Ventura Cannabis and Wellness Corp CVHIF

RE:RE:RE:RE:RE:Buyers of CVHIF shares

[dileas48s]

....and just a tiny bit more clarity:

There is zero tax consequences for shares / warrants you receive inside a TFSA, RSP, or RESP.

It's kind of a burn that you get VIBE shares and warrants who's value is way below initial investment cost for CXV/BLVD/VCAN but capital gains will hit for selling with an SP above $1.06 (for the shares anyway).

davgro wrote: Just to add to my previous post re: tax consequences of the VCAN transaction(s). 

There is no immediate tax liability related to the VIBE warrants you receive outside of RRSPs, TFSAs or other registered accounts. 

Under the Income Tax Act s. 15(1), s. 49(3)(b):

When a corporation grants, to existing owners of its common shares, rights to acquire additional shares of the corporation, in the form of a warrant or option, the following tax consequences result:

 

* the value of the warrants or options must be included in the shareholder's income, unless identical rights to acquire shares have been offered to all owners of the corporation's common shares

* the amount included in the shareholder's income becomes the cost basis of the rights for the shareholder.  In the case of VIBE the warrants have a $0.00 cost and should be showing as such in your account.

 

Rights Exercised

If the rights are exercised to purchase shares, the cost basis of the shares acquired will be equal to:

 

* the cost basis of the rights (amount included in shareholder's income); plus

* the amount paid to exercise the rights and acquire the shares

 

Rights sold

** This does not apply to the VIBE warrants as they are not tradeable **

If the rights are sold without being exercised, there will be a gain in the amount of:

 

* proceeds received, less

* the cost basis of the rights (amount included in shareholder's income)

For most taxpayers, the gain will be a capital gain, 50% of which is subject to tax.

davgro wrote:

DashForCash wrote: Great advice Davgro!
Quick follow up question if you may know the answer -  the tax liability you talk about related to the dividend - is that applicable to the year 2021? Or only if or when you sell the dividend shares as in down the road if you sold them next year or later?

The tax liability on the stock dividend applies in the year you receive the VIBE shares in your account i.e. 2021 regardless of whether you sell or keep your VIBE shares.

The stock dividend sets the Adjusted Cost Base (ACB) for your VIBE shares ($1.0341 for 1st tranche).  If you sell your VIBE shares for more than your ACB you will have a capital gain, less and you will have a capital loss.

Hope that helps.