Transfering Employer Shares to Registered Account

I have decided that I am going to transfer the shares I purchase through my company’s employee share purchase plan into my RSP. I am able to do this free of charge through the broker I use (one of our company’s bankers).

There are a couple of benefits of doing this. First, I don’t have to sell the shares to make this happen. The transfer occurs through an in-kind transfer. What this means is that on the day the transfer occurs, the broker pretends that I sell the shares, and then makes a contribution to my registered account. I need to record this as a sale for income tax purposes so I will need to pay any capital gains taxes. However, the second benefit is the resulting tax credit that I receive as a result of the contribution. For us Canadians, an RSP contribution helps to offset taxes by giving us a tax deduction during tax season. At my income level, I should receive about 50% of this back in the form of a refund.

I plan to do this every so often as my employer shares build up. I will sell these shares periodically so that my employer shares do not make up more than 5 – 10% of my portfolio. This is just safe investing!!!