Need to withdraw my ex-employer share purchase plan

SamInColumbia · Post by **SamInColumbia** » Wed Dec 22, 2010 9:00 pm

Hi,

I am currently in US on a TN since Sept 5, 2010. I need to transfer my shares from my ex-employer's (Canada) purchase plan to either an RRSP or NRP account. It's about 25K. What are the implications from a tax perspective?
Is there any way I can transfer without actually having to sell the shares first and incur capital gains?

Thanks
Sam

nelsona · Post by **nelsona** » Thu Dec 23, 2010 2:31 pm

2 questions:

Was your ESPP in a pension plan already or is it simply stock held outside your pension?

What are you calling an NRP?

SamInColumbia · Post by **SamInColumbia** » Sat Dec 25, 2010 2:43 pm

The company shares are in the company SPP (Class A) and is administered by SunLife.

By NRP I meant, Non-registered Plan. The shares are currently non-registered and is outside of a pension plan.

I think I can transfer the shares in-kind to a personal RRSP account without having to sell it. My family is still in Canada and so as per the emigrant's guide, I am still a resident of Canada. So, as long as I do the in-kind transfer before they leave Canada, there should be no tax implications. They will be joining me next month. Is this assumption correct?

Thanks!

nelsona · Post by **nelsona** » Sat Dec 25, 2010 7:41 pm

Your Cdn residency status is not an issue here. You are a US resident from Sept 5, but will have the option of filing a 1040NR in US since you have not yet satisfied SPT (asuming you spent little time in US before stating work. So, whatever the tax consequence in canada, thereis none in US.

You want to be considered non-res in canada to avoid having to report your US wages.

As to the transfer from your ESPP to your RRSP, that would seem to me to be a taxable event, just like any in-kind transfer TO and RRSP triggers exercise.

Am I missing something?

nelsona · Post by **nelsona** » Sun Dec 26, 2010 8:42 am

I think I see what you are saying. By "no tax implications" you mean the income created by taking the stock, will be offset by the deduction of RRSP contribution. That would be correct.

However in terms of US taxation, only the income would be recognized, not the RRSP contribution,

This it would be, like you kind of said, be important to do this before you will file a 1040. Regardless of when yur family moves to US, you will file a full-fledged 1040 next year (to get better US tax on your US income), so, while you still can in 2010, I would be making this transfer NOW, before Jan 01.