Hi,
If you are planning to invest in bullion in Canada, it is as important to understand the tax rules as it is to choose the right bullion for your investment. Even though bullion can help you secure your wealth in the long run, you might still have your doubts about the tax rules when you buy or sell bullion. In this article, we have tried to simplify the tax rules for you in a friendly manner.
Is Bullion Taxable When You Buy?
If you are a Canadian investor, you will be relieved to know that most bullion products are tax-exempt when you buy them.
If you buy gold, silver, platinum, or palladium bullion of a certain purity, such as 99.5% for gold or 99.9% for silver, you will not have to pay the GST or HST when you buy the bullion. This includes the most popular bullion products, the Gold Maple Leaf or the Silver Maple Leaf.
What If You Sell Bullion?
If you decide to sell your bullion in Canada, the CRA will treat the profit you make from the sale of bullion as a capital gain.
If you make a capital gain from the sale of bullion in Canada, you will have to pay a tax of half of the capital gain at your prevailing tax rate. For instance:
If you buy bullion for $5,000 and sell it for $7,000, you will have to pay a capital gain tax of half of $2,000, i.e., $1,000.
Do You Have to Report Every Time You Sell Bullion?
Yes, you will have to report the capital gains you make from the sale of bullion in Canada.
That being said, many people do not consider these smaller transactions. However, it is important to keep records of all your purchases and sales to be prepared in case of an audit. It will also help you to only pay taxes on your actual profits, not the total value of your sales.
Are There Ways to Reduce Taxes on Bullion?
There are a few ways to reduce the taxes paid on bullion investments. While you cannot avoid the capital gains tax, you can minimize the effect of the tax. Some of the ways to reduce taxes include:
Why Many Canadians Still Choose Bullion
Even though Canadians will be required to pay a capital gains tax when they sell their bullion, the benefits of investing in bullion far outweigh the tax. Bullion investments are unlike other investments, as they do not require:
Buying Bullion from a Trusted Canadian Dealer
When you choose to buy bullion, it is important to do so through a reputable Canadian dealer. This will ensure that the bullion you receive is of the highest quality and will qualify for the tax exemption at the time of purchase. AU Bullion provides a variety of high-quality bullion coins and bars to Canadians.
Final Thoughts
While taxes will be required to be paid when Canadians sell their bullion investments, this does not mean that Canadians should not consider this type of investment. In fact, taxes are a normal part of the process of buying and selling bullion, and Canadians should be aware of the capital gains tax to be prepared to meet the requirements.
