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How would one liquidate physical gold without paying capital gains ? If you hold gold coins then that is currency so capital gains should not apply as I understand it but how would you liquidate bullion ?

Norman1 said
Would you consider gold certificates or gold receipts instead of all that physical gold, Winnie?

One is example is the exchange-traded gold receipts issued by the Royal Canadian Mint. Each receipt is represents about 0.01 fine troy ounces of 99.9%+ purity physical gold from the Royal Canadian Mint. 0.35% per annum charge for safekeeping of the physical gold behind the receipt.  

Here's the underlying problem with gold certificates or gold ETFs or any other form of "paper gold". There is no real substitute for holding physical.

If the rationale that one is invested in gold in the first place is that it's a hedge against the current financial system imploding, then holding any kind of paper claim on physical gold is pointless. You need to have the metal in your own hands beforehand for the hedge to be effective, because when the "big crisis" comes, paper claims on gold will become meaningless and will not be honored. Even if you think you own it, if your gold is sitting at some intermediary, even if they guarantee (ha-ha) it belongs to you, chances are they've loaned it back out to somebody else (to earn a fee) who then probably loaned it again to somebody else, and then somebody else and so on, resulting in multiple paper claims on the same metal. When the big crisis arrives and the ultimate borrower doesn't or can't give the gold back, everybody in the chain backwards is going to be screwed.

This is even true of the major gold ETF custodians, where it has already been established that they (e.g HSBC) are using the same fractional reserve lending practices for leveraging gold that they use in currency lending. Bottom line, if a crisis balloons to where everyone asks for their gold at the same time, there isn't enough physical to cover all the claims they've created. At that point it's game over. Multiple parties will be claiming ownership of the same metal, but the only thing that will matter is who is actually in possession of it at the time. Any paper claim will be valueless because the metal is gone.

OTOH if you just want to speculate on a rise in gold prices without the anticipation of a full monte collapse, then a paper claim may suffice as a trading instrument. But understand what you are trying to accomplish, what the risks are, and why

Wonder how banks report sale of bullion to them by individual re CRA.
In other words, they report income etc if its a bank account or broker's account. What are their obligations when it comes to a "stranger" walking in to unload a few ounces. I imagine from a money laundering stand point, banks have tighter rules ?
Just curious.

Bud said
Banks pay 100% on ur gold coins bars have u tried to resell them any fees mark up  

The last time I sold gold bars to RBC and Scotia in 1993.
After that I prefer not to deal with banks, there is many other options where to sell without dealing with banks.
By the way, I would be happy to buy your gold and will pay you more, than banks do.

savemoresaveoften said
Wonder how banks report sale of bullion to them by individual re CRA.
In other words, they report income etc if its a bank account or broker's account. What are their obligations when it comes to a "stranger" walking in to unload a few ounces. I imagine from a money laundering stand point, banks have tighter rules ?
Just curious.  

Don't know how they do it now, but in 1993 they did not even asked me to produce any ID. The only requirement was to fill up purchase-sales receipt and write there any name you wish, any address and any phone number. At that time they also paid cash.
Like I said before, I don't deal with banks now, I have many other better options.

Bill, I also glad to know, that I'm not alone hiding in the Canadian woods. And, I prefer to "store in the woods" Maple Leafs coins. They each have year stamped, so if in a few hundred years from now some future people will find my storage, they will have some fun.

Regarding capital tax now. Yes, I always pay all my taxes, even all under $1 interest, that I received on some checking/savings accounts without any T5 slips.

I was saying here, that one can "choose" to pay capital gains tax, because there will be no receipts, tax slips or connections to persons SIN and maybe some people, who didn't received tax slips or don't know, that need to pay capital gain tax, can "choose" not to pay capital gains tax.

I only wanted to explain here, that there will be no mandatory tax slip, like T5, for example.
Using "choose" was incorrect, wrong, because everybody must pay taxes. You are correct, Bill, I do apologize for using "choose", that was not good explanation at all.

savemoresaveoften said
Wonder how banks report sale of bullion to them by individual re CRA.
In other words, they report income etc if its a bank account or broker's account. What are their obligations when it comes to a "stranger" walking in to unload a few ounces. I imagine from a money laundering stand point, banks have tighter rules ?
Just curious.

Winnie said

Don't know how they do it now, but in 1993 they did not even asked me to produce any ID. The only requirement was to fill up purchase-sales receipt and write there any name you wish, any address and any phone number. At that time they also paid cash.
Like I said before, I don't deal with banks now, I have many other better options.

The rules are now tighter.

The dealer now has to issue a T5008 slip and file a T5008 return to CRA, just like someone disposing of shares or bonds through them, according to the T5008 Guide:

Who has to file a T5008 information return?

