Sorry guys and gals for the late info, been reaaaly busy, here it is - the RRSP rules.
Yesterdays close rule.
Because a stock is at different prices all day long they needed a time when the stock is at a fixed price and that is at the close or the open, Rev CA chose the closing price of a stock as its deemed value when placed in an RRSP. To be fair they had to choose YESTERDAYS close , just in case you put the stock in the RRSP at say 6.35 am . Even if it doubled at 6.34 am, the deemed value is yesterdays close, and the increase is now sheltered, the increase DOES NOT form part of your contribution limit.
Now for the kicker using those rules!
You buy 1000 stock of ABC for $1 on monday , tuesday it goes to the moon, say, $10, you call your broker tell them to transfer $1000 worth ( .10 x 10,000) of stock of crappy XYZ from your RRSP and replace it with $1000 worth of ABC from your cash acct., ie a straight stock swap both priced AT YESTERDAYS CLOSE. YOU MUST give the order to them in writing or by fax THE DAY ABC ZOOMS, next day is too late. At the end of the day, ABC will show as $10,000 in your RRSP, next day it gaps to $12,000, you sell and the $12k is now sheltered.
YIKES - XYZ just came alive today ( wednesday) its gone from .10c to .20 , you phone your broker, transfer XYZ back into your RRSP at yeterdays close price price of say .10 swapping it with $1000 CASH, at the end of wedneday you now have an extra $1000 profit sheltered.
You started off on monday with 10,000 crappy XYZ worth $1000 now you have $11,000 cash in your RRSP after selling XYZ for .20 on thur.
Remember, you want stock to go into your RRSP AS LOW A PRICE AS POSSIBLE, then you want the gain to happen INSIDE it.
The % foreign content rule.
This one is not very well known, you can have 20% foreign content in your RRSP , that is common knowledge, but most people do not know you can have 100% foreign content by paying a 1% penalty per month on the amount over 20%, you do not need permission or anything special, your broker will add the penalty each month automatically. So if your RRSP was 100% foreign for the whole year you would pay 12% of 80% = 9.6% penalty on the total value as a penalty. The value of the stock will change each day so the $ penalty will also change, but your broker does that calc.
Shame on brokers that do not these two rules, they have a legal fiduciary duty to know and advise you of them when you open up an RRSP account.
SCOUSER. |
