# T5008 and Schedule 3 forms



## Puppies (Apr 16, 2017)

Hello,

Could someone please help me.

First time doing my own taxes as an investor with a US non-registered account. Currently, I'm slightly lost and confused. But a month ago, I was totally lost and confused. The main cause of it is the T5008/RL-18. Imagine the shock when I loaded TD's T5008 slips into TurboTax and it said that I made $350, 000 and that I owe the government $75, 000. I still laugh about that every time.

In truth, I only gained around $1, 500 in 2016. I got that amount from using TD's 2016 trading summary they sent. It almost exactly matches the amount TD has on me on their website when I log into my account. 

I guess my question is: can I do my taxes without dealing with those T5008 slips? They only show short positions. In my opinion, the trading summary is THE definitive gains/loss statement. I plan on attaching TD's T5008/RL-18 along with the trading summary when I mail in my paper tax return.

I'm almost finished my tax return. But currently stuck on Section 3 of the Schedule 3 form. Am I supposed to print a copy of the Schedule 3 form for every position that I opened in 2016? I'd have to print like 80 copies! Here's what I mean. 

i.imgur.com/YElYoye.jpg

Should I make a copy for every entry in that screenshot? Haha. I only traded a total of 5 US companies and ETFs. Also, anyone know why the entries are randomly arranged that way? There doesn't seem to be any rhyme or reason to it.

So yeah. With only 2 weeks left until the deadline, I'd like to get this done asap. I was a bit side tracked for a while. 

Thanks in advance!


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## james4beach (Nov 15, 2012)

T5008 only supplies part of the vital information. Capital gain/loss calculations require both the proceeds (which T5008 shows) *and the cost basis*, the ACB. When you're missing the ACB that's when you end up seeing ridiculous numbers.

Back to basics here. For capital gains, you must calculate proceeds of the sales, minus the adjusted cost base. This must be calculated for each position.

Many of us around here use a spreadsheet of our own, somewhere, to track these numbers. Each year at tax time, you make sure that your own spreadsheet is accurate... both the T5008 and the Trading Summary will help you verify that your own capital gain/loss spreadsheet is correct.

Then in your tax software, there is usually a place you can expand the Schedule 3 listing and enter a full list, basically just dumping out what's on your spreadsheet. Proceeds, cost, and resulting gain or loss. If you have trouble figuring out your cost base, you can usually pull the number from the TD monthly statements.

But it's best to rely on your own records.

And yes, you can complete your taxes without dealing with the T5008 directly. However the CRA will get the T5008 so you should make sure you aren't ignoring any information on that slip. Everything that appears on the T5008 (with some exceptions such as investment savings account TDB8150 etc) should show up in your capital gain/loss calculation.


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## AltaRed (Jun 8, 2009)

The OP needs to clarify something..... the OP says a "US non-registered account". Does the OP mean s/he is trading in USD....or is simply trading US domiciled companies and ETFS in the CAD side of the account? If the former, the OP has the additional problem of currency cap gains/losses for each trade in which the OP has to convert each USD purchase and sale into CAD equivalent in order to calculate cap gains/losses. If the latter, I would suggest the OP just assume that TD has calculated forex correctly and use the numbers directly off the T5008.

The OP didn't say s/he was using tax software but s/he should because it provides all the lines (rows) required on Schedule 3 to do the entries. OTOH, the OP can probably aggregate purchases and salees using a spreadsheet as long as the cap gain/loss comes out right. I don't know if TD calculates ACB right, e.g. does the Cost Basis include the commission to buy? Also, commissions to sell are treated as expenses associated with the sale. Also, does the OP know anything about superficial losses in event s/he sold X for a loss and then bought X again within 30 days?

IF I was the OP, I'd plug all that information into the ACB tool provided by www.adjustedcostbase.ca and work with that to calculate gains and losses. BUT the OP needs to address this USD vs CAD question first.


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## Puppies (Apr 16, 2017)

james4beach said:


> T5008 only supplies part of the vital information. Capital gain/loss calculations require both the proceeds (which T5008 shows) *and the cost basis*, the ACB. When you're missing the ACB that's when you end up seeing ridiculous numbers.


Ahh. Is that what box 20 is for on those T5008 slips? It says cost or book value in that box.


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## AltaRed (Jun 8, 2009)

Puppies said:


> Ahh. Is that what box 20 is for on those T5008 slips? It says cost or book value in that box.


Should be. What currency is your T5008 in (Box 13)?


