savings plan (RRSP) and tax-free savings account (TFSA) you’re probably paying taxes that could be re-invested.

Half of capital gains on stocks are taxed. Aside from a small credit, dividends are also taxed. Interest on fixed income is fully taxed.

In most cases the sooner you get them into the tax shelter of an RRSP or TFSA, the better. 

Shares of corporations in a non-registered investment account can be used as an RRSP or TFSA contribution by transferring them as in-kind contributions.

In an RRSP, the contribution can be deducted from your income and not taxed until it is withdrawn in retirement.

In a TFSA, gains or dividends are never taxed.

Making the transfer is like moving your car from one parking space to another. Before you move the car you must pay parking fees up to that point. In other words, you must pay the Canada Revenue Agency taxes owing up to the time of transfer.

However, if you have a loss on shares transferred to either, the loss is not deductible. 

In most cases, unless the loss is very small, it would be best to sell the shares and contribute the cash to the registered account. 

One other thing: if you or your spouse want to repurchase the same shares in your RRSP or TFSA, do not do this until after 30 days. Otherwise the loss will be considered a superficial loss and will be disallowed.