Bruce
You were correct wrt superficial loss. I too found the link Nelsona forwarded. I contacted CRA 3 times yesterday - the first two still telling me that it was not a superficial loss, but finally the 3rd person said yes it was and referenced a Tax Ruling on the matter. If you want it the Tax Ruling is number 2008-0299661E5, and an accountant should be able to get a copy for anyone who wants it. (is there a way to attach files to these threads? I have a pdf copy but can't attach it).
The bottom line states, "Subparagraph 40 (2) (g) (i) of the Act provides that a taxpayer's loss from the disposition of property is nil to the extent that it is a 'superficial loss'. Accordingly, a taxpayer cannot normally claim a capital loss if the taxpayer sells a security which is then repurchased by a trust governed by the taxpayer's RRSP, RRIF, or TFSA within the [30 day] period described above."
Wash Sales in US/Canada
Moderator: Mark T Serbinski CA CPA
Nelsona / Steveh - Thanks. I knew it was superficial loss but could not recall when they changed the rules.
Do you know how this superficial loss gets reported (if at all) on a Canadian return? I suppose I could either ignore it entirely (since this loss is "nil") or I could simply drop my ACB to exactly match my sales proceeds (because then at least the transaction is reported).
Do you know how this superficial loss gets reported (if at all) on a Canadian return? I suppose I could either ignore it entirely (since this loss is "nil") or I could simply drop my ACB to exactly match my sales proceeds (because then at least the transaction is reported).
"In reviewing the double taxation and gains clauses, I would hve to amend my earlier statement. Note that my ORIGINAL statement in that thread was 'more' correct, and I should have just left it at that. "
Nelsona - So the bottom line for a USC living in Canada is that gains on a US stock are considered Cdn-sourced by Canada and US-sourced by the US. Canada gets first dibs on taxing the gain. Double-taxation is then eliminated on the US return by re-sourcing the income on form 1116.
Do I have that right?
(Sorry to ask for the clarification. We've gone back & forth a few times and I'm struggling to figure out which interpretation you're saying is "more" correct.)
Nelsona - So the bottom line for a USC living in Canada is that gains on a US stock are considered Cdn-sourced by Canada and US-sourced by the US. Canada gets first dibs on taxing the gain. Double-taxation is then eliminated on the US return by re-sourcing the income on form 1116.
Do I have that right?
(Sorry to ask for the clarification. We've gone back & forth a few times and I'm struggling to figure out which interpretation you're saying is "more" correct.)
Bruce, I am interested in this thread too as I will soon have a similar situation as you (US Citizen residing in Canada), and I am also wanting to see Nelsona's answer.
Just for consideration, doesn't the Tax Treaty Article XIII Gains, paragraph 4 mean that any gains form the sale of stocks or mutual funds are only taxable in the country of residence (http://www.fin.gc.ca/treaties-conventions/USA_-eng.asp )? Except that if you were a US resident before and you owned the stock before you moved to Canada then paragraph 5 comes into play (which was re-written in the new protocol under Article 8 thereof http://www.fin.gc.ca/treaties-conventions/USA_1-eng.asp ) and per paragraph 5 the US can levy taxes on those gains too.
So if you bought and sold stocks after becoming a resident of Canada, they are taxable only in Canada. This seems similar to the treatment of social security under Article XVIII paragraph 5 of the Treaty. For what it's worth, in that case the IRS have told me to record the social security income in line 20a on the 1040, but then indicate $0 as the taxable amount in line 20b, and cite the Treaty Article that applies. So I assume you could do the same thing with gains that are taxable only in Canada, ie., record the gain income, but then record $0 as the taxable amount.
On the other hand if you lived in the US within the last 10 years and owned the stocks while you resided there, then the US can tax the gains, and you then need to work with the credits and deductions of the Treaty Article XXIV for elimination of double taxation. How to do that exactly is a bit confusing to me, but perhaps Nelsona can give some further guidance.
Just for consideration, doesn't the Tax Treaty Article XIII Gains, paragraph 4 mean that any gains form the sale of stocks or mutual funds are only taxable in the country of residence (http://www.fin.gc.ca/treaties-conventions/USA_-eng.asp )? Except that if you were a US resident before and you owned the stock before you moved to Canada then paragraph 5 comes into play (which was re-written in the new protocol under Article 8 thereof http://www.fin.gc.ca/treaties-conventions/USA_1-eng.asp ) and per paragraph 5 the US can levy taxes on those gains too.
So if you bought and sold stocks after becoming a resident of Canada, they are taxable only in Canada. This seems similar to the treatment of social security under Article XVIII paragraph 5 of the Treaty. For what it's worth, in that case the IRS have told me to record the social security income in line 20a on the 1040, but then indicate $0 as the taxable amount in line 20b, and cite the Treaty Article that applies. So I assume you could do the same thing with gains that are taxable only in Canada, ie., record the gain income, but then record $0 as the taxable amount.
On the other hand if you lived in the US within the last 10 years and owned the stocks while you resided there, then the US can tax the gains, and you then need to work with the credits and deductions of the Treaty Article XXIV for elimination of double taxation. How to do that exactly is a bit confusing to me, but perhaps Nelsona can give some further guidance.
There is a differnce between US taxing a gain, and the source being US.
The double taxation clause has sourcing rules that apply ONLY for that Article. Otherwise, sourcing is as outlined in the gains clause, which is essentially, country of residence except for real or resource property.
If you remove the fact that a Cdn resident is a US citizen, only US property is taxable in US. Thus US stocks, whether held in US or Cdn brokerage, are Cdn-sourced.
There has been no change due to the protocol on this. The re-write applies only to Cdns leaving canada.
The double taxation clause has sourcing rules that apply ONLY for that Article. Otherwise, sourcing is as outlined in the gains clause, which is essentially, country of residence except for real or resource property.
If you remove the fact that a Cdn resident is a US citizen, only US property is taxable in US. Thus US stocks, whether held in US or Cdn brokerage, are Cdn-sourced.
There has been no change due to the protocol on this. The re-write applies only to Cdns leaving canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
"There is a differnce between US taxing a gain, and the source being US.
Hmmm... Maybe we should avoid talking about where these gains are "sourced" (since that sounds like where we might be getting hung up).
How does a USC living in Canada avoid double-tax on a gain from selling a US stock? I think the only options are "passive income" FTC or "re-source income" FTC on the 1116.
Hmmm... Maybe we should avoid talking about where these gains are "sourced" (since that sounds like where we might be getting hung up).
How does a USC living in Canada avoid double-tax on a gain from selling a US stock? I think the only options are "passive income" FTC or "re-source income" FTC on the 1116.