# DRIP'ed ETF cost base



## noviceinvestor (Jan 7, 2013)

I have couple questions regarding the cost base calculation for a distribution paying ETF residing in my non-registered account. I purchased VFV late March of last year. At the time, my cost base was $28.25. I have made no other purchases, but have gotten extra shares through the synthetic DRIP.

The following is based on my records:

Settlement dateTransaction# of units bought/(sold)Price per shareCommissionReturn on capitalTotal ACBCurrent # of sharesACB/unitMarch 26, 2013Buy34328.229.999,689.4534328.25March 27, 2013Reinvest128.299,717.7434428.25July 2, 2013Reinvest130.199,747.9334528.25Sept 30, 2013Reinvest131.069,778.9934628.26January 6, 2014Reinvest135.009,813.9934728.28
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Total distributions received:
March 27, 2013: $37.39 (of that $28.29 was DRIP'ed)
July 2, 2013: $38.49 (of that $30.19 was DRIP'ed)
Sept 30, 2013: $48.16 (of that $31.06 was DRIP'ed)
Jan 6, 2014: $45.87 (of that $35.00 was DRIP'ed)

Vanguard hasn't released the 2013 distribution details yet, so I don't know what the breakdown is between ROC, foreign income, etc. I understand that, if I choose to sell my investment today, the capital gain impact would be for the 2014 taxation year; however, I do want to gain an understanding ahead of time. What info would I need and how do I calculate the ACB with the DRIP? 

Also, Vanguard declared its distribution and paid to shareholders on record as of Dec 31, 2013. Would the last distribution be considered part of the 2013 tax year or 2014?

Apologize for the long read; pretty sure these are newb questions...


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## Eclectic12 (Oct 20, 2010)

Here is a link that gives the details and highlights that one risk of not doing it properly is paying taxes twice.

http://howtoinvestonline.blogspot.ca/2009/01/etfs-and-mutual-funds-calculating.html

This second link highlights that net effect of the DRIP is to increase the ACB, which will lower the capital gain (or increase a capital loss).
http://www.theglobeandmail.com/glob...ep-more-of-your-etf-nest-egg/article10207129/


Cheers


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## wendi1 (Oct 2, 2013)

http://www.adjustedcostbase.ca/

Wait for the Vanguard information, or there might be preliminary info on their web site. It will be a big fat report, and will contain everything you need.

I like the calculator above for ACB. 

CRA also has a somewhat more wordy example on this page http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-e.html#P1185_82580

The Dec 31 2013 distribution is for the 2013 tax year. Hope this helps.


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## Cal (Jun 17, 2009)

To get a guesstimation you could look at the 2012 info, but it in no way will reflect the 2013 holdings.


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## GoldStone (Mar 6, 2011)

I don't drip in the non-reg accounts. Record keeping is a torture. Life is way too short for this.

Collect dividends in cash. Add new cash from savings. Buy whatever position is down the most. Or start a new position.

DRIPs are overrated.


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## warp (Sep 4, 2010)

GoldStone said:


> I don't drip in the non-reg accounts. Record keeping is a torture. Life is way too short for this.
> 
> Collect dividends in cash. Add new cash from savings. Buy whatever position is down the most. Or start a new position.
> 
> DRIPs are overrated.


I can agree with this....the record keeping can be torture, so I have hestitated dripping in cash accounts too.

However , it is a bit of a stretch to say that drips are overrated. I will drip in most holdings we have ,where we get a "discount" on the price.


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## GoldStone (Mar 6, 2011)

warp said:


> However , it is a bit of a stretch to say that drips are overrated. I will drip in most holdings we have ,where we get a "discount" on the price.


The OP drips an ETF. No discounts there.

Even with discounts, DRIPs are overrated. Compare two alternatives:

1. DRIP an overweight stock that trades at a high P/E multiple and an all time high. You get 5% discount to the market price.

2. Take dividends in cash. Add new savings. Buy an underweight stock (or start a new position) at a low P/E multiple.

Which option gives you a better discount?


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## warp (Sep 4, 2010)

In the registered accounts and the TFSA's I will drip when I get a good discount, as I have said....this is a good plan over the long term.

I do what you do in the cash accounts, although finding good valuations right now is difficult....any suggestions?


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