If I trade stocks on the TSE with a US brokerage account, are all gains/losses generally considered US source for IRS purposes and non-taxable for CRA purposes?
There seems to be an exception in the CRA code for gains from
"a share of the capital stock of a company where the share's value is derived principally from real property situated in Canada"
where principally is 50% or more and real property includes
"rights to explore for or to exploit mineral deposits, sources and other natural resources and rights to amounts computed by reference to the amount or value of production from such resources"
Quotes are from IT-173R2 Capital gains derived in Canada by residents of the United States
http://www.cra-arc.gc.ca/E/pub/tp/it173 ... 3r2-e.html
Does anybody know if this differentiation is actually applied in real practice, since so many TSE stocks are resource based.
My biggest gain is on AUR resources which has Chilean copper mines so would be excluded, but Compton and Husky are energy stocks with probably greater than 50% Canadian assets.
Cap Gains on TSE Stocks for US resident/citizen
Moderator: Mark T Serbinski CA CPA
Followup
In reading IT-420 (referred by 5013-G) section 16 where it discusses "taxable canadian property" in the list of "common items" it doesn't discuss publically traded stocks only referring to partnerships when addressing the 50% issue and also "certain" unit trusts. Since it doesn't address publically traded stocks as a common item it would lead me to believe that many TSX stocks could be excluded from taxable canadian property for a non-resident. I wish somewhere they would address this issue in a straightforward manner.
The company will know if they are considered resource or real property for tax purposes.
Generally though, publicly-traded, non-resource, non-real estate stocks, whether traded by a US-broker or Cdn broker, would not be taxable in Canada for a non-resident, and would be considered US-sourced.
Generally though, publicly-traded, non-resource, non-real estate stocks, whether traded by a US-broker or Cdn broker, would not be taxable in Canada for a non-resident, and would be considered US-sourced.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Generally, if an investment which IS subject to Cdn cap gains tax is sold by a non-reesident, 25% of the TOTAL proceeds will be withheld, unless one files afor a certificate of compliance before hand T2062 or one posts security.
In any event, one would then file a normal non-resident return (not a 216 return, which is specific to renatl income, nor a 217 return, since this is not pension income).
there are special rules for resource property as to whether this would be treated as capital gains or normal income, so check with your accountant, or with Husky as to how to proceed. the difference would be that you either pay flat ~12% Cdn tax or flat ~23% on the increased value.
In any event, one would then file a normal non-resident return (not a 216 return, which is specific to renatl income, nor a 217 return, since this is not pension income).
there are special rules for resource property as to whether this would be treated as capital gains or normal income, so check with your accountant, or with Husky as to how to proceed. the difference would be that you either pay flat ~12% Cdn tax or flat ~23% on the increased value.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Thank you for the information. I do appreciate knowing as much as possible before I talk to my accountant.
I think I know the answer but I will ask anyway. These Husky shares are in each of my children's accounts. They have been there since we moved from Canada 5 years ago. The other thing in these accounts have unrealized losses (Nortel common shares) . If the Husky and Nortel shares were sold in the same year, could the loss on the Nortel shares, lower income on the non-resident tax return?
I think I know the answer but I will ask anyway. These Husky shares are in each of my children's accounts. They have been there since we moved from Canada 5 years ago. The other thing in these accounts have unrealized losses (Nortel common shares) . If the Husky and Nortel shares were sold in the same year, could the loss on the Nortel shares, lower income on the non-resident tax return?
joe
No. The nortel stock was subject to deemed disposition when they left, and that was it for Canada, gain or loss. any further loss, when triggered, will be on their US return.
Both the husky and nortel sales wold be reported in US of course.
Both the husky and nortel sales wold be reported in US of course.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing