Capital Loss - 2024 Tax Planning StrategyFor the Canadian investors on this board that are wondering how to claim their 'Unpriced' VGCX shares as a Capital Loss on their 2024 Income Tax return, here's a link with some good info.
TaxTips.ca - Worthless Shares or Debt Section 50(1) of the Canada Income Tax Act allows you to claim a Capital Loss when certain conditions are met (see info in link for criteria).
"You must also file an election in writing, in the form of a letter signed by you, with your tax return, as indicated in T4037 Capital Gains. If you file your tax return electronically, send the letter separately to Canada Revenue Agency (CRA), indicating that it is in support of your electronically filed tax return. The letter should state that you want subsection 50(1) of the Income Tax Act to apply to the particular transaction. Include your full name and address, as well as your social insurance number, and ensure that you sign the letter. Make sure you have documentation which shows that the shares or debt qualify as a s. 50(1) disposal, which you will be required to provide if requested by CRA.
The advantage of this is that the taxpayer can write off the investment while still retaining ownership. The corporation may "revive", and be worth something in the future. Any recovery of amounts previously deducted would have to be included as capital gains."
Since at this point, the final outcome of VG as a corporate entity and whether the corporation will eventually be disolved via Bankruptcy, be sold, or 'revive' is uncertain at this time. Section 50(1) allows you to claim a Capital Loss
while retaining the share ownership in the event the corporation should "revive" in the future. This approach is different than contacting your broker and requesting they remove the shares from your account as a "worthless" security which would then mean that your brokerage firm becomes the owner of your 'Unpriced' share certificates and should VG revive in the future, they instead will benefit from any future capital gains from shares that essentially cost them nothing.
I've had "worthless" securities removed from my account in the past when I was certain the corporation was bankrupt and had absolutely no chance of revival. However, this seems to be a different scenario whereby VG as a corporation still has valuable assets and is in "Receivership"and the eventualy disposition of those valuable assets is still unknown.
I'm not an acountant but I've done my own Income Tax for over 40 years and will be using the Section 50(1) approach so that by some miracle if VG did 'revive' and the shares one morning resumed trading at $10 bucks a share I won't by kicking myself because I simply had the worthless shares removed from my account and my broker now owns the shares. Instead, once I know for sure that VG won't revive, I'll then proceed to have the worthless shares removed from my trading account and my broker can have them.
The above is in my opinion only, is not tax advice and posters/readers on this board should contact their financial advisor and/or accountant regarding this strategy if / as needed.
DYODD
HB77