Hello. I know that in Canada, when we sell gold bars, they will give you a proper receipt with info on it, and then we are supposed to report either a capital gain or loss on that year's tax depending on whether we made money. However, my question is, what happens when they don't know how much I bought the gold for? For example, lets say if I bought the gold using cash so there is like, no receipt and no paper trail.

Thanks.

If you don't have record of the cost basis you use the market value of the precious metals at the time of acquisition. Historical data is not hard to locate.

More common is inheritance of previous metals in which case its the value at the date of death of the individual leaving the precious metals in an inheritance.

This post was edited by SBD on Jun 24 2023 10:42am

But how would they know when I bought the gold though? Lets say I bought it a really long time ago and I honestly don't remember.

Unless you have dementia I'm sure you can ballpark it within a five year range. Better to report something than let CRA asign a value for you.

If you challange them in tax court the onus will be on you to provide evidence the cost basis is different from what they asign.

I see. Thanks. And you are absolutely right, I do NOT want to get involved with the CRA. However, I believe I might be able to minimize any capital gains on the gold I own.

Let's say I sold my gold and made some money. I know I have to figure out 50% of the profit I've made, and then add this amount to the total personal income that year, and then my personal tax rate is applied to this total.

So instead of selling all of my gold bars in one year, I sell only one gold bar a year. This way, even if I do make a profit, the amount that would be added to my income is small. And if my overall income is low enough, I might not have to pay any taxes at all. I feel that this is a legal way to minimize having to pay taxes on any gold I own.

Do you think this would work?

This post was edited by JessiWan on Jun 24 2023 10:51am

Yes it's a smart idea to keep your income in lower tax brackets if you can and spread it out overtime.

With that said that's on the basis that you don't feel the value of the gold market will decrease more than that of the tax savings from selling it over time.

Like if gold was at an absolute peak right now and you think it's going to decrease significantly in the next few years, dispite paying more tax the higher sales price of your gold might be well in excess of the extra tax burden.


It's the same concept with equities in your RRSP as you get older. You draw down a bit year by year to keep your income in lower tax brackets rather than taking all of your RRSP money out at once in retirement.

Thank you for the reply. It was very helpful.

:

Another question, if you don't mind.

I plan on using a bank's safety deposit box for my gold. Do you think there is a risk of loss? For example, let's say theft by an employee, or if there is a fire (not likely but still possible).

I don't want to keep my gold at home, I don't have the capacity for it, it also sounds very risky.

Also, will the CRA know that the amount I am reporting is from a sale of gold? I kind of don't want the CRA to know that I own gold.

This post was edited by JessiWan on Jun 24 2023 11:16am

Typically Canadian Financial Institutions carry insurance for risk of loss. For instance if a bank goes into default your chequing and savings accounts are insured up to 100k per category. Believe there's 7 total categories. 700k total. So you're backed via the CDIC typically. While I don't have any experience to know if this coveres bankers boxes it would be an easy question to ask before getting one. Risk of theft is certainly fairly low these days. Security is pretty enhanced and electronic bank theft is significantly more prevalent than physical theft at banks. Way easier to try to scam elderly people than physically rob a bank these days.


As for tax return reporting. You can be vague. Just list a disposition. You don't need to say for what specifically.

For instance prior to being able to import tax slips into your tax return we used to just add everyone's t5008s (disposition of assets) up into a single total, and maybe they had 500 sales of securities in the year and we would sum it all in excel and report it as one line item rather than each individual transaction and CRA used to accept that without issue.

In the event they review yes you had to provide the excel and t5008s as back up but that was rare.

I should add a disclaimer that this isn't advice. Just some of my own experiences.

If a US person reads this pretty certain there's a precious metals tax reporting form so it's not the same as Canada.

This post was edited by SBD on Jun 24 2023 11:38am

I see. Thanks.