# XIT.TO Stock split?



## Tostig (Nov 18, 2020)

I was looking at the charts in Yahoo Finance and something seemed off. I eventually looked at the price history section and it stated a 942:1000 stock split on Dec. 30, 2021.

I checked my brokerage accounts but there was no evidence of a split in my account (although I recognize that not many brokerages accept fractional shares) because the whole shares hadn't changed.

A Google search didn't turn up any explanation.

So before I contact Yahoo, I'm asking CMF members what they know about this split.

Thanks.


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## Spudd (Oct 11, 2011)

I believe it is reinvested capital gains distributions. The capital gains distribution for this year was 3.23, which is about 6% of the stock price, and 942:1000 is about a 6% difference. 









BlackRock(R) Canada Announces Final Annual Reinvested Capital Gains Distributions for the iShares(R) ETFs







www.barrons.com


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## Tostig (Nov 18, 2020)

Spudd said:


> I believe it is reinvested capital gains distributions. The capital gains distribution for this year was 3.23, which is about 6% of the stock price, and 942:1000 is about a 6% difference.
> 
> 
> 
> ...


So would my interpretation be correct?

An investor holding 1000 shares before the split would initially hold 942 shares after the split. But since the distribution is reinvested, the investor is given 58 shares of equity bumping his holdings back up to 1000.

If this is correct, shouldn't this activity be reflected in my transaction history?


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## james4beach (Nov 15, 2012)

As @Spudd referenced, it appears to be a "reinvested distribution". This does not change the number of units you hold in your brokerage. I can't speak to the accounting of how this is calculated, but you won't see any difference in the number of shares you hold and you won't see it in transaction history either. The distribution is handled (internally) by the fund and rolled into existing units.

The only impact from our perspective is that we need to change our ACB.


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## AltaRed (Jun 8, 2009)

Agree with post #4. I've seen these things for years now. There is no Schedule 3 cap gains/losses entry in one's tax return.


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## Eclectic21 (Jun 25, 2021)

james4beach said:


> As @Spudd referenced, it appears to be a "reinvested distribution".
> 
> This does not change the number of units you hold in your brokerage. I can't speak to the accounting of how this is calculated, but you won't see any difference in the number of shares you hold and you won't see it in transaction history either ...


OOH ... I've never seen the number of units change.
OTOH ... what I recall in the monthly statement was two entries that updated the cost base but left the number of units alone.

IOW - it's going to depend on whether the broker updates the cost base correctly as to whether one will see an entry, AFAICT.


If I remember to search for it, I'll let you know what the entries are. I don't care as my ETFs are in registered accounts and will be for some time.


Cheers


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## Eclectic21 (Jun 25, 2021)

Tostig said:


> So would my interpretation be correct?
> 
> An investor holding 1000 shares before the split would initially hold 942 shares after the split. But since the distribution is reinvested, the investor is given 58 shares of equity bumping his holdings back up to 1000 ..


I don't think so because a re-invested capital distribution is not a split. Any time I've had a split, the number of shares or units changed up or down while the cost base stayed the same. For example, a 1 for 4 split meant 100 shares became 400 shares while a 10 for 1 split meant 100 shares became ten shares.

ETFs can generate capital gains that are immediately taxable but re-invested.








Phantom Distributions and Their Effect on Adjusted Cost Base | Adjusted Cost Base.ca Blog






www.adjustedcostbase.ca







Tostig said:


> ... If this is correct, shouldn't this activity be reflected in my transaction history?


If it really is a split then I'd expect to see a single entry that changes the number of shares/units.

For an ETF's re-invested capital distributions, in the past my broker statement showed no entries and the cost base did not change. More recently, as my broker changed how they do things, what I recall is two entries in the monthly history that update the cost base but leave the number of units untouched.


Cheers


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## Tostig (Nov 18, 2020)

Eclectic21 said:


> I don't think so because a re-invested capital distribution is not a split. Any time I've had a split, the number of shares or units changed up or down while the cost base stayed the same. For example, a 1 for 4 split meant 100 shares became 400 shares while a 10 for 1 split meant 100 shares became ten shares.
> 
> ETFs can generate capital gains that are immediately taxable but re-invested.
> 
> ...


Is it really a split? That's the question I'd like to ask Yahoo because that's what is shown in the price history on December 30, 2021 and stock prices in the price chart have all shifted upward all without showing any changes to the quantity of my holdings.

In January 3, 2021 I was doing some pricing analysis that included XIT. On January 2, 2020 XIT closed at 28.91 according to my old spreadsheet whose data came from Yahoo Finance. Today, the January 2, 2020 close price is states as 32.41 probably reflecting the stock split of both December 2021 and December 2020.


