# Don't Know Adjusted Cost Base on ETF's



## Belguy (May 24, 2010)

I have been rebalancing my accounts most of which are registered. However, I do have one non-registered account. Quite some time ago, I purchased some ETF's for that account but I don't know when I purchased them or what I paid for them due to poor record keeping. Now, I am afraid to sell any units in any of these ETF's for fear of tax implications for the 2013 tax year. Specifically, I won't know how to determine the adjusted cost base. 

Can anyone advise me on how to proceed from here? I realize that it is my own stupidity that brought me to this point. Can I work this out myself or could a tax advisor help me?

Thank you for any advice that you can provide me with.


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## caricole (Mar 12, 2012)

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Can anyone advise me on how to proceed from here?

Click to expand...

*Start of with going back , 5,7, 10, 15 years wih your monthly statements of you margin account with your broker

When you find the first year they show up, you have a good starting point

1) With your old taxreturns you can trace back the year and date you purchased these ETF's

2) With these taxreturns you should have the taxslips with the return, dividends and ROC return of capital

3) With these items you can rebuild the sequence of the changing values every year

4) Why not give here ONE ETF, and see how it could be rebuild for taxpurposes, the symbol end a theoretical quantity

5) Please dont tell me you bought an ETF 20 years ago...LOLOLOL

Its fun to go back a few years for taxpurposes

Of coarse if you gave your taxes to H&R BLOCK or any other jockers...they maybe do your taxes but have no clue of how to opdate your portfolio,,,,or any portfolio


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## Four Pillars (Apr 5, 2009)

I'm not sure if a tax advisor will be able to help other than to give some guidance regarding "best guess" adjusted cost estimates.

Can you call your brokerage and ask them? They might have the info on their system. 

If you have moved between brokerages then try contacting other brokerages you might have been with in the past - again, they might have the info on their systems.

Another option is to spend some time thinking about when you likely bought the units - look up the prices for that time period and pick a day (s) and use those numbers.


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## Guban (Jul 5, 2011)

Four Pillars said:


> I'm not sure if a tax advisor will be able to help other than to give some guidance regarding "best guess" adjusted cost estimates.
> 
> Can you call your brokerage and ask them? They might have the info on their system.
> 
> ...


Asking the broker is the easiest, but be careful, they may not have the correct adjusted cost base. You can look up the historical prices, but you need to be aware that there may have been some return of capital since the time you purchased the ETF. 

Good luck with this, as it may not be an easy thing to do. I always wondered how CRA establishes a realistic ACB. In the absence of any proof by the taxpayer, just assume zero???


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## Jagas (Feb 11, 2013)

In the absence of any records a tax advisor will not be able to provide much help. While it is very true that a broker supplied ACB may not be accurate, without any other records I would suggest using their figure if one is available. Based on my experience with tax and CRA, the practical solution when there is literally no paper trail is to simply make a best estimate of what the cost base is using any information you have at hand - If you know the year the purchase was made but nothing further, just use the average price for that year. Distribution information should be available for any ETF going back forever which will allow you to piece together part of the picture.


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## Belguy (May 24, 2010)

Somebody on this forum once said that some people have no business investing in equities because they do not have the necessary skills to calculate the taxes owing on sale of the asset. Count me in that crowd. I wish that I had never invested in ETF's in my open account because, if I had stayed with mutual funds instead, the fund company would have kept track of everything for me via their annual T3's.

I don't pretend to be enough of a tax expert to figure all of this out although I realize that there are websites to help with the bookkeeping.


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## Potato (Apr 3, 2009)

No, even with mutual funds you still need to track your ACB yourself for non-registered, unless it's an above-and-beyond service of your advisor. That's why they mail out the trade slips.


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## Eclectic12 (Oct 20, 2010)

Belguy said:


> Somebody on this forum once said that some people have no business investing in equities because they do not have the necessary skills to calculate the taxes owing on sale of the asset. Count me in that crowd ...
> 
> I don't pretend to be enough of a tax expert to figure all of this out although I realize that there are websites to help with the bookkeeping.


