Hi, does anyone know if it's possible to transfer ETFs, say VTI & VXUS, that were bought at an American brokerage (e.g Fidelity), to a Canadian brokerage when moving back to Canada from the US? If so, how would such a process look like and cost and how would the taxes be filed?
When I was searching online for info on this, some people said that you should sell stocks if doing so results in a loss before entering Canada but that you should sell them after entering Canada if doing so results in capital gains - this is the case due to the resetting of the cost basis. However, It appears that you are better off selling the stocks in Canada if you expect to have capital gains (and avoid the headaches of the transfer, assuming it's possible), whereas, if doing so would result in a loss, then transferring them to Canada is preferable since it allows you to hold onto your stocks so that they can accrue in value. Is this correct? I am thinking of a scenario where someone would need to move back to Canada during a massive market crash. In such a case having to liquidate your assets would be catastrophic.
Transfering ETFs in kind from US and Canada
Moderator: Mark T Serbinski CA CPA
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Death&Taxes
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Re: Transfering ETFs in kind from US and Canada
Your Cdn broker would handle this, and there should not be any fee. The transfer is not a taxable event.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Re: Transfering ETFs in kind from US and Canada
I recently did the same thing. As nelsona said, the process is initiated by the receiving broker. It's not a taxable event until the ETFs are actually sold.
Keep in mind that selling assets during a market crash (like right now) is not catastrophic if you're going to put the money right back into the market again. You're selling when the market is low but also buying when the market is low, so it's a wash. The only problematic part is the change in market conditions while the money is being transferred..you might lose, but you also might win.
Keep in mind that selling assets during a market crash (like right now) is not catastrophic if you're going to put the money right back into the market again. You're selling when the market is low but also buying when the market is low, so it's a wash. The only problematic part is the change in market conditions while the money is being transferred..you might lose, but you also might win.
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Death&Taxes
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Re: Transfering ETFs in kind from US and Canada
Fug1 wrote:
> I recently did the same thing. As nelsona said, the process is initiated by
> the receiving broker. It's not a taxable event until the ETFs are actually
> sold.
>
> Keep in mind that selling assets during a market crash (like right now) is
> not catastrophic if you're going to put the money right back into the
> market again. You're selling when the market is low but also buying when
> the market is low, so it's a wash. The only problematic part is the change
> in market conditions while the money is being transferred..you might lose,
> but you also might win.
Which Canadian brokerage did you use? Did you perform the transfer once you were in Canada? Also is it possible to sign up to the Canadian brokerage while in the US or do you have to wait until you were in Canada?
That's a good point, I hadn't thought of that - I guess you can even buy similar ETFs such as ITOT and IXUS to avoid the wash sale and use the loss for tax loss harvesting. Still seems a bit risky to me especially since i am not very experienced on this. What benefit does transferring ETFs to Canada have over selling them right after arriving to Canada to take advantage of the new cost basis (assuming it's a gain)? Does transferring the ETFs also result in the cost basis being updated?
Excuse me for the all the questions, I appreciate you guys' answers.
> I recently did the same thing. As nelsona said, the process is initiated by
> the receiving broker. It's not a taxable event until the ETFs are actually
> sold.
>
> Keep in mind that selling assets during a market crash (like right now) is
> not catastrophic if you're going to put the money right back into the
> market again. You're selling when the market is low but also buying when
> the market is low, so it's a wash. The only problematic part is the change
> in market conditions while the money is being transferred..you might lose,
> but you also might win.
Which Canadian brokerage did you use? Did you perform the transfer once you were in Canada? Also is it possible to sign up to the Canadian brokerage while in the US or do you have to wait until you were in Canada?
That's a good point, I hadn't thought of that - I guess you can even buy similar ETFs such as ITOT and IXUS to avoid the wash sale and use the loss for tax loss harvesting. Still seems a bit risky to me especially since i am not very experienced on this. What benefit does transferring ETFs to Canada have over selling them right after arriving to Canada to take advantage of the new cost basis (assuming it's a gain)? Does transferring the ETFs also result in the cost basis being updated?
Excuse me for the all the questions, I appreciate you guys' answers.
Re: Transfering ETFs in kind from US and Canada
Interactive Brokers. I was in Canada when I opened the account. I don't think a Canadian brokerage would let you open an account before you're a resident.
It's actually quite a bit easier to transfer stocks/ETFs than it is cash. With cash you have to instruct the sending brokerage to initiate an international wire transfer, which they make a bit more difficult.
The step up in basis is from the point you become a Canadian tax resident. It doesn't matter when you actually transfer them, they are deemed taxable in Canada the moment you become a Canadian tax resident. You also need to cease being a US person. For example, if you're a US citizen or green card holder while you're living in Canada, you would still need to pay the IRS capital gains tax (without stepped up basis) when you sell the assets. So you need to make sure you cut ties with the IRS before you sell them, otherwise they'll tax you. If you have the US brokerage sell them, they will report the capital gain on a 1099 to the IRS...so make sure you're absolutely certain the IRS won't come after you for the gain.
It's actually quite a bit easier to transfer stocks/ETFs than it is cash. With cash you have to instruct the sending brokerage to initiate an international wire transfer, which they make a bit more difficult.
The step up in basis is from the point you become a Canadian tax resident. It doesn't matter when you actually transfer them, they are deemed taxable in Canada the moment you become a Canadian tax resident. You also need to cease being a US person. For example, if you're a US citizen or green card holder while you're living in Canada, you would still need to pay the IRS capital gains tax (without stepped up basis) when you sell the assets. So you need to make sure you cut ties with the IRS before you sell them, otherwise they'll tax you. If you have the US brokerage sell them, they will report the capital gain on a 1099 to the IRS...so make sure you're absolutely certain the IRS won't come after you for the gain.
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Death&Taxes
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Re: Transfering ETFs in kind from US and Canada
Gotcha, thanks.
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depreciationrecapture
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Re: Transfering ETFs in kind from US and Canada
If we transfer or purchase a Canadian SP500 ETF such as VFV.TO, is it considered a PFIC?
Re: Transfering ETFs in kind from US and Canada
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