Canada Nesties
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Selling stocks and taxes
We have company stocks for my husband's work and have decided to sell them to move them into a TFSA (apparently we can't transfer them without selling them and then re-buying them).
We've paid tax on these stocks- every year at tax time we get some document from the broker and I know we're paying taxes on it, because I watched the "amount owing" go up in QuickTax when I entered in this information.
However, one of my husband's co-workers told him that they'll also deduct tax off this specific sale, which makes it sound like we're getting taxed twice on these capital gains. Does that make sense? I understand capital gain tax, but then what were we paying tax on the past two years during tax time?
Re: Selling stocks and taxes
I would need more details, but it sounds like your husband has options - so every year he is granted options. When he exercises the options to buy the stocks, he is taxed on the difference between what he pays for the stock and what the fair market value of the stock is worth (usually employees buy stock at a discount). The fair market value of the stock on the purchased date becomes its tax cost to you. If the price that you sell the stock for is more than the tax cost to you, then you have a gain, which would be taxed as a capital gain. This gain would not have been previously taxed.
Does that make sense to you?
Here is a numerical example:
Say in 2008, your husband bought company stock for $100. The value of the stock at that time was $300. Your husband would pay tax on the $200 difference. The "cost" of the shares to your husband is deemed to be $300. Let's say you sell the shares in 2009 for $450. Your husband has a capital gain of $150 on the shares, on which he must pay tax.
Oh... so I guess it's the same thing if you don't get a discount but the company matches your purchase?
Darn. I wasn't expecting to pay tax on this sale. But I guess it doesn't really matter since we're not using the money, just transferring it, and now we won't have to pay tax on it when we sell it for real later (out of the TFSA).
If the company is matching what you are purchasing, you are getting the shares that the company is giving you for free. So same concept.
Or, you could look at it like you are getting 2 shares for the price of 1, so 50% discount.
Either way, looks like you have to pay tax. There may not be that much tax to pay - it depends on whether the stock has gone up a lot since you acquired the shares.