Note that there is nothing sacred about either the broker or the stock named in the commentary below. You can use any discount broker and achieve the same thing. There are usually half a dozen different interlisted stocks that you can use as well.
Some of these comments are not mine and are included for context. If the original posters are offended at my excerpting their words, object and I will edit them out.
On 6 Dec 2001, Norbert Schlenker wrote:Under $10,000, shop around at the local banks.
Over $10,000 and under $1,000,000, you will almost certainly do better than at any bank using the following technique.
1. Open a TDWH Canada account.
2. Deposit your C$.
3. Buy as many MG.A on the TSE as you can for your C$.
4. Sell the same number of MGA on the NYSE and settle in US$.
5. Phone TDWH and ask them to journal the MG.A in your C$ account over to the US$ account.
This moves as much as $100,000 Canadian to US$, at a cost of about C$75, and almost always at darn near spot.
- You can use Magna today, but it might be something different by the time you read this.
- You have to use a stock you don't currently own, so as not to run into tax problems.
- The amount you lose on the trades is a taxable capital loss, unlike the bank's spread, which is just a dead loss.
- If you are willing to take a chance, buy the MG.A at the bid and then offer the MGA at the ask. You might do better than spot.
- Do not use any of the exchangeable shares that trade on the TSE.
On 10 Dec 2001, Norbert Schlenker wrote:George$ wrote:You say it might be better to use something other than Magna. Why?
Because it's the highest priced liquid interlisted stock, so you can move about C$100,000 for C$75. If you don't need to move that much at once, then use something even more liquid, like Barrick or Celestica, as sunrise suggested.
It's actually a poor idea to do the exchange on a day when the market is wild, because you can't guarantee that you can get close to spot. Just wait for a quieter day.
Per your quotes, there is a slight variation from spot. You can play that, if you like, by buying at the bid on one exchange and selling at the ask on the other, but you take the risk that the market moves against you when you do this. It's not a big risk, but it's there.
For today's ratio, assuming you traded at the closing prices, moving $100,000 costs the $75 in commission plus about $100 variation from spot. I defy you to exchange C$100,000 at any other financial institution for $175 total in fees, half of which is a taxable capital loss.
On 17 Dec 2001, Norbert Schlenker wrote:TDWH has their own rules and rules aren't very flexible. Think of WebBroker as a really dumb order clerk who knows a very simple set of rules, because it can't be trusted with anything really complicated and so will refuse anything that looks out of the ordinary.
Call TDWH again and ask them what they would do if the MGA were sitting in the US$ account today. Their answer, as long as you get somebody with sense, will be that they will do the sale in Toronto, no questions asked. (If you aren't talking to someone with sense, ask for their boss, and go up the chain until you have someone with sense.) Remember the name of the person with sense - you'll be calling them again.
No short sale rules apply, because the sale isn't short once you buy MGA in New York. No settlement rules apply, because they can journal the stock in one day and settlement is T+3.
Buy 800 MGA in New York using WebBroker. When you are confirmed, try to sell 800 MG.A in Toronto. The computer will refuse because it is following stupid rules. Take the order number, phone the sensible person that you spoke to before, explain that you have entered a valid order that WebBroker has refused, and get them to execute the sale. Make sure they charge you C$29 on the sale, which is what TDWH promises when WebBroker won't do its job.
On 4 Feb 2002, adrian2 wrote:According to CCRA, a superficial loss occurs when:
1. you, or a person affiliated with you, buys, or has a right to buy, the same or identical property (called "substituted property") during the period starting 30 calendar days before the sale and ending 30 calendar days after the sale; and
2. you, or a person affiliated with you, still owns, or has a right to buy, the substituted property 30 calendar days after the sale.
In George$'s case, both statements apply.
On 4 Feb 2002, Norbert Schlenker wrote:The wording is clear, even in the Act. I hate to admit I'm wrong, but I am.
I must confess utter astonishment. The purpose of the rule is to prevent the realization of a loss for tax purposes when no disposition takes place in an economic sense.
The rule is so broadly drafted, however, that it means that a security purchase followed by a partial sale within 30 days, perhaps simply to stanch the overall magnitude of a loss, falls under the rule. You obey the spirit and the letter catches you.
Maybe George should just claim that the Magna trade is so out of keeping with his normal investment pattern that the 800 shares were done on income account. Then the loss is completely deductible.
On 30 Oct 2003, Oliver wrote:For a US based investor, there are some problems. I attempted the transaction today. Unfortunately, TDW indicates that the transfer from the US side to the CAN$ side will not happen until the trade settles in three days.
On 30 Oct 2003, Norbert Schlenker wrote:Oliver, you're getting a runaround. Call them back and ask them whether you could sell whatever it is you bought in New York today. The answer is, "Yes, sir, three bags full, sir." They know damn well that, on a trade date basis, you're long the shares. If you bought them in New York, you can sell them in New York. Today!
If that's so, then you can sell them in Toronto or on any other exchange with T+3 settlement where they're listed. If TDWH will not do it, it's time for a supervisor. Do not be satisfied by negative responses from ill-trained novices.