Quote:
Originally Posted by JackJack
I've got contribution room for my RRSP for the 2014 year.
Is there a best way to top-up the remaining amount?
Should I contribute to the limit in kind (transfer stock from my Investment Account) or top up with cash?
Currently, if I were to realize any gains from the stocks in my Investment account, I would be on the hook for capital gains tax of 50% correct? Would it be better to transfer some shares into RRSP, and then later 35-40 years down the road, pull it out and only be taxed less? Does it work like that?
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If you transfer the shares today its a deemed disposition (in other words it is like you sold them even though you are transferring in kind). The Capital Gains amount is half of what you would pay for income, so you would pay say 19.5% at the top end as opposed to 39% in Alberta. You would save more in tax this year than what you will pay next year for the capital gains.
Contributing cash will just get you that tax break and not cost you the capital gains taxes (obviously).