Comments on: Employee Stock Purchase Plan (ESPP) Explained

By: Barry Choi

Barry Choi — Sat, 29 Jul 2023 10:32:57 +0000

In reply to Jerry.

Hi Jerry,

Yes, capital gains would apply for in-kind transfers – https://ca.rbcwealthmanagement.com/documents/634020/2239538/The+Navigator+-+Tax+Treatment+of+In-Kind+Asset+Transfers+2016.pdf/0991f84f-dd10-46c6-935f-3a23cdca7ccf

By: Jerry

Jerry — Fri, 28 Jul 2023 21:14:23 +0000

Hi Matt

My employer is US-based. I bought ESPP shares through their brokerage. Would there be capital gains if I just transfer shares to Tfsa or rrsp? If there is tax then I guess there’s really no advantage to just having their brokerage sell the shares and send the cash?

By: Barry Choi

Barry Choi — Wed, 12 Apr 2023 17:42:25 +0000

In reply to Matthew. Matthew, No real downside. In the end you want their free money and you'll try to minimize your tax burden.

By: Matthew

Matthew — Wed, 12 Apr 2023 17:37:21 +0000

The employer portion does have the option to be invested in any of the 3 (non-reg., TFSA or RRSP). What I did not understand were the cost to the benefit side which I now understand is a taxable benefit. If the additional RRSP investment is an attractive and available option for the employer portion then it sweetens the deal as the tax is refunded before the vesting period expires (employer portion is ours no matter what, just locked or vested for 2 years).

So for us it makes sense and we will move to have the employer portion invested as RRSP moving forward. I wonder and doubt if the already invested employer portion can be moved from cash to RRSP (I get and am ok that it will trigger capital gains and RRSP deductions). Any reason not to do either one if we have the room and the tax benefit creates a quicker positive cashflow?

By: Barry Choi

Barry Choi — Mon, 03 Apr 2023 15:25:38 +0000

In reply to Matt.

Hey Matt,

No tax benefits since it sounds like you have to put the 3% in a non-reg account. You could technically move it to your TFSA and RRSP after it’s vested, but you’d pay any capital gains based on the time of acquisition.

Either way, you’re still getting 3% for free.

By: Matt

Matt — Mon, 03 Apr 2023 15:23:16 +0000

I”m confused. Our employer program will match 50% of our stock purchases up to 6% (they provide 3% on the 6% we elected to invest). Our 6% is direct to RRSP (this part is straightforward to me). The 3% matched is (locked for 2 years) currently in a non-reg. account. What are the tax benefits or issues if we change the benefit moving forward to a TFSA or RRSP (assuming we have the room)?

By: Barry Choi

Barry Choi — Tue, 28 Feb 2023 15:54:09 +0000

In reply to Richard. Richard, You'll need to contact your old company. Those shares should be sitting somewhere.

By: Richard

Richard — Mon, 27 Feb 2023 22:09:20 +0000

What is i was let go and my employer never provided me the shares I participated in the employee purchase plan. I paid in 5 percent and they matched. How do I track down their rules for the purchase plan and when this should have been paid out. It has been years

By: Barry Choi

Barry Choi — Tue, 01 Nov 2022 10:14:36 +0000

In reply to Nico. Nico, Assuming your company allows you to transfer shares in-kind, there are no capital gains/losses that would be triggered.

By: Nico

Nico — Mon, 31 Oct 2022 23:48:40 +0000

Hi Barry,
Thank you for this information about ESPP. Could you please comment on transfer of shares from ESPP account to a non-registered account (same account holder)? (After lay-off, ESPP shares needed transfer.)
Am I correct that this type of transfer does not generate a capital gain/loss? Thanks