Transfer investments from unregistered account to a US broker

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terrychen
Posts: 6
Joined: Wed Jul 14, 2021 10:26 pm

Transfer investments from unregistered account to a US broker

Post by terrychen »

I am on a TN Visa and in process of transferring all my investments (US-listed stocks/ETFs) from Questrade's unregistered account to a US broker through ACAT. I was reading somewhere that said it's better to sell everything and re-purchase all the investments to refresh the cost base before initiating the transfer just to prevent being double-taxed on the capital gain.
1. Is this necessary? My understanding is transferring out from Questrade is deemed disposition, so the cost base should be the market price at the time of transfer? But then I contacted the US broker, they said the cost base will be instructed by Questrade. So I guess it's better to just refresh it just in case ?
2. I also had a TFSA account, and have transferred everything to that unregistered account already, so I don't have to transfer two accounts over to the US broker. Is this is the right thing to do?
3. Is there a grace period for people like me who do this after they have already landed in the US? I only started doing this a week after I landed and I think it will take another 2,3 weeks to get the account transferred over. I am hoping this won't mean a tax nightmare for me at the end of the year :/
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Transfer investments from unregistered account to a US broker

Post by nelsona »

1, This is not necessary for unregistered investments (non-RRSP, TFSA). Many years ago the IRS instituted regs that mesh the deemed disposition rules of Canada with their tax system. IRS will accept the deemed disposition value as your new cost basis for future sales. Questrade has nothing to do with this. It is your deemed disposition form that will dictate the cost basis.
2. No problem, however TFSA investments will NOT be granted new cost basis, because they were not subject to deemed disposition. When you eventually sell, they will trigger cap gains in US on their original basis.
3. No. Your deemed disposition values have already been locked-in on the day you moved to US. You can sell or transfer as you wish, but the cost basis is now fixed by the two cases I mentioned above.
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
terrychen
Posts: 6
Joined: Wed Jul 14, 2021 10:26 pm

Re: Transfer investments from unregistered account to a US broker

Post by terrychen »

Thanks for the response!
1. If I understand correctly when I file my tax return with IRA, I will just need to use the closing price for my investments on the day I landed in the US? I am just a little concerned because I know Questrade is going to send the original cost basis to the US broker and they are going to just use that as the cost basis which will be very different than the cost basis at the time of deemed disposition.
3. When you said locked-in, do you mean there's a record that IRA will actually look at? Is that something I will need to provide when I file my tax or is that something provided by the new broker? (in the form of some tax slip)
nelsona
Posts: 17225
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Transfer investments from unregistered account to a US broker

Post by nelsona »

1, I wouldn't worry about what Qtrade sends out, You will use REv Proc 2010-19 to do this anyways, when you sell each holding. YOU determine the cap gains.

3, Yes, when you file your Cdn departure tax return in the spring, you will report your non-TFSA holdings and values on the day you left, and pay Cdn tax on these (deemed disposition), and this goes on a tax form attached to your return. Since you have already left canada, those values are already "locked-in". YOU will provide this. YOU submit the Cdn form in order to get a different cost basis.
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
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