Moving investments from US to Canada

@ck_2020 @sohran10 @usa2can @panditji @sysout @aman @foobar
Hi All, checking on your experience of cost basis, as I’m in the same boat of transferring my assets. Did your brokerage apply cost basis based on -

  1. value of stocks on the date you landed in Canada
  2. value at which you purchased stocks in US
  3. value of stocks on the date of brokerage transfer

With the market so down, the only option I want to refrain from, is the last.
I called so far IBKR and TDI , they mentioned #2 but looking for a real experience.
Appreciate if you could share your experience along with Canadian brokerage name if possible.

Thank you

My understanding is that you need to know and maintain your own cost basis.

At Questrade, they have on their records the cost basis as the value on the day on which they received the assets from Schwab, but this isn’t accurate. The value should be the the value on the day you became a tax resident of Canada.

I’ve not really sold any of the investments that I moved, so I haven’t reported any totals to the CRA yet (except for declaring foreign assets annually with my return) but when I do I will report the value on the date when I moved to Canada for good. Reddit recommends this https://www.adjustedcostbase.ca/ to track your cost basis across investment categories and accounts.

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@foobar @Nick

The cost basis of the stocks transferred changes when moving from another country to Canada. This adjusted cost basis (ACB) applies not only to the stocks, but also other assets one owns like art, property, precious metals (specific rules for what is considered personal use vs assets that need to be reported - not covering that here).

For stocks that have been transferred: The new ACB of all transferred stock options becomes the day you landed in Canada and acquired the Permanent Resident status. Canada considers the Fair Market Value of these assets to the day one acquires status by entering the country. Any capital gains (or losses) are ignored by Canada for tax purposes.

CRA states this on their website in very construed terms, so won’t link those sections here. This blog post from Phil Hogan’s site helps: 10 Things to Know Before Moving to Canada from the US

Note the example Phil gives to one of the commentators:
Phil Hogan, CPA, CA, CPA (Colorado) [October 20, 2017 At 12:49 pm]

When you move to Canada, your assets are technically revalued to their fair market value. And the intention here, is that Canada is not going to tax you on any approved gains that you earn before you moved to Canada. But the technicals and the approach to how to manage that move for tax purposes is a lot more complex. So let me give you an example…

So let’s say, you own Apple’s stock that you purchased for $100 that’s now worth $160 and you’re thinking about moving to Canada. As you enter Canada, so the day you enter Canada for tax purposes, your new cost-basis for these Apple shares will be $160. So if you move to Canada and if you sell the Apple shares immediately, the fair market value proceeds will be $160, your cost basis for Canadian purposes will be $160. So you have 0 gain in Canada. Now you still will, assuming you’re still a US citizen, have a gain in the US of $60. And you’ll pay tax to the US but you certainly will not pay tax on that same gain in Canada.

Note that only US citizens have to pay tax on gains in US. If not a US citizen, the US tax on gains does not apply.

The best outcome of this rule is that it now allowed me to transfer stocks in my own time rather than piling yet-another-task during the move. For some stocks I purchased in 2020 downfall, I have some sweet gains that will not be taxed.

I use Interactive Brokers and they allow me to update the cost basis on the website. With that, the reports they send and track for me are accurate.

PS: Hit me up for a referral link to Interactive Brokers - I love it and highly recommend it as a trading platform if you know your stocks.

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Thanks @wanderingfeet for the insightful post. I did speak to Phil hogan personally last week and came to know about this. Same time I applied for IBKR account, still in process. I will try calling them and add you as your referral, please share the link on DM and will see :+1:

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