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I own stock of a company outside of Canada. Recently, the company was bought out by a Canadian company with newly issued shares listed in Toronto. As a shareholder of the company, I received new shares of the Canadian company.

All my shares are held by my broker in Singapore. I have no immigration status in Canada.

I would like to know if there are any capital gains taxes owed when I sell out these new shares after holding them for a period of time such as six months to a year. I am very confused.

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I am unfamiliar with Canadian tax law and Singaporean tax law. However, if it is similar to other western countries:

When you report your income tax to the Singaporean authorities, you are likely to have to report capital gains tax on foreign investments. While sometimes allowance is given if the money is held offshore - tax is sometimes not paid until the funds are brought into the country, because the account is at a Singaporean broker dealer, the funds will have been brought into the country when the transaction is settled.

Canada may not levy capital gains taxes on non-residents, and if they did (unlikely), they may have a tax treaty with Singapore avoiding double taxation, in which case you would probably pay Canada first when the shares are sold, and then pay the difference to Singapore (the amount paid to Canada would be a deduction).

A local (Singaporean) accountant, tax advisor or tax lawyer would be able to advise you on the situation to be sure. This is quite a common situation for investors in the stock market who own stock internationally.

You may also have to factor in the exchange rates when you work out your acquisition cost and how much you received when you dispose of (sell) the shares.

You could potentially transfer your position to a foreign broker-dealer before closing it to defer or avoid taxes. Your local advisor should be able to let you know what the implications are.

  • Thanks for your answer, There are no capital gain tax in Singapore, All I concern is any tax I should pay in Canada and when? If I am not selling all in one time, moreover, if there are tax what value should I base on as the original cost, at the time of acquisition? There are no cash transaction so how to determinate the cost? – Glory Jun 9 at 22:59
  • Usually your broker will take care of any tax, which again is unlikely to be owed. The acquisition cost would be the original price when you purchased the original (the company outside of Canada) shares. – xirt Jun 9 at 23:31
  • noted your comment, but for the cost I still have question. The price I bought the share (outside of Canada ) already appreciated before the acquisition which is nothing do with the tax in Canada. Furthermore, the acquisition bases on issuing a share of Canada company without specifying the actual value (but a market price for reference). – Glory Jun 10 at 2:09
  • If you acquire an asset at a given price and it goes through a corporate action, you still own the resulting asset(s) at the original price . It is only when you dispose of the asset (sell it) that it becomes relevant for capital gains purposes. Unless the acquisition was for cash, the acquisition by a Canadian company for stock is not usually a taxable event. – xirt Jun 10 at 3:09
  • Thanks for your answering point by point, appreciated – Glory Jun 10 at 15:50
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Generally, securities are Excluded properties from part I taxation. There are some exceptions for things such as shares of company which are not widely held.

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/disposing-acquiring-certain-canadian-property.html

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/non-residents-canada.html

It doesn't even show up as an option in the non-resident tax calculator.

https://apps.cra-arc.gc.ca/ebci/nrtc/prot/welcome.action?request_locale=en_CA

https://www.fin.gc.ca/treaties-conventions/Singapore_-eng.asp Article XIII 4. Gains from the alienation of any property, other than those mentioned in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.

Surprisingly alienation is not defined explicitly so the ordinary usage, i.e. you selling your shares, seems to apply.

Because of this I think you would not probably be subject to Canadian taxation unless you make an election (you'd have to read up on that on the CRA site).

Here's another answer which can be helpful What capital gains taxes do non-resident Canadian citizens owe?

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