If you wish to make a contribution but do not have sufficient available cash, you may make the contribution “in kind“. This means that you can transfer an investment (a stock, a bond, a mutual fund) from your outside investment account to your RRSP. The asset will be valued at market on the day you affect the transfer and that will determine the precise value of your contribution.

Tax law comes into play here. That is considered a “deemed” disposition and must be reported as if you sold the asset outright. But there’s a catch. If you have a capital gain on the disposition, you must pay tax on it. But, if you have a loss, that loss is not claimable.

Thus, it behooves you to determine your potential gain or loss before you make the in-kind contribution. If your gain is sizable, you will need to come up with some cash later to pay the tax. If your loss is sizable, it may not be wise to use that particular asset to make the contribution because you will forego any tax value from that loss. In this case, you should comb through the rest of your outside investments to see if you have a better candidate to transfer.

For investment or cash flow reasons, you may contemplate doing a “swap” of assets between your outside account and your RRSP/RRIF. The asset you give up in your outside account is deemed to have been sold. As above, any gain is taxable and any loss is denied. Again, it behooves you to do some advance calculations before you affect this transaction. If the loss you give up is large, the specific swap you had in mind may not be a good idea.

Lastly… some good news! In some situations, the so-called “superficial loss” rules subvert tax planning to create capital losses in your outside account. This involves selling an asset to trigger a loss then buying the asset back again within a 30 day window of selling it. The good news is that the 30 day window test does not need to be met if you re-buy the asset within your RRSP/RRIF.