IIS: strategies and nuances: what to do when changing brokers with an IIS?
Answer
Changing brokers when you have an Individual Investment Account is a procedure that requires strict compliance with established regulations, as an investor can only have one active IIS at a time. Regarding IIS strategies and nuances, there is usually a clear action plan that helps transfer assets without losing accumulated investment tenure and tax benefits.
To successfully transfer an IIS from one professional market participant to another, you need to sequentially perform the following steps:
•Determine your current standing and contact the broker you plan to move to in order to clarify the technical feasibility of accepting securities and cash from an IIS held with another broker.
•Set a success metric and ensure that at least three years have passed since your current IIS was opened, or that you are ready to close it and forfeit the right to deductions if the tenure is less than three years (although the law allows transferring an IIS without losing tenure only if you simultaneously close the old account and open a new one within a month).
•Choose the transfer method: you can transfer assets "in-kind," meaning as securities without selling them, or sell all assets, withdraw the money to a bank account, and deposit them into the new IIS; however, the first option is preferable to avoid capital gains tax.
•Set a deadline and submit an application to close the account and transfer assets to your first broker, strictly observing the 30-calendar-day window to open a new IIS with the new broker so that the tax authority does not invalidate your investment tenure.
•Automate regular activities at the new location: after the securities and funds are successfully credited to your new broker, request a certificate of closure for the old IIS and provide it to the tax office or the new broker to confirm the continuity of your investment period.
Compliance with these rules ensures that you will not face claims from tax authorities and can continue enjoying all the benefits of an Individual Investment Account.
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