My_question_is: Canadian-specific Subject: Invitation to make a voluntary disclosure Expert: taxman at centa.com Date: Tuesday February 20, 2007 Time: 01:09 PM -0500 QUESTION: I hold a number of shares in the company of NCCC (National Credit Counsellors of Canada) I purchased these shares in 2003/2004 at an average price of 25 cents, and the company declared their value at the time to be $1.00. I swapped these shares into my self Directed RRSP at their declared value of $1.00, and have just received a letter from the legal firm representing NCCC saying that the increased value of the shares made by NCCC was incorrect. This has considerably reduced the value of my RRSP, and to add insult to injury, NCCC has reduced the share holdings of all share holders by 10 to 1 (100 shares now becomes 10 shares) The legal firm representing NCCC has sent shareholders a letter suggesting that any shareholder affected by the disclosure by NCCC may come forward and make a voluntary disclosure to CRA. I would be interested in your opinion and advice as to what course of action, if any, I should take. Thanks in advance for your help. ================================================ david ingram replies: In my opinion, you should be putting the excess cash back into your RRSP to reflect the true value. Then you should amend your tax returns for that year to include a capital gain or maybe even a straight gain on any difference between what you paid and the value that you actually put them into the RRSP. Of course, a proper method would likely be to put the shares in at exactly what you paid for them. Sending the CRA a letter stating that you have corrected the innocent mistake should suffice. The good news is that because the stock in in an RRSP, the loss is 100 % deductible. I have often said that the only stock to put in an RRSP is stock that goes down because you get twice as much of a tax deduction that way. I believe that if you are buying stock or mutual funds, they should always be outside any RRSP so that you get the favourable tax treatment on Capital Gains and Dividends. Fred Snyder has a worksheet that shows that you break even at 4% and make more money on a leveraged purchase where you borrow $100,000 and use the interest as your 5% a year write-off as an alternative to putting $5,000 a year into an RRSP. Get him to do the paperwork for you. Every Thursday Evening, Fred Snyder of Dundee Wealth Management conducts one of 17 different financial seminars in the boardroom of his office Time: 7:00 to 9:30 PM Date: Every Thursday evening Place 1764 West Seventh Vancouver (corner of Burrard) Phone (604) 731-8900 to register No cost - no obligation Topics always cover mortgage interest as a deduction other topics - getting the mortgage, estate planning, critical care insurance, income taxation, differences between stocks and bonds, and usually the most innovative HELOC mortgage offered in Canada from Manulife Bank If you are starting in downtown Vancouver and do not want to go home first, one of the excellent THAI HOUSE restaurants is in the same building and makes a nice start to the evening. If it is your first seminar, Fred will buy you dinner if you are pre-registered. I, david ingram, will be at the Thursday evening following the last Sunday of each month to cover mortgage interest as a deduction and give the class an adding test. -------------- Answers to this and other similar questions can be obtained free on Air by david ingram on the last Sunday of each month. On the last Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram will be a guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com <http://www.600am.com/> Call (604) 280-0600 to have your question answered. BC listeners can also call 1-866-778-0600. Callers to the show and questioners on this board can also attend the Thursday Night seminars on finance and making your Canadian Mortgage Interest deductible. I will be at the seminar following the last Sunday of the month. ------------------------------ David Ingram's US / Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists My Home office is at: 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://www.david-ingram.com/> Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation in connection with personal or business affairs such as at www.centa.com <http://www.centa.com> . If you forward this message, this disclaimer must be included." Be ALERT, the world needs more "lerts" international non-resident cross border income tax help estate family trust assistance expert preparation & immigration consultant david ingram, income trusts experts on rentals mutual funds RRSP RESP IRA 401(K) & divorce preparer preparers consultants This from "ask an income trusts tax and immigration expert" from www.centa.com <http://www.centa.com/> or www.jurock.com <http://www.jurock.com/> or www.featureweb.com <http://www.featureweb.com/> . 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