Canadian Tax Question: Capitol Gains (1 Viewer)

[Rain]

Ok, so while I was with my previous employer, let's call them Big and Evil, Inc., I was a member of the employee stock program.

As such, during 2001 and 2002 and I bought and sold some of the stock that I held in the company.

I'm currently waiting for some statements that I can make heads or tales of, but this is basically my question:

Do the brokerage fees for selling the stock count against any capital gains, or are the gains independent of that.

In other words, let's say I buy $100 worth of stock and it goes up in value to $120. Then I sell it, but there is a $25 brokerage fee. I end up with $95 even though I paid $100. Is there still a capital gain of $20 or does the fee negate it?

Thanks.

 

[PaulT]

Rain, check with a tax guy to be certain but I believe the Capital Gain is the full amount (your 20$ example) but you may be able to write off some or all of the fee for the Brokerage.

 

[Ken Situ]

It should be cost base per stock. In other words, the calculation is based on how much it costs you to buy per stock, and how much you get per stock from selling. The capital gain is the difference. In your example, you would have a capital loss, which you can carry forward for forever.

You can phone Revenue Canada for a definite answer.

 

[nolesrule]

That's an interesting question. I know it doesn't answer for you, but in the U.S., Capital Gains is calculated as the net of how much you put in and how much you get back (for the specific shares you sold), inclusive of any brokerage fees that may alter either amount.

 

[PaulT]

OK, it seems that you can deduct costs of fees from your gains (as per Joe's US example).

Check here:
http://www.ccra-adrc.gc.ca/E/pub/tg/...tml#P318_20286

Stocks are considered to be Capital Properties, therefore:

Outlays and expenses - are amounts that you incurred to sell a capital property. You can deduct outlays and expenses from your "proceeds of disposition" (defined below) when calculating your capital gain or loss. You cannot reduce your other income by claiming a deduction for these outlays and expenses. These types of expenses include fixing-up expenses, finders' fees, commissions, brokers' fees, surveyors' fees, legal fees, transfer taxes, and advertising costs.

You'll have to get the correct forms (Schedule 3) to determine whether or not it is as simple as gain minus costs.

 

[Rain]

I suspect that if it were not a straight deduction, it would probably specify "portion" or something similar.

Anyway, thanks. I'll check further on this.

 

[Max Leung]

I had played with the stock market for a few years (started in 1999). Made some big bucks, and then lost a fair bit later.

Your capital gains are after all other costs are factored in. You would be claiming a capital loss.

I simply gave Revenue Canada a table showing my initial base cost, the fees to obtain it, the profit(loss) minus the fees to sell it. It's fairly straightforward!

You're also allowed to apply capital losses to previous years. Got a big fat refund that way, after losing tens of thousands on the stock market in the last 2 years (but I made much more than that, so I'm still ahead! ).