How to get rid of worthless shares.

No matter what you do when it comes to taxes, you will get into trouble if you don’t keep a proper paper trail. Don’t count on the CRA help desk to keep you out of trouble.

When it comes to getting rid of worthless shares, but the shares still exist in the market… you could find yourself with tax problems if you ever get audited. An audit is a process where CRA works to disallow as many expenses and losses as possible. The best Tax Audit Solution is to be prepared ahead of time. An audit ready paper trail is the answer. Don’t get into tax problems because you did not take the time to do things right in the first place.

If your share dispostion is not covered under the Income Tax Act which spells out the circumstances under which you can report the value of certain shares as zero, and claim a capital loss for the full amount that you paid for them.

You need to get rid of the shares and have a paper trail to prove it.  A simple way would be to write up an agreement of purchase and sale to someone at non arms length, e.g. a friend or family member. Transfer the shares to them, write a cheque for a buck, and Bob’s your uncle.

Dan White