The issue is poor recording keeping and the lack of the numbers needed, is it not?

The ACB calculation is plain old addition, multiplication, division and subtraction operations. It is tedious, I know but not particularly an issue for most people when they build a spreadsheet for tracking it.
http://www.taxtips.ca/personaltax/investing/taxtreatment/etfs.htm

Even on schedule 3 of the tax form, it's a simple "Proceeds" minus "ACB for the units sold" - "Expenses". That's not an exceptionally difficult calculation.


Don't let the pain of discovering you need a better bookkeeping system and better information lead you astray into thinking it's exceptionally difficult. 

That's how the tax experts who want $60 for a simple return make so much money.

Cheers


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## caricole (Mar 12, 2012)

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I don't pretend to be enough of a tax expert to figure all of this out although I realize that there are websites to help with the bookkeeping.....Belguy

Click to expand...

*Would you give the symbol of one of your ETF's, the aprox year of purchase ??? not essential, and for the quantity, lets say we go for 1.000 parts

At least it would become easy to démonstrate how to update the ACB

You dont have to be a taxexpert or an accountant

You just have to update once a year and spend 15 minutes per ÉTF after April 31 to the ACB of Dec 31 previous 

If you can not do this, SUFFER....you deserve it...LOLOLOL


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## Belguy (May 24, 2010)

I did some more digging and came up with the following. Note that these are just some loose ends in my open account that I would like to sell and the total value is not huge.

I own:

120 XEG
140 XFN
240 XRE
160 XMD

Bot:

6/2/05: 40 XMD
6/2/05: 50 XEG
6/3/05: 70 XFN
6/2/05: 240 XRE

8/11/08: 120 XMD
8/12/08: 90 XEG
8/11/08: 70 XFN

I have not been able to find the purchase prices. 
Somewhere along the way, for unknown reasons, I must have sold 20 units of XEG.

If I sold these all of my units of these foru funds today, how would I calculate the ACB's?

Pardon my stupidity.


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## bgc_fan (Apr 5, 2009)

You could always check with your broker to see if they have your year end tax statements on file. As part of my tax packages, it includes a summary of all transactions made that year. Both TD Waterhouse and CIBC Investor's Edge does that.

As for calculating ACB you just add all the expenses (including commission costs) and divide it by the total number of shares that you purchased. When you purchase more shares, you just add the total costs together and divide by the new amount of shares. When you sell shares, the ACB will remain the same. It is only when you buy new shares that the ACB needs to be adjusted.


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## Belguy (May 24, 2010)

Maybe I should only be investing in GIC's!!:stupid::stupid::stupid::stupid:


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## Eclectic12 (Oct 20, 2010)

bgc_fan said:


> ... As for calculating ACB you just add all the expenses (including commission costs) and divide it by the total number of shares that you purchased .... It is only when you buy new shares that the ACB needs to be adjusted.


For an ETF that does not pay return of capital (RoC), there's also the possibility of re-invested distributions affecting the ACB.

For one that does pay RoC, the ACB needs to be adjusted for the RoC portion being paid.

The tax tips web site lists:


> How do I calculate the capital gain when I sell my Canadian ETFs?
> 
> If you hold Canadian ETFs in a non-registered account, you must keep track of your ACB, or "adjusted cost base" for each ETF. The ACB of your investment in an ETF will be the total of:
> 
> ...



As I say, it's tedious and a pain if one is not keeping up with it (or electronic copies) but it is relatively easy math.


For some reason, people tend to ignore RoC for ETFs which is more common than one would think. 

As an example, the iShares XIC ETF distribution page shows in the "Distribution Details" section that in 2008 some of the distribution was re-invested and then later in the "Annual Distributions" section RoC being paid from 2001 to 2012. Both of these will change the ACB.
http://ca.ishares.com/product_info/fund/distributions/XIC.htm


I haven't checked whether the ETFs listed have RoC but IMO, it's better to comfortable with the more complicated situation, check the details and rule RoC out of the picture versus not being aware of it.


