Making an In Kind RRSP Contribution

Every month I purchase shares of the company I work for as part of our overall benefit plan. This has been a great benefit as the money goes into the taxable account that I opened through the bank that the company uses for all our employee investment account. I never really see the money until I enter the trade that happens in Microsoft Money. Basically, I have been dollar cost averaging into these shares.

One of the features of the plan and the bank we work with, is that I can also open up an RSP (non-taxable investment account) and have the shares I have accumulated deposited into this account as an in-kind contribution. What this means is that I basically transfer the shares in to the RSP without having to sell them and buy them back again. At the time this happens, the government deems that I have sold the shares (even though I haven’t) which will create either a capital loss or a capital gain. Due to the company’s arrangement with the bank, we do not pay an commissions, transfer fees, or other fees to do this.

The benefit of an in-kind contribution is that I get the associated RSP contribution which will reduce my taxable income for the year. Once I file my taxes I will get a certain percentage of this back in the form of a tax refund. It is really a win-win for me.