# Mutual fund vs ETF reporting at disposition



## james4beach (Nov 15, 2012)

I have only dealt with ETFs whereas my parents have investments mainly in mutual funds. I'm confused about the differences in tax reporting at the time of disposition (capital gain/loss vs ACB)

With ETFs it's pretty clear, I track the ACB. And when I eventually sell the shares, I look at proceeds - ACB and report the capital gain or loss on Schedule 3. Just like stocks, I have to report this myself and it's not in a brokerage slip.

What happens with mutual funds? I mean those held at mutual fund companies, not the discount brokerage. Does the fund company send slips for everything? Do the slips encapsulate the capital gain of disposition? Or does one have to include a manual calculation similar to stocks?


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## GoldStone (Mar 6, 2011)

The fund company sends an annual slip for the distributions made in the year. The slip provides the breakdown by the type of income: realized capital gains (within the fund), dividends, interest, return of capital.

It is your responsibility the track the ACB in a taxable account. It's easy if you choose to take the distributions in cash. ACB = your initial purchase price. 

There is more work involved if you reinvest the distributions in more fund units. You have to track each reinvestment and adjust your ACB accordingly. I use Quicken to do this. 

In theory, your broker statement should give you an accurate ACB (especially if you never move funds from broker to broker). In my case, TDDI statements show the same ACB as Quicken, down to the last penny.


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## james4beach (Nov 15, 2012)

But how about mutual funds NOT held in a discount brokerage? Something like RBC Mutual Funds held in RBC investment accounts.

Does the holder of those still have to track the ACB and calculate the ending capital gain / loss?


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## GoldStone (Mar 6, 2011)

I don't have the direct experience. I never held mutual funds in a taxable mutual fund account.

Common sense tells me they should be able to track the ACB, at the very least. If a discount broker can do it, why can't they?

Don't know if they are supposed to issue the slips showing the gain/loss.


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## pwm (Jan 19, 2012)

At PH&N they track your ACB for you. It's on the monthly statement. I would assume that any financial institution would do so.


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## OhGreatGuru (May 24, 2009)

RBC statements have changed their terminology over the years. It used to be "Average Unit Cost", then "Unit Adjusted Cost Base", and now "Unit Book Cost". I track my ACB, and it has always matched their figure, whatever they called it. I seem to recall seeing some fine print that they do not guarantee that these terms will match your ACB for tax purposes. Perhaps because you may have transaction costs that they are not aware of.

As far as I know they don't issue capital gain/loss tax slips for dispositions (just earnings within the fund), unless you have a managed investment account where this is included in the fees you are paying them. You need to report your Gains/Losses based on your account statements and your tracking of ACB.


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## Guban (Jul 5, 2011)

ETFs and mutual funds are treated the same at tax time.

The only difference that I can think of that would still apply today are corporate class mutual funds. They allow investors to reallocate (exchange one corporate class mutual fund with another. Eg. An Asia fund for a US fund) without incurring any capital gains taxes. There are disadvantages such as a higher MER. 

See:
http://www.theglobeandmail.com/glob...iciency-what-you-really-want/article13939409/


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## james4beach (Nov 15, 2012)

That's interesting, I wouldn't have guessed that old fashioned mutual funds were so similar to ETFs (regarding disposition).

I guess my parents accumulated mutual fund units for so long, that they have not sold any yet. Most of their mutual fund activity was inside RRSPs so this hasn't come up until now.

I'd better warn them that they must be reporting capital gains on Schedule 3. It sounds like the brokerage slips won't do it for them. I know with ETFs you have to do it yourself, but for some reason I thought the mutual fund companies did it for you.


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