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## Puppies (Apr 16, 2017)

Thanks for the reply AltRed. 

It is a USD account. I will look into those suggestions you mentioned. And on second thought, I think I will use TurboTax this year to do my taxes. Should make things more simple I can imagine.


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## Puppies (Apr 16, 2017)

*guinea pig*



AltaRed said:


> Should be. What currency is your T5008 in (Box 13)?


USD


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## AltaRed (Jun 8, 2009)

Puppies said:


> USD


Then you must convert everything to CAD to put into your tax return. You are supposed to use the forex rate in effect on the date of settlement so you have some work to do. How many times did you purchase/sell eacg individual security in 2016?


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## Puppies (Apr 16, 2017)

*puppy dog*



AltaRed said:


> Then you must convert everything to CAD to put into your tax return. You are supposed to use the forex rate in effect on the date of settlement so you have some work to do. How many times did you purchase/sell eacg individual security in 2016?


Okay, I just got off the phone with TD Direct Investing. All those T5008 slips and trading summaries are in USD and must be converted to CAD. However, the CRA provides an average US$ rate for 2016 and it is 1.32480640. So I can use that instead of going back to every settlement date.

So yes, I have some work to do over the next couple of days in my spare time. Haha


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## james4beach (Nov 15, 2012)

Unfortunately on a position-by-position basis, you must use the exchange rate at the time and not the average for the year.

One way to look this up is to use google finance. Browse the cursor over the day and you'll see the rate at the time in the upper-right corner of the chart:
https://www.google.com/finance?q=usdcad

As AltaRed says, you can also aggregate multiple entries together if you have trouble fitting them onto the form. In the end what matters is that the capital gain/loss is correct, and that you have supporting documents (a spreadsheet showing all the proceeds and cost basis) and that every position shown on the T5008 has been included in your own listing.


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## AltaRed (Jun 8, 2009)

Puppies said:


> Okay, I just got off the phone with TD Direct Investing. All those T5008 slips and trading summaries are in USD and must be converted to CAD. However, the CRA provides an average US$ rate for 2016 and it is 1.32480640. So I can use that instead of going back to every settlement date.


TD is not correct as J4b notes in his post, and what has been repeated in forum many times. That said, in post #8, I asked how many times you traded each security in 2016. For example, if you traded one security 30 times, one might be tempted to use the annual forex rate. However, the loonie lost ground throughout 2016 so CRA would be out some currency cap gains if you used the annual forex rate. If you only traded one security a few times, then you have no choice but to use the forex in effect on the date of settlement of each trade.

I'd suggest you really need to pull up a chair, get a pot of coffee and slave away one day making all the proper conversions. This is a learning for the future. If you keep track of it as you go... it is less of a burden than dealing with it at tax time.


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## Puppies (Apr 16, 2017)

james4beach said:


> Unfortunately on a position-by-position basis, you must use the exchange rate at the time and not the average for the year.
> 
> One way to look this up is to use google finance. Browse the cursor over the day and you'll see the rate at the time in the upper-right corner of the chart:
> https://www.google.com/finance?q=usdcad
> ...


On a position by position basis, eh? I see. Well, it looks like you guys know what you're talking about. No biggie, probably only an extra 30 seconds to find the exhange rate for every one of those settlements.


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## james4beach (Nov 15, 2012)

AltaRed said:


> I'd suggest you really need to pull up a chair, get a pot of coffee and slave away one day making all the proper conversions. This is a learning for the future. If you keep track of it as you go... it is less of a burden than dealing with it at tax time.


And think of how beautiful it would be to do all this trading inside a TFSA 

I agree with AltaRed that in some conditions you might be able to use the annual average rate.

Keeping track as you go along really makes this easier, it's not as bad as it seems. My records look something like this. One is the cost (converted to CAD by using that day's rate) and the other is the proceeds, also with current rate recorded. The resulting capital gain is very easy to calculate when you've recorded these along the way.


```
2015-05-28 ; Buy 2   CS put '16 @ 8.50 USD ; $1,712.49 USD ; rate 1.2444 ; $2,131.02 CAD
2015-09-23 ; Sell 2 CS put '16 @ 10.60 USD ; $2,107.47 USD ; rate 1.3342 ; $2,811.79 CAD
.... capital gain $680.77
```


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## Puppies (Apr 16, 2017)

james4beach said:


> And think of how beautiful it would be to do all this trading inside a TFSA


Haha. I actually traded in a USD TFSA before going to a USD Non-Registered. I can't bear to trade stocks (don't have the knack for it, fewer strategies--if any, and don't like the reward for the risk involved) and the lack of option strategies (understandably) actually made me lose money. . However, I will fund my USD TSFA one day again when the time is right. I have some ideas in my head.


