One issue would be paying brokerage commission on the buy and sell. Also, some potential fluctuation in value of the stock due to the timing difference between the buy and the sell.But it isn't too much trouble
to just use the cash in my RRSP account to buy the stock I intend to
transfer instead and sell the stock in my non-RRSP account at a
different time.
But now Ottawa has extended the "no swap" rule to RRSP's. Where is the abuse? Let say I have BCE shares with a market value of $100,000. I transfer that to my RRSP and take out $100,000 in cash. Let say the gain on the transfer is $20,000 on which I pay the taxes. Is Ottawa concerned that the BCE shares now that they are in an RRSP will suddenly grow in value to $1,000,000? Ottawa will still get the tax when I mature my RRSP (unlike a TFSA).SWAPs are no longer permitted as many clients were finding tax loopholes and were inflating the size of their TFSA accounts.
Then Ottawa should restrict the "no swap" rule only to these "prohibited investments" but my broker is taking the view that the "no swap" rule applies to every security, even widely held publicly listed equities like BCE and Royal Bank. However, my broker said that "contributions in kind" is still fine.The last budget introduced the concept of "prohibited investments". Shares in companies where you and related parties have greater than a 10% interest will be in that category. Your RRSP will be required to dispose of them by 2013 or face a special tax.
I believe the measure was designed to combat schemes that were using swaps of inflated value private company shares to strip cash out of RRSPs without paying tax.