Capital Gains Tax Slip
are the brokerages supposed to report our capital gains in non registered accounts in a tax slip like they do for dividends and interest?
the T5 i got has the dividends paid out but not capital gains.
so we are supposed to calculate that on our own?
Originally Posted by canadian_investor
Dec 31 statement will often have a section that shows you your gains or losses.
Your brokerage will send a TRADING SUMMARY 2011
with all your buys (debits) and sells (credits) for the whole year.
i do have my trading summary because i track on my own as well.
it is just that capital gains are harder to calculate than dividends.
so it would have been better if the brokerage had provided that information instead of dividends in the T5.
dividends are easy
but sounds like we have to calculate cap. gains on our own.
do the brokerages report cap. gains to CRA like they report interest and dividends?
if they do, then why not provide us with the same?
if they don't, then how is CRA going to cross check what we report in our tax returns?
Not really ... if you check out the "How Investment Taxes Work" sticky, with a few exceptions like trust units, the bookkeeping and math is much easier than the dividends IMO.
Originally Posted by canadian_investor
... and yes - the investor has to calculate their capital gain (or loss) on their own.
I expect the brokerages report the trading summary so that if you "miss" reporting that $400K capital gain, CRA will notice.
I expect they don't because they can't be sure what the Adjusted Cost Base was. If one buys the stock with broker A and moves one's account over to broker B - the broker will be able to record what the value was when the transfer happens but not what the buy price was, how many purchases etc.
Then too - I've seen enough errors that I don't trust their numbers anyway.
Regardless, the broker may or may not have enough information. If one does all of their buying/selling through one
Last edited by Eclectic12; 2012-03-20 at 02:12 AM.
alas, brokers' annual trading summaries have little or no relationship to the capital gains that are to be reported unless all of the buy & sell transactions for a single security occur in the same year.
brokers don't need to "report" investors' trading summaries to the cra. The cra is already plugged directly into all brokers' computer systems & can download whatever information it wants, night & day.
the cra & other tax authorities will be principally interested in the sells. These are the taxable events. In most cases, the buys are not taxable events on the date they occur. The buys will become part of taxable events when, eventually, each security is sold. The sell event may not occur for many years. This is why a trading summary is useless.
basically, taxpayer is best served by keeping a log/spreadsheet of each individual security with history of its acquisition(s) & dispositions(s). Investors who sell parts of holdings need to also break out the unit cost & keep this running forward accurately as they partially trade in & out. Knowing the unit cost at all times (this is the ACB or adjusted cost base per unit) is the only way to calculate the cost base of a partial securitiy sale.
it's a discipline. I've trained myself to log all trade details as soon as they occur into spreadsheets that record these histories alpha by company name. Including bank of canada USD exchange rates on the date of each US transaction. Because it's easier to record capital gains info while it's fresh. It's much harder to go back months later to reconstruct what happened. I did have to learn this the hard way.
Last edited by humble_pie; 2012-03-20 at 08:21 AM.
I didn't know that CRA was that "plugged in" ... but it makes sense in a computer age.
Originally Posted by humble_pie
+1 ... and then some for the "it's harder to go back".
I was on top of the regular stock I bought but then when I sold my first trust units, I discovered there was a lot more to the trust unit tax calculations. By then, some of the paperwork had been destroyed in a basement flood and the trust was bought out so that the handy web site charts of the types of income were no longer available.
After that painful mess, it's much easier to stay on top of it yearly and keep backup copies.