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## james4beach (Nov 15, 2012)

Eclectic21 said:


> ETFs can generate capital gains that are immediately taxable but re-invested.


Can we use this opportunity to review the correct way to handle taxes in this situation? Let me see if I got this right, and please correct any mistakes here

*1. Update your ACB*

There aren't any tax slips which tell you how to adjust the ACB, though I've found that brokerages do a good job at automatically updating the cost basis shown. Even if the broker updates it, you should (in your own record-keeping) _increase the ACB_ based on the reinvested distribution. The official number for this can be found in the document published by iShares each year called "Distribution Characteristics for iShares CDN Funds". The number for 2021 is not official yet.

Last year's tax document: 2020 Distribution Characteristics for iShares CDN Funds

This document should be published in March. The investor then has to look at the "Reinvested Distribution Per Unit" and use that number.

*2. Amounts on the T5 and T3 slips*

Distinct from the above, you should also report any taxable amounts from the T3 or T3 slip (if any) which are dividends, and possibly also T3: box 21 - capital gains. So whatever the T3 capital gains says, you must report and pay taxes on. This part is straightforward enough in tax software, since the dividends and cap gains will automatically find their way to the correct sections of the tax return. For example T3 box 21 (capital gains) will end up on Schedule 3 under "T3 information slips".

T3 slips may arrive as late as March 31.

Just remember that updating your ACB is not automatic. You must do this yourself based on the tax characteristics document. You _should not_ rely on the T3 amounts to do this ACB update, since the capital gain distribution on the T3 may not equal the reinvested distribution.


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## AltaRed (Jun 8, 2009)

That is not quite true for capital re-invested distributions. The 2021 values are now final.

Each of the ETF providers publish the amount of their re-invested capital distributions on/about Dec 30th of each year. Here is one news release for Blackrock. They are reported on a per unit basis. XIT is $3.23066 which is used to increase the ACB on one's units. I've already done that for 2021 in my records for Blackrock, BMO and Vanguard ETFs.

BlackRock® Canada Announces Final Annual Reinvested Capital Gains Distributions for the iShares® ETFs


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## james4beach (Nov 15, 2012)

AltaRed said:


> That is not quite true for capital re-invested distributions. The 2021 values are now final.
> 
> Each of the ETF providers publish the amount of their re-invested capital distributions on/about Dec 30th of each year. Here is one news release for Blackrock. They are reported on a per unit basis. XIT is $3.23066 which is used to increase the ACB on one's units. I've already done that for 2021 in my records for Blackrock, BMO and Vanguard ETFs.
> 
> BlackRock® Canada Announces Final Annual Reinvested Capital Gains Distributions for the iShares® ETFs


I think you're right that these are usually the final number. But the link itself says:

"The actual taxable amounts of reinvested and cash distributions for 2021, including the tax characteristics of the distributions, will be reported to brokers (through CDS Clearing and Depository Services Inc. or “CDS”) in early 2022."

I have no idea if the number ever changes before it's pushed out to brokers. But I think you're right, must as well update our records now. I just updated mine based on this press release.


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## AltaRed (Jun 8, 2009)

The breakdown of the cash distributions is not available until March (on the T3 tax slip). The phantom capital re-invested distributions for ACB adjustment purposes is known now.


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## Eclectic21 (Jun 25, 2021)

Tostig said:


> Is it really a split?
> 
> That's the question I'd like to ask Yahoo because that's what is shown in the price history on December 30, 2021 and stock prices in the price chart have all shifted upward all without showing any changes to the quantity of my holdings ...


Definitely a key question. 

If Yahoo confirms it is a split then all the comments about re-invested capital distributions go out the window. Though as I say, all the splits I have experienced have resulted in the number of shares/units changing. They have been had press releases that announced that a split happened on date X with the ratio documented.




Tostig said:


> ... In January 3, 2021 I was doing some pricing analysis that included XIT. On January 2, 2020 XIT closed at 28.91 according to my old spreadsheet whose data came from Yahoo Finance. Today, the January 2, 2020 close price is states as 32.41 probably reflecting the stock split of both December 2021 and December 2020.


Odd ... will be interested in whether you get a response explaining it. 

Cheers


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## Eclectic21 (Jun 25, 2021)

james4beach said:


> Can we use this opportunity to review the correct way to handle taxes in this situation?
> Let me see if I got this right, and please correct any mistakes here ...