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## Puppies (Apr 16, 2017)

james4beach said:


> And think of how beautiful it would be to do all this trading inside a TFSA
> 
> I agree with AltaRed that in some conditions you might be able to use the annual average rate.
> 
> ...


Oh thanks for the example. 

And then you put $394.98 USD into box 20 right?


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## Puppies (Apr 16, 2017)

james4beach said:


> And think of how beautiful it would be to do all this trading inside a TFSA
> 
> I agree with AltaRed that in some conditions you might be able to use the annual average rate.
> 
> ...



Also, from the information you've given I assume this is a single long put position and not a vertical position. Most of the positions I opened were verticals. So, something like this.

JUL 20 2016 - Sell 30 NFLX PUTS AUG26'[email protected] - proceeds 6832.35
JUL 20 2016 - Buy 30 NFLX PUTS AUG26'[email protected] - cost 5977.50 (this does not show up on my T5008 slip)

Both expired worthless

$855 USD gain.

So in my case, $855 USD would go into box 20 I assume.

Edit: After some thinking, I could argue that $855 USD would not go into box 20. In fact box 20 could be left blank. And the $5977.50 cost would be accounted for as a capital loss in another section. Since the T5008 slip only shows proceeds, if I were to buy single call options and they were to expire worthless, that would not show up on the T5008 slip! My call to the CRA tommorow should clear things up.


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## james4beach (Nov 15, 2012)

Puppies said:


> Oh thanks for the example.
> 
> And then you put $394.98 USD into box 20 right?


I've never filled in box 20. From this data I have, I then went to fill in Schedule 3 with proceeds 2,811.79 cost base 2,131.02 and gain 680.77. That ends up in Schedule 3 in section 3. All of these are in CAD.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> Puppies said:
> 
> 
> > ... And then you put $394.98 USD into box 20 right?
> ...


Schedule 3, part 3 is "Publicly Traded shares, mutual fund units ... ". It is for record the capital gains.
http://www.cra-arc.gc.ca/tx/ndvdls/.../lns101-170/127/cmpltng/mtlfnds/menu-eng.html

The T5008 is what CRA gets from the financial institution so they can find anything missing or done incorrectly.


Here is a PDF copy of the Schedule 3 form from CRA's web site. The tax software should also have a way (either an interview or by opening schedule 3 directly) to fill this out.
http://www.cra-arc.gc.ca/E/pbg/tf/5000-s3/5000-s3-16e.pdf


Most investors here on CMF use their records that were recorded "as it happens" to fill out Schedule 3. Some will download the T5008 slips from CRA to verify nothing is missing but based on other threads, not many let the software run with it as there are too many mistakes (ex. currency was not identified on the T5008 slip).


Cheers


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## james4beach (Nov 15, 2012)

AltaRed said:


> TD is not correct as J4b notes in his post, and what has been repeated in forum many times.


Another year and another faulty T5008 !

This time I'm looking at a T5008 from TD which shows the wrong sub account (letter A/B/C/etc). I'm not surprised, but this is awfully sloppy.


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## like_to_retire (Oct 9, 2016)

james4beach said:


> Another year and another faulty T5008 !
> 
> This time I'm looking at a T5008 from TD which shows the wrong sub account (letter A/B/C/etc). I'm not surprised, but this is awfully sloppy.


Yes, but as we've discussed in the past, it's best to simply fill out Schedule 3 manually (and obviously ignore all the ISA entries on the T5008) and only use the T5008 to see if you might have missed something.

ltr


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## fatcat (Nov 11, 2009)

1) box 20 is where you put the cost basis ... not ... the gain or loss

2) you take the cost of the security: shares x cost per share plus commision = cost basis (eg. 100 shares @$10.00 each = $1000 + 9.99 trading cost = cost basis of $1009.99

3) go to xe.com and look up the historical exchange for the day of the ... settlement ... not the day of the trade and use that rate to convert your cost basis $1009.99USD to canada dollars

4) put that number in box 20

6) convert the number in box 21 ... the selling value (eg. 100 shares @ $11.00 = $1100 minus the commision of 9.99 = $1090.01) to CAD using xe.com historical rate for the day of ... settlement

5) go the box 13 and erase the USD denotation

all of your numbers are now in canada dollars converted on the day of settlement


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