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I am planning on paying my girlfriend back 18K, which she plans on putting in her RRSP. Rather than sell funds that are in my non-registered investment account (which would cause me to pay capital gains) I was hoping to make an in-kind transfer of the shares to her, which she could then put in her RRSP directly. Am I allowed to do this? It seems like this would allow people to avoid paying capital gains taxes whcih I'm sure the government doesn't allow. What am I missing, who is charged the capital gains and when?

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    Not an answer because I'm only familiar with US laws, but in the US, the cost basis transfers over to whoever is receiving the shares. So when they sell, they'd pay the full capital gains tax on the full cost basis from when you acquired the shares.
    – Daniel
    Commented Feb 15, 2021 at 21:00
  • Marriage soon? You generally do not have a capital gain or loss if you give capital property to your spouse or common-law partner canada.ca/en/revenue-agency/services/forms-publications/…
    – brian
    Commented Feb 16, 2021 at 2:02

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Yes you have to pay capital gains tax. Here is a document explaining all the different scenarios.

https://ca.rbcwealthmanagement.com/documents/720599/720615/Tax+Treatment+of+In-Kind+Asset+Transfers+-+use+this.pdf

Transfer made to arm’s length individuals.
Arm’s length individuals generally include individuals who are not related to you and who act independently from you. At the time of the transfer The transfer of assets is a taxable transaction; you dispose of your assets to the arm’s length person at fair market value. You report the capital gain or loss realized on the disposition on your income tax return. The ACB of the transferred assets is the fair market value of the assets on the date of transfer.

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