# I'm fed up with Interactive Brokers



## dotnet_nerd (Jul 1, 2009)

This brokerage sucks, they cannot get their act together regarding tax forms.

This is the 2nd time now I've received that dreaded review letter from CRA "According to our records, you were in receipt of investment income that appears not to have been fully reported"

_The 2nd damn year in a row._

What happens is IB can't get their tax reports correct so they keep revising them and sending the update to CRA. Then CRA blames me for mis-reporting.

(It's true IB probably emailed me a revision notification, but I get about 20-30 emails per day from them (alerts, daily digests, dividend notices, corporate actions etc etc) so it gets lost in the noise.)


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## FI40 (Apr 6, 2015)

dotnet_nerd said:


> This brokerage sucks, they cannot get their act together regarding tax forms.
> 
> This is the 2nd time now I've received that dreaded review letter from CRA "According to our records, you were in receipt of investment income that appears not to have been fully reported"
> 
> ...


That's a bummer. I had heard mostly good things about IB, but incorrect tax reporting is a huge nuisance. Amazing that these kinds of screwups are even possible - shouldn't it all be automated? I guess it's poorly automated.


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## avrex (Nov 14, 2010)

I'm a big Interactive Broker user. 

Based on the number of option trades we do, it's difficult for me to personally track all of individual trades that are executed.
We rely on IB to properly track this for tax purposes.
If they don't track it properly, that's a big problem.

Thanks for the heads-up. I'll keep an eye out going forward.


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## avrex (Nov 14, 2010)

One thing that always worried me, in any non-registered account (like IB), is the taxation of options.
And in particular, the *holding of short options*, when the tax year ends.

In the TMX published, Equity Options Tax guide, it states the following for the Call Writer.


> During the taxation year that the option is written, the writer is deemed by the Act to have disposed of a property whose adjusted cost base is nil, realizing a capital gain equal to the amount by which the premium received exceeds any brokerage fees.


In other words, if you hold any open short options from one calendar year into the next, *you have a capital gain*.
For example, today (Nov-24-2015) I sell 3 NFLX Jun-17-2016 $120 calls at 16.82.

Guess what? If I don't close this position by Dec 30, 2015, I have a taxable gain of $2,523 (i.e. 300 x 16.82 x 0.5 capital gains)

This shocked me, when I first discovered this. I had assumed that I could report the capital gain / loss, in the year that I close my position (just like we do when we buy and sell stocks).

Because of this, I decided that I would close my short positions before the calendar's last trade date.

However this year (2015), I've got a bunch of diagonal options that I need to keep open and in play going into the new year. 
I hope that Interactive Brokers reports this properly. 

I'm not saying that this is the problem with Interactive Brokers. (i.e. not reporting the capital gain in the above circumstance.)

But, with all of the confusing rules around the taxation of options, I'd be surprised if any broker is able to report amounts that perfectly line up with what the CRA expects.


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## avrex (Nov 14, 2010)

*Interactive Brokers - T5008*

Here's one more thing that I assume (hope) that Interactive Brokers is getting correct (in the CRA's eyes)..... the T5008.

I receive one T5008 for all of the options trading that I've done for the entire year.
Box 15. Type code of Securities = OPC. This represents Options.

On my tax forms, I report,
Box 20. Cost or book value
Box 21. Proceeds of disposition or settlement amount.

Now, if we look at,
Box 13. Foreign currency. It is <blank>

All of my option trading is done with US options and US currency.
Based on this, I'm assuming Interactive Brokers has properly done the currency conversion of all of my individual option trades correctly.

I'm reporting Box 20 and Box 21 as Canadian dollars on my tax form and am assuming that they are correct.
I don't have time to go through all of my trades and perform a currency conversion on each one.

Just something else to think about (worry about).


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## dotnet_nerd (Jul 1, 2009)

The problem isn't my trades reporting. I look after those myself in a database.

It's the T5's. Simple T5's. They can't get them right. 

Then I'm automatically screwed because they resubmit amended T5's which of course don't match the T5 income I reported. So I get flagged by the CRA's computers.

2 years in a row now. F*** sakes.


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## DenisD (Apr 19, 2009)

I've been an IB client since shortly after they opened in Canada. I agree their tax reporting leaves a *lot* to be desired. I don't do options but do over 100 trades/year in the US and Canada. I don't look at their tax forms until well into April. I expect them to be revised once or twice. So far, I've been able to reconcile my records with their unhelpful reports within a few cents after too much work. No complaints from CRA so far.


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## Silverbird (Mar 5, 2013)

I've had similar issues with my parent's account at Questrade. I double check the T5's and T3's that they receive and two years running I've had to get Questrade to make corrections to their form. Generally they have issues with distributions right near Dec 31 and put them in the wrong year. Fortunately everything seems to eventually be in sync, since they haven't received any of those unpleasant CRA letters.


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## janus10 (Nov 7, 2013)

You know how IB says you can't have USD in their RRSPs? Well that's not exactly true. I transferred in kind my iTrade RRSP which held mostly USD stocks and ETFs.

As soon as I sold one in the IB account I was now able to buy USD stocks and ETFs. I'm going to try buying a US option when I have an opportunity.

So when I transfer my wife's I am going to make sure I take some of her CDN cash and buy some USD money market or equivalent ETF to ensure I can have a ready pool of USD cash holdings.

Now have any if you figured out how to take your CDN cash that is held in your IB RRSP and convert it into US cash? Most of the purchases and trades I do are in US while my margin account is almost exclusively in CDN.


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## MrMatt (Dec 21, 2011)

janus10 said:


> You know how IB says you can't have USD in their RRSPs? Well that's not exactly true. I transferred in kind my iTrade RRSP which held mostly USD stocks and ETFs.
> 
> As soon as I sold one in the IB account I was now able to buy USD stocks and ETFs. I'm going to try buying a US option when I have an opportunity.
> 
> ...


If they say you can't have USD in their RRSPs they probably don't even have a way to convert to USD.


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## humble_pie (Jun 7, 2009)

avrex said:


> Here's one more thing that I assume (hope) that Interactive Brokers is getting correct (in the CRA's eyes)..... the T5008.
> 
> I receive one T5008 for all of the options trading that I've done for the entire year.
> Box 15. Type code of Securities = OPC. This represents Options.
> ...



avrex i'm not/have never been an IB client. But i'd expect their T5008 to be in US dollars, not canadian dollars. I'd never expect that a broker has *done* currency conversions on any trades, option or otherwise. 

as necessary, one can use the CRA accepted bank of canada annualized rate to convert trades into CAD.


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## Numbersman61 (Jan 26, 2015)

I don't trade with Interactive but with TD. I have both a Canadian Dollar Account and a US Dollar account. I receive a form 5008 for each account and the US Dollar account report is in US dollars. CRA requires transactions (buys and sells) done in a foreign currency to be reported in Canadian dollars on the transaction date so every year I have to convert each transaction into Canadian dollars based on Bank of Canada exchange rate for each day of a trade. Investment income can be reported based on average annual exchange rate. I assume the form 5008 you received relates to Your US dollar account and is reported in Us Dollars. Easy to check - compare details on 5008 to trade confirmation data.


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## janus10 (Nov 7, 2013)

Interestingly I can't find the symbol for DLR.U at IB. That could have been the answer. 

Before transferring more accounts I'll use up most of my cash in each registered account to buy US securities.


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