Transfers out of a Cash account

When you transfer cash from a cash account, you do not incur taxes. Instead, you incur taxes when you realize a profit from a sale of securities. In other words, when you sell an investment at a profit, you trigger capital gains and the proceeds become taxable income.

You can request a transfer of either Canadian or U.S. Dollar cash out of your cash account, provided that your investments are fully settled first. 

For more information about trade settlement, check this helpful article.

When transferring existing investments (like stocks, ETFs or options) out of a cash account, it is important to be aware of where you are transferring the investments to.

If you’re transferring to another non-registered account (like another cash account or a margin account) there is nothing you need to do.

If transferring to a registered account (like an FHSA, TFSA or RRSP), it will trigger a taxable event. The position(s) you transfer will act as if you close the position in the cash account and simultaneously open it again in the registered account. 

For example, if shares purchased at $10 and are now valued at $15 and are transferred out, it'll be as if you have sold the shares at $15, with tax implications mirroring those of a sale. And then rebought the shares in the registered account at $15.

When transferring investments from your Cash account, ensure you consult with a tax professional for more information and guidance.

When you transfer investments out of a cash account, the dollar amount of the transfer is represented by the market value of the investment on the date of the transfer request. Therefore, the amount of capital gain/loss is dependent on this market value.

Because market value can fluctuate throughout the day, the CRA allows you to choose the price that is considered “market value.” This can vary depending on the type of investment:

To indicate which price you’d like Questrade to use for determining your transfer amount, you can leave a comment on the request after it has been placed.

Simply click the “Request history” tab, and click “Add comment” for the request indicating which price you’re using.

Please note: Depending on the account type receiving the investments, there may be additional tax implications to be aware of (i.e. making sure you don’t over-contribute to your TFSA).

Explore the related articles in this lesson for more information on asset transfers.

Note: The information in this blog is for educational purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied, is made by Questrade, Inc., its affiliates or any other person to its accuracy.