Canadian stock transfer

Canadabound · Post by **Canadabound** » Thu Jan 24, 2013 9:25 am

A relative of mine is a US resident who is going to receive C$10mm in Canadian stock on selling his business. His cost basis in the shares is C$1mm. The shares are now worth C$10 mm. The shares are in his name. He would like to open a joint account with his (US citizen/US resident) wife and move the shares to the account. What are the tax ramifications involved both to him and her? Thanks.

OT

nelsona · Post by **nelsona** » Thu Jan 24, 2013 3:18 pm

He owes tax on $9m in both canada and US (US will give credit for Cdn tax).

Where he puts the money afterwards in meaningless.

Canadabound · Post by **Canadabound** » Fri Jan 25, 2013 8:42 am

Thank you. One more question. If the stock pays dividends going forward, who pays the tax? Each joint holder, equally? Can the joint holders choose which one would pay the tax (the wife in the lower bracket, hopefully)?

nelsona · Post by **nelsona** » Fri Jan 25, 2013 12:55 pm

They would still be his shares. Transfers to spouse are ignored to determin attribution.

Canadabound · Post by **Canadabound** » Fri Jan 25, 2013 1:32 pm

Although my relative is a US citizen/tax resident, he does have a Canadian address (cottage) as well. He is currently holding the shares at a Canadian brokerage firm, using this Canadian address (the firm is not licensed to do business with US residents). His understanding is that when the company starts paying dividends (in short order), there will be no witholding tax on the dividends, if held at the Canadian brokerage firm. On the other hand, if he moves the shares to a US broker, there will be a witholding tax. Will he be violating any tax laws, in either country, if he chooses not to move the shares to a US broker?

nelsona · Post by **nelsona** » Fri Jan 25, 2013 3:11 pm

He needs to move these to a US broker. CDn brokers are forbidden to deal with US clients in non-sheltered accounts.

Spoofing a Cdn address is never useful