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The mailbox is filling up again, so let’s see what questions readers have on their minds.
Q – I will turn 71 this year. As a result, I will have to close my RRSP and convert it to an RRIF by Dec. 31.
I have many stocks in my RRSP, which I have no intention of selling. So, my strategy when converting to an RRIF is that next year, when I will be required to transfer a minimum amount from my RRIF into income (minimum of 5.28%), I will merely transfer enough shares of an individual stock from my RRIF account to a non-registered trading account. This will meet the minimum requirement and permit me to hold onto these shares in their entirety as well. Of course, I will have to pay tax on this transfer out of my RRIF into the trading account.
My question is this. At some point, I will sell these shares that I have just paid tax on, hopefully at a profit. Will I have to pay tax on the capital gains? Wouldn’t that amount to double taxation as I’ve already paid tax on these shares? – Phillip P.
A – Yes, you will have to pay capital gains tax on profits but no, it is not double taxation. Once the shares are out of the RRIF, you’re starting clean from a tax perspective. The book value of the shares is the price at the time you moved them into the non-registered account. If you were to sell them the next day at the withdrawal price, there would be no tax. You’ll only pay tax on any profits you make going forward – in other words, on any future gains.
Q – I have a large RESP, and my son is now entering university in the U.S. I want to lock in some of the currency gains between the Canadian and U.S. dollars. I need to be able to hold the position I purchase in the RESP and would like to minimize currency conversion.
I know some of the funds offer .U versions, but I have also recently found some that have Canadian dollar versions that are “unhedged.” The one that comes to mind is HBF.B
If I buy a U.S. equity fund (unhedged), don’t I get the benefit if the CAD weakens as the position will be in U.S. companies? If not, can I own the .U versions of various funds in an RESP (even though I suppose I incur the currency conversion when I purchase)?
Do you have suggestions for me to lock in the recent strength of the CAD? – Lyle B.
A – All assets in registered plans including RESPs are single currency accounts. RBC Direct Investing notes that while all trades will settle in Canadian dollars, you will still see the U.S. dollar value of your investments. Any foreign income received (dividends or interest) will automatically convert to Canadian dollars.
So, reporting will always be in Canadian dollars although most brokers will show the U.S. dollar value of any assets held in that currency.
With that in mind and being that your son will be attending a U.S. university, you should own U.S. dollar-denominated securities in your plan. I suggest you talk to the financial advisor who handles the plan about the best securities to achieve this. Keep in mind they should be low risk as your son is now of university age. Stock market risk is a greater concern than currency risk at this point.
Next time: Low-risk ETFs, buying BCE, transferring losing stocks to TFSA.
If you have a money question, send it to me at gordonpape@hotmail.com and write Fund Library Question on the subject line. I can’t promise a personal response, but I’ll answer as many questions as possible in this space.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
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Notes and Disclaimer
Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
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