- Gifting stocks can be a smart way to pass on wealth
- The most straightforward way to gift stocks in Canada is through a non-registered brokerage account
- When you transfer stocks, you’ll need to calculate any capital gains
- the recipient of the gift will inherit your adjusted cost base (ACB)
Are you looking to gift stocks in Canada? Whether it’s for a family member, a friend, or even a child, gifting stocks can be a smart way to pass on wealth. But before you do, it’s important to understand the process, the tax implications, and how to make the most of your gift.
The most straightforward way to gift stocks in Canada is through a non-registered brokerage account
Steps to Gift Stocks in Canada
Read below for an overview of how to gift stocks in Canada.
Step 1: Contact your brokerage. Every firm has its own process, but typically, you’ll need to fill out a transfer form, either online or on paper. You’ll specify which stocks you want to give and provide details about the recipient’s account.
Step 2: Complete the transfer. You’ll indicate the number of shares, the stock ticker, and the recipient’s account info.
It is also important to note that tax implications may be incurred with gifting stock in Canada.
In Canada, when you transfer stocks, it’s considered a ‘disposition.’ That means if the stock has appreciated in value, you might need to pay capital gains tax.
Step 3: When you transfer stocks, you’ll need to calculate any capital gains—basically, the difference between what you originally paid for the stock and its market value at the time of the transfer.
When gifting stock keep in mind that the recipient of the gift will inherit your adjusted cost base (ACB). Which means, when they sell the stocks later, they’ll pay capital gains tax based on your original purchase price, not the value when you gifted it.
If the recipient is a minor, the kiddie tax applies, which we’ll cover in another video.
To wrap up, gifting stocks through a non-registered account is simple, but be sure to plan ahead for the tax implications. Make sure the recipient is aware of their future tax responsibilities too.
Check out Rick Rule’s Holiday gift picks.
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