What is an in-kind transfer?
An in-kind transfer is when you move securities (stocks, ETFs, bonds) from one account to another without selling them first. Instead of liquidating to cash and re-buying, the shares themselves move.
The tax treatment depends entirely on the type of transfer:
| Transfer type | Tax consequence | ACB impact |
|---|---|---|
| Taxable → TFSA | Deemed disposition at FMV | Resets to FMV in TFSA |
| Taxable → RRSP | Deemed disposition at FMV | Resets to FMV in RRSP |
| Broker → Broker (same type) | No disposition | ACB carries over unchanged |
| RRSP → TFSA (rare) | RRSP withdrawal + TFSA contribution | N/A (deregistration) |
Transfers that trigger a deemed disposition
When you transfer shares from a non-registered (taxable) account into a registered account (TFSA, RRSP, RESP, FHSA), the CRA treats it as if you sold the shares at their fair market value (FMV) on the transfer date and immediately repurchased them inside the registered account. See also capital gains in registered accounts.
This means:
- Capital gain — if FMV > your ACB, you report the gain on Schedule 3 for that tax year
- Capital loss — if FMV < your ACB and you transfer to a TFSA or RESP, the loss is permanently denied (superficial loss rule applies because you still own the same shares)
- Loss to RRSP — also denied under subsection 40(2)(g)(iv) since you hold the identical property
Broker-to-broker transfers (no tax event)
Moving shares between two non-registered accounts at different brokers — or between two TFSAs, or two RRSPs — is not a disposition. The CRA does not consider this a sale.
Your adjusted cost base carries over unchanged. The new broker may or may not display the correct book cost (many show $0 or the market value on transfer day), but for tax purposes your original ACB remains.
Common scenarios:
- Switching from Wealthsimple to Questrade — ACB carries, no gain/loss
- Consolidating two non-registered accounts at the same broker — ACB pools
- Moving TFSA from one bank to another — no tax event whatsoever
TFSA contribution in-kind
Contributing shares in-kind to your TFSA uses your TFSA contribution room based on the FMV on the contribution date. This is both the deemed proceeds of disposition and the amount of room consumed.
Example: You own 100 shares of XYZ with an ACB of $20/share ($2,000 total). The shares are now worth $35/share ($3,500 FMV).
- Deemed proceeds: $3,500
- ACB: $2,000
- Capital gain: $1,500 (taxable portion: $750 at 50% inclusion)
- TFSA room used: $3,500
- New ACB inside TFSA: $3,500 (irrelevant since gains in TFSA are tax-free)
Future gains on those shares inside the TFSA are completely sheltered — you're "locking in" the gain now to shelter all future growth.
RRSP contribution in-kind
Contributing shares in-kind to your RRSP works similarly: deemed disposition at FMV, which creates the RRSP deduction and triggers any capital gain.
However, unlike a TFSA contribution, you get a tax deduction equal to the FMV contributed. This can partially or fully offset the capital gain triggered.
Example: Same $3,500 FMV transfer with $1,500 gain:
- Capital gain reported: $1,500 (taxable: $750)
- RRSP deduction: $3,500 (reduces taxable income)
- Net tax effect: usually a net benefit, since the deduction exceeds the gain
How to track ACB across transfers
The biggest practical problem with in-kind transfers is ACB continuity. When shares arrive at a new broker, the broker has no way to know your original purchase price. You need to:
- Record the ACB before the transfer — export your transaction history or note the per-share ACB
- Verify the new broker's book cost — it will almost certainly be wrong (they typically use the market price on transfer date or $0)
- Keep your own records — the CRA requires you to calculate your own ACB; broker records are not authoritative
For deemed dispositions (taxable → registered), the ACB resets to FMV on the transfer date, so you need to record that FMV accurately.
Partial transfers and the pooling rule
If you transfer only some of your shares of a security:
- Non-registered → Registered: The deemed disposition applies only to the transferred shares. Use the pooled average ACB per share to calculate the gain. The remaining shares in your taxable account keep the same pooled ACB per share.
- Broker → Broker: The shares that move retain their proportional ACB. If you hold 200 shares and transfer 100, each group keeps the same per-share ACB (it's all one pool anyway).
Remember: under Canadian tax law, all shares of the same security in all your non-registered accounts form one ACB pool (the "identical property" rule). Partial transfers don't change the per-share ACB — they just move units between custodians.
Common mistakes to avoid
1. Transferring losing positions to a TFSA
The loss is denied permanently. If your shares are below your ACB, sell them first (take the loss), wait 31 days, then contribute cash and repurchase inside the TFSA.
2. Forgetting to report the deemed disposition
An in-kind transfer to a registered account is a disposition even though no cash changes hands. You must report it on your Schedule 3. The CRA will have no T5008 for this — it's your responsibility.
3. Using the broker's book cost after a transfer
The receiving broker's displayed "book cost" or "average cost" is almost always wrong after a transfer-in. Using their number on your tax return can result in over- or under-reporting gains.
4. Double-counting the ACB
When you transfer between brokers, if you don't remove those shares from your ACB tracking at the old broker, you'll have phantom shares inflating your pool. Make sure to record the transfer out.