Question about stocks and income tax

[ahatt]

My DH & I started contributing to his work's company matched stock/shares program in November. We have never owned stocks before, so I was just wondering if this is something we have to claim on our taxes? And if it is, do they automatically mail a form for this?

His employer has matched part of our contribution, so I don't know if that's considered "Additional income"....I don't really know a whole lot about how it works with stocks, so any help would be appreciated.

[ashedfc]

It depends on How the Employer has setup the your contribution, & their matching up. There are all different kinds of set-up possible, so there is no standard formula which fits all.
In most cases, we have seen, the HR dept. does the calculation, & tax deduction in your paycheck is adjusted accordingly, so when you get your T4 slip is all accounted in it.
But, I would suggest, follow up with your HR dept, regarding your specific case.

What you buy is your personal choice (it doesn't impacts your tax structure), you can buy stocks, bonds, options, futures, gold, silver, real estate (retirement account, do hold all kind of stuff, as long as its an eligible/registered product)..

[Ciel]

When you get into stocks, you will have to keep track of share costs and also capital gains and losses (there are situations that indicate when you are deemed to have disposed of a capital property).

The CRA guide to Capital Gains and Losses:
http://www.cra-arc.gc.ca/tx/ndvdls/t.../menu-eng.html

Shares, funds and other units:
http://www.cra-arc.gc.ca/tx/ndvdls/t.../menu-eng.html

Taxable dividend income:
http://www.cra-arc.gc.ca/tx/ndvdls/t.../menu-eng.html

If your stocks generate any dividend income, you can claim a dividend tax credit-
http://www.cra-arc.gc.ca/tx/ndvdls/t...5/425-eng.html

[ashedfc]

Employers matching (normally) is in a registered account, where you get the tax deduction. So since its registered, capital gain/loss, doesn't matter; as everything stays in the account tax deferred till withdrawal. So there is no need to track the book value/capital loss or gain & the accounting headache which comes with it.

[ahatt]

Thank you, that sounds very straight forward! I'm glad I don't have to track the capital gain & loss...that sounds like it would be a lot of work

Employers matching (normally) is in a registered account, where you get the tax deduction. So since its registered, capital gain/loss, doesn't matter; as everything stays in the account tax deferred till withdrawal. So there is no need to track the book value/capital loss or gain & the accounting headache which comes with it.

[ahatt]

If they do calculate it on my husband's T4, would it be included in his income or in a different box on the T4 slip?

I'll have him ask as well just to be sure of how they are doing it.

It depends on How the Employer has setup the your contribution, & their matching up. There are all different kinds of set-up possible, so there is no standard formula which fits all.
In most cases, we have seen, the HR dept. does the calculation, & tax deduction in your paycheck is adjusted accordingly, so when you get your T4 slip is all accounted in it.
But, I would suggest, follow up with your HR dept, regarding your specific case.

What you buy is your personal choice (it doesn't impacts your tax structure), you can buy stocks, bonds, options, futures, gold, silver, real estate (retirement account, do hold all kind of stuff, as long as its an eligible/registered product)..

[freebies258]

they'll send you a slip if you sold it or earn div on it....and there's usually a letter with contact info when they first gave you the stock..double check with the HR...

[ahatt]

Thank you!

they'll send you a slip if you sold it or earn div on it....and there's usually a letter with contact info when they first gave you the stock..double check with the HR...

[ahatt]

We received my husband's T4 slip, and under Box 40 on his T4, it shows an amount. Is this typically where they would account for the employer stock contribution?

It depends on How the Employer has setup the your contribution, & their matching up. There are all different kinds of set-up possible, so there is no standard formula which fits all.
In most cases, we have seen, the HR dept. does the calculation, & tax deduction in your paycheck is adjusted accordingly, so when you get your T4 slip is all accounted in it.
But, I would suggest, follow up with your HR dept, regarding your specific case.

What you buy is your personal choice (it doesn't impacts your tax structure), you can buy stocks, bonds, options, futures, gold, silver, real estate (retirement account, do hold all kind of stuff, as long as its an eligible/registered product)..

[Sunraven]

If it's a registered account (an RRSP), then the portion your husband contributed personally will be counted as an RRSP contribution for him and will appear on an RRSP contribution receipt that you will receive in the mail. You will use this receipt to enter it as a deduction against his employment income on line 208 of his income tax return.

Everything is easier with numbers so here's an example:

Gross income - $50
Husband's contribution to his RRSP - $15
Income your employer taxed you on and remitted to the govt = $35

Not $50.

However, the amount they entered in Box 14 of your T4 slip is $50. So you have to enter your RRSP receipt for $15 on your tax return to get net income of $35. Tax will then be calculated on that $35.

However because the employer already remitted tax on that $35 to CRA, it's a wash.

Makes sense?

[ahatt]

Thanks Sunraven for the advice , but it's actually company shares that he contributed to, not an RRSP. His employer matches a portion of the % of each of his paycheques each payperiod that goes towards the purchase of shares in the company.

If it's a registered account (an RRSP), then the portion your husband contributed personally will be counted as an RRSP contribution for him and will appear on an RRSP contribution receipt that you will receive in the mail. You will use this receipt to enter it as a deduction against his employment income on line 208 of his income tax return.

Everything is easier with numbers so here's an example:

Gross income - $50
Husband's contribution to his RRSP - $15
Income your employer taxed you on and remitted to the govt = $35

Not $50.

However, the amount they entered in Box 14 of your T4 slip is $50. So you have to enter your RRSP receipt for $15 on your tax return to get net income of $35. Tax will then be calculated on that $35.

However because the employer already remitted tax on that $35 to CRA, it's a wash.

Makes sense?

[Sunraven]

Thanks Sunraven for the advice , but it's actually company shares that he contributed to, not an RRSP. His employer matches a portion of the % of each of his paycheques each payperiod that goes towards the purchase of shares in the company.

Every pay period, I purchase my employers's shares, and they in turn purchase matching shares in their own compay for me. These shares are held for me in an RRSP account at Sunlife. Are you saying your hubby's shares are not held in an RRSP account?

[ahatt]

Oh I see what you are saying. Hmm..I have no idea, I was not aware that that was how company share plans worked. They offer a company share plan, and a group RRSP, so I thought that the two were completely separate. He never enrolled in the group RRSP, only the share plan.... so I'll have to have DH find out from his employer, where the shares are held.

Thanks Sunraven

Every pay period, I purchase my employers's shares, and they in turn purchase matching shares in their own compay for me. These shares are held for me in an RRSP account at Sunlife. Are you saying your hubby's shares are not held in an RRSP account?

[Sunraven]

Oh I see what you are saying. Hmm..I have no idea, I was not aware that that was how company share plans worked. They offer a company share plan, and a group RRSP, so I thought that the two were completely separate. He never enrolled in the group RRSP, only the share plan.... so I'll have to have DH find out from his employer, where the shares are held.

Thanks Sunraven

It IS possible that it's not held in an RRSP. It can be held in an account outside of an RRSP. A non-registered acct. Ask him to call his HR dept and find out how it's being handled.

Either way the company that is administering the account should have sent you a statement as at the end of Dec 3st to show his investment balance at the end of the year and all transactions that took place for the year.

[BOO111]

Thanks Sunraven for the advice , but it's actually company shares that he contributed to, not an RRSP. His employer matches a portion of the % of each of his paycheques each payperiod that goes towards the purchase of shares in the company.

I have these as well,which are deducted off my paycheck,my employer also matches these as well.They are company shares through computershare.com.I do receive slips for these,they are T5 slips.I received a bunch of them,as I do every year.