Bravo Gold Corp V.BVG

Bravada shares cost basis

[speks]

Is anyone familiar with how a spin-off like Bravada is treated under the Canadian tax system? For example, is the adjusted cost basis zero? If not, what should it be?

(The shares showed up in my account marked as a stock dividend, butthat's just how the brokerage treated it.)

[ashcake]

My accountant told me that if I retained the same amount of BVG shares after the dividend ofth bravada shares then the cost base of bravada shares in zero.

[brit]

You're quite correct ashcake.  Under the Canadian Tax Act the new Bravado shares will have an adjusted cost base of zero.The downside is that your taxable capital gain will be .5 times whatever you eventually sell the new shares at.Cheers,Brit

[wtelfair]

My shares are sitting in a US Roth IRA, so these rules do not apply.

[schor]

If your in catada and have your shares in an rrsp or tfsa then there is nothing to worry about.Schor

[brit]

True in the short term.  However when you eventually start withdrawing from your RRSP your withdrawals, whether they be accumulated capital gains, interest from GICs, dividends or royalties, or whatever you have built up inside over the years, will be taxed fully at your marginal tax rate.That's one of the drawbacks of having a Canadian RRSP, within which one generates capital gains

[schor]

Brit, your post is bang on with my philosophy.I tell every young person I know that they should put their money in a direct trading tfsa and even borrow for investments outside of an rrsp until you hit your peak earning potential. Invest in your tfsa and house before you invest in anything else. Then depending on age and earnings plateau, start thinking of an rrsp. The lure of the tax refund from