Cheers


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## Belguy (May 24, 2010)

I have to wonder how many investors in ETF's realize the records that they need to keep for taxation purposes when it comes time to sell?

Am I the only one who finds this record keeping tedious and difficult? What a pain!! Not only that, but it is tax pain which doctors can't do anything about!!:highly_amused::highly_amused::highly_amused::highly_amused:


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## Sampson (Apr 3, 2009)

It is a pain that money can solve. Hire an accountant, hand over a box of statements, let them figure it out.


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## caricole (Mar 12, 2012)

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I have to wonder how many investors in ETF's realize the records that they need...Belgyi

Click to expand...

*As I said before, it takes yearly about 15 minutes to update the ACB of each ETF, and I do it around April 15-20 each year

I did not forget you

I traced back the distributions since 2001 for all Ishares :encouragement:

But I have a problem with the historical prices, in "OVERVIEW" IShares site have the "HISTORICAL PRICES" but it is in EXEL and I have Open Office and can not open the file 

You seem to have the exact dates and quantities of your purchases, is there any way to find the purchase price at these 2 dates

I can then adjust the ACB each year according to the ditributions of ROC (subtractfrom ACB) and Capital gaind (add to ACB)

Here you find the source of the adjustements

http://ca.ishares.com/product_info/fund/overview/XFN.htm

http://ca.ishares.com/product_info/fund/distributions/XFN.htm


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## Eclectic12 (Oct 20, 2010)

Belguy said:


> I have to wonder how many investors in ETF's realize the records that they need to keep for taxation purposes when it comes time to sell?


If the investor is correct 100% of the time in their calculations and CRA agrees, there's not that many records that needs to be kept. :biggrin:

The value in the records, like just about any other tax item, are to shorten disputes that without documentation would result in over paying taxes and/or penalties.




Belguy said:


> Am I the only one who finds this record keeping tedious and difficult? What a pain!! ...


Tedious - yes. 

Difficult - only if there is a lack of knowledge or a bad record keeping system. If done on reqular basis, with a good system - it's not difficult.

To use an imperfect analogy - if one has a big yard to cut and starts with a push mover in a haphazard fashion, it's tedious and difficult. Most will work out a system and/or buy a power or riding mower to make it more tedious than difficult.


Bottom line is the effort required to trace back years of transactions from limited info is much greater than say, a yearly update.

Cheers


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## Belguy (May 24, 2010)

What percentage of individual investors do you even think bother to keep track of the ACB of their stocks? 100%? Maybe a little less than that? Perhaps a half of all small investors? Less than half? Very few? Hardly any?

It would be interesting to have even a rough idea of how many.


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## My Own Advisor (Sep 24, 2012)

I bet many individual investors don't bother tracking....just guessing...


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## caricole (Mar 12, 2012)

2005...0,07053 capital gain... 0,12180...return of capital..for 70 XFN = 4,9371 (capital gain) and 8,526 ( ROC)

On Dec 31 2005 your ACB changes as follows

Increase of 4,94 because you paid taxes on the capital gain received and decrease of 8,53 because of ROC that you received you did not have to pay taxes on

On Dec 31 2006 you repeat the exercise with the figures of 2006

On Dec 31 2008, you repeat the exercise for 140 XFN with the figures of 2008....and so on

Anybody who claims not updating the ACB of his investments , I ask myself if they are reel investors or just BLA-BLA and SELLING advise that is worthless for nothing or preparing an exam for finacial advisor ???:chuncky:


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## Belguy (May 24, 2010)

ACB makes my head explode but math was never one of my favourite subjects anyway.

Thanks for your help and now I shall go to bed and dream about capital gains and return of capital. I'd rather have sugarplums dancing in my head.

Could any tax preparer work this out for me or do I need to go to an accountant? What do you charge if I decide to drive to Quebec?