The following persons have to file a T5008 information return:

■ every trader or dealer in securities who buys a security as principal (for their own account) or sells a security as an agent or nominee for any vendor;

■ every person in the business of buying and selling precious metals in the form of certificates, bullion, or coins who makes a payment to another person for a sale of precious metals by that other person;
…

Chapter 5 – T5008 slip
…
Box 15 – Type code of securities

Indicate the type of security by entering one of the following codes:
…
FUT – Futures
MET – Precious metals
MFT – Units in a mutual fund trust or investment fund trust
…

Box 16 – Quantity of securities

Enter the quantity of securities involved in the transaction. The quantity must be in units that apply to that security (for example, for gold, give the number of ounces).
…

I guess money launderers and terrorists have also tried to use precious metals in place of cash. Dealers in precious metals and stones now have FINTRAC reporting and know-your-client obligations, especially when over $10,000 of precious metals are sold or purchased by someone over a short period of time: FINTRAC: Dealers in precious metals and stones

Norman1 said
Dealers in precious metals and stones now have FINTRAC reporting and know-your-client obligations, especially when over $10,000 of precious metals are sold or purchased by someone over a short period of time

In the last few months I purchased a lot of physical 99.99% gold from many different dealers mostly over the internet.

All transaction I deliberately did just below $10,000.

From 9 dealers only 1 wanted to see photo of my ID.

So, in reality, if anyone want to buy gold and use totally imaginary names, it is possible even right now with strict FINTRAC reporting.

Once again, I'm just sharing my experience here and not advocating or suggesting anything.

Winnie said

Norman1, can you please explain, what they mean "is a supply of a financial service and generally exempt" ?

Exempt from what? Capital gains?
I don't understand, English isn't my native language.

29. Any supply of a precious metal (i.e., gold, platinum or silver) meeting the purity requirements 99.5% in the case of gold and platinum, as set out in the definition of precious metal in subsection 123(1), is a supply of a financial service and generally exempt.
Metals of this quality are normally investment-related and are usually bought and sold on international exchanges that establish world-wide precious metal prices.

The implied context of that CRA document is GST and HST sales taxes and not income taxes. So, the term "generally exempt" then means generally exempt from GST and HST.

If one buys $5,000 of "financial services" purity-level gold, the $5,000 and any commission charged is exempt from GST/HST. Sort of like buying $5,000 of bank shares from a stockbroker. No GST/HST on the $5,000 or the $9.99 commission.

In contrast, if one buys $5,000 of gold that's not "financial services" purity, then it is like buying $5,000 of 2x4 wood. HST/GST on the $5,000 and any commission charged.

"Listed personal property" is a special kind of "personal-use property". Something can't be "listed personal property" if it is not "personal-use property" or not "property".

Is a 99.9% purity gold coin "property" or a "financial instrument"? If one didn't pay HST or GST when one purchased the coin from a dealer, then it is a "financial instrument" and not "property".

Not sure if people are reading the definition of listed personal property in section 54 of the Income Tax Act correctly:

listed personal property of a taxpayer means the taxpayer’s personal-use property that is all or any portion of, or any interest in or right to — or, for civil law, any right in or to — any

(a) print, etching, drawing, painting, sculpture, or other similar work of art,

(b) jewellery,

(c) rare folio, rare manuscript, or rare book,

(d) stamp, or

(e) coin; (biens meubles déterminés)

personal-use property of a taxpayer includes

(a) property owned by the taxpayer that is used primarily for the personal use or enjoyment of the taxpayer or for the personal use or enjoyment of one or more individuals each of whom is

(i) the taxpayer,

(ii) a person related to the taxpayer, or

(iii) where the taxpayer is a trust, a beneficiary under the trust or any person related to the beneficiary,

(b) any debt owing to the taxpayer in respect of the disposition of property that was the taxpayer’s personal-use property, and

(c) any property of the taxpayer that is an option to acquire property that would, if the taxpayer acquired it, be personal-use property of the taxpayer,

and personal-use property of a partnership includes any partnership property that is used primarily for the personal use or enjoyment of any member of the partnership or for the personal use or enjoyment of one or more individuals each of whom is a member of the partnership or a person related to such a member; (biens à usage personnel)

To me, it seems like something has to be both personal-use property and coin to be "listed personal property".

Bill said
Sticking with the capital gains issue, there is no capital gains on listed personal property (LPP) items sold for under $1000.  

I had no idea about under $1000 no capital gains.
But, who sets the sale price?
For example, if today I will sell to my friend 1 oz gold Maple Leaf coin for $990, that means my friend will be exempt from paying capital gain, correct?
Another example, if I purchased 1 oz gold 99.99% bar in 1993 for $250 and just sold today for $1900, I don't have to pay capital gains tax, correct?
Sorry, I'm so confused about that capital gains tax, really, would like to learn and pay proper taxes.