I am a DIYer when it comes to choosing investments but not when it comes to figuring out the tax implications and I am too old to bother learning now.


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## Eclectic12 (Oct 20, 2010)

Belguy said:


> ACB makes my head explode but math was never one of my favourite subjects anyway.


My condolences.




Belguy said:


> Could any tax preparer work this out for me or do I need to go to an accountant?


As long as the tax preparer is being paid to do the entire return - I'd expect they'd do it. But I'm not sure as have never used a tax preparer.

I figure most of the work to getting the slips together to hand to tax preparer. Especially since the tax preparer seems to be using the same or similar software for the tax return.




Belguy said:


> I am a DIYer when it comes to choosing investments but not when it comes to figuring out the tax implications and I am too old to bother learning now.


I don't mean to sound harsh but essentially you are saying that you are willing to live with whatever mistakes the tax preparer makes. If that means paying twice as much taxes as you should, c'est la vie.


Cheers


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## Cal (Jun 17, 2009)

I would contact your brokerage to see if they can assist you.


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## caricole (Mar 12, 2012)

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What do you charge if I decide to drive to Quebec?....Belguy

Click to expand...

*LOLOLOL....No charge of coarse....even better

If I can find the historical prices of your 4 ETF's I will update the ACB of each,,,,

And if you would supply me with your E.MAIL adress,I will send you a nice table in WORD with the figures and results

The only things missing (HISTORICAL)

Closing prices of XEG, XFN,XRE,XMD, on Feb 06 2005

Closing prices of XFN, XRE, XMD, on Nov 08 2008

Closing price of XEG on Dec 8 2008

If you can not find them, eventally I will find them from someone with Microsoft Office installed who can open EXEL files
==========================================================================================
Updating the ACB of stocks is a good passtime

Updating ETF,s is a sport :rolleyes2: :distrust:

Its up to you Belguy,


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## Spudd (Oct 11, 2011)

You can find them quite easily by using Google Finance. Go to finance.google.ca and type in the ETF symbol in the search field. Then on the left hand side, after it comes up, you will see an option "Historical Prices". After you click on that, it brings you to a screen showing the latest historical prices, but you can type any dates you want into the date fields and you will see the prices for those days. I tried it for XEG for 2005 just to make sure it works, and learned that it didn't trade on Feb 6, 2005. Haha. Maybe Belguy meant June 2? Anyways, that's how you can find them quite easily.


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## caricole (Mar 12, 2012)

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You can find them quite easily by using Google Finance..Spudd

Click to expand...

*I Know this route but Google finance would not take XFN for historical quotes ????

Finally my OPEN OFFICE managed to read the EXEL tables and I now have acces to the gistorical quotes, the udating of the ACB since 2005 will follow

As you said, the exact dates are not valid, no trading or setlment dates

I will take the PRÉVIUOS trading date

@Belguy

I understand your broker = TDW, mine too

After you clik on the header of your MARGIN ACCOUNT...2 titles

BOOK VALUE and MARKET VALUE

For ETF's they update these according to the distributions and any partial sale or additional purchase is also reflected in thes columns

ITrade is also updating BOOK VALUE after additional purchases or partial sales and the year-end distributions of ROC and CAPITAL GAIN

Your MONTHLY STATEMENT is also indicating BOOK VALUE and MARKET VALUE of each of the values detained in the account

Have a close loock :hopelessness: :encouragement:


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## caricole (Mar 12, 2012)

*2013 01 01...XFN....140....2.757,15........19,69
*

I just did the XFN

140 shares

Bouk value 2.757,25$ ...19,69/share

Marketr value as of today closing 24,74 = 3.463,60

These 2 figures 2.757,25 and 3463,60 should correspond to the figures of your portfolio as of today

If it make sense, if it suites you....just say so and the 3 others will follow

I could send you the table with all the details,,,but the headers are IN FRENCH OF COARSE....LOLOLOL

Au Québec, c'est en Français que ça se passe LOLOLOLOLOL :subdued::distrust:


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