Sure.




james4beach said:


> ... There aren't any tax slips which tell you how to adjust the ACB, though I've found that brokerages do a good job at automatically updating the cost basis ....


Agreed ... though if one does not independently calculate the cost basis then compare, I'm not sure how one can be confident the cost base was properly increased by the broker. 


Articles such as the ones linked earlier in the thread tell one the mechanics of what to do without having the relevant numbers while the tax slips have neither for the re-invested capital distribution. The T3 slip does identify RoC with a vague comment from what I recall.




james4beach said:


> ... The official number for this can be found in the document published by iShares each year called "Distribution Characteristics for iShares CDN Funds". The number for 2021 is not official yet.


There's multiple spots for this info.

There are the press releases ... one for the estimated number around Nov and one for the final number. The ETF web page also lists this info, though not all ETF companies make it as easy to find as BMO listing a chart specifically for re-invested capital distributions.

If all else fails, the CDS Innovations T3 lists both re-invested capital distributions as well as RoC on their form plus the tax breakdown.




james4beach said:


> *2. Amounts on the T5 and T3 slips*
> Distinct from the above, you should also report any taxable amounts from the T3 or T3 slip (if any) which are dividends, and possibly also T3: box 21 - capital gains


Have you had an ETF report on a T5?

Maybe it's changed recently but my ETFs only reported via a T3 - though they are all Canadian domiciled.

IAC, all taxable capital gains have to be reported on a T slip - whether from cash or non-cash phantom distributions. The trouble I had was one had to find a cash paid listing on the ETF web site then compare against the taxable distribution to confirm the non-cash phantom distribution (i.e. all cash paid < the total taxable distribution number).




james4beach said:


> ... T3 slips may arrive as late as March 31.


Don't know about recently as I moved my ETF over to my TFSA after multiple years of the ETF T3 being posted in April.




james4beach said:


> ... Just remember that updating your ACB is not automatic.


Actually - my broker does it automatically so I only spot check it once in a while versus doing it yearly back when they didn't update it for either type of ACB adjustment.




james4beach said:


> ... You must do this yourself based on the tax characteristics document. You _should not_ rely on the T3 amounts to do this ACB update, since the capital gain distribution on the T3 may not equal the reinvested distribution.


As I say, I've had years when the T3 CG amount included both cash paid and the re-invested capital distribution so I agree one shouldn't automatically apply the T3 CG amount.

Cheers


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## Tostig (Nov 18, 2020)

How does one calculate the ACB if there is no transaction history to back up your calculation?


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## james4beach (Nov 15, 2012)

Tostig said:


> How does one calculate the ACB if there is no transaction history to back up your calculation?


The tax characteristics documents and press releases are all the evidence you'll need to justify the ACB modifications. I store the iShares tax characteristics PDF for each year, and am happy to share if anyone needs them for the last 14 years.


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## james4beach (Nov 15, 2012)

Eclectic21 said:


> Have you had an ETF report on a T5?
> 
> Maybe it's changed recently but my ETFs only reported via a T3 - though they are all Canadian domiciled.
> 
> IAC, all taxable capital gains have to be reported on a T slip - whether from cash or non-cash phantom distributions. The trouble I had was one had to find a cash paid listing on the ETF web site then compare against the taxable distribution to confirm the non-cash phantom distribution (i.e. all cash paid < the total taxable distribution number).


I mentioned T5 because I can't remember if cash dividends ever show up on a T5. I've only seen the ETF's capital gain distribution on a T3.


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## AltaRed (Jun 8, 2009)

US domiciled ETFs are T5 based, but ANY Canadian trust (ETF, mutual fund, REIT, et al) issues a T3 (for trusts).


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## Tostig (Nov 18, 2020)

The T3 or T5 would only report the flow-through capital gains for individual investors to declare. The ACB doesn't matter until the shares or some of the shares are sold.

This is the kind of thing I wish could be standardized in brokerage statements. It's all computerized anyway so it shouldn't be so hard for your brokerage to do the updated ACB for each stock you have and tabulating it in a Schedule 3 Capital Gains table all ready for you to use.

That kind of calculation is also the reason why I had instructed BMO Investorline to remove the DRIP option from my taxable accounts.


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## Eclectic21 (Jun 25, 2021)

james4beach said:


> ... I mentioned T5 because I can't remember if cash dividends ever show up on a T5. I've only seen the ETF's capital gain distribution on a T3.


My T5 slips have been common stock paying dividends like TD bank. 
REITs and ETFs have been T3 slips.

It's been this way going back to 2004.


Cheers


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## Eclectic21 (Jun 25, 2021)

Tostig said:


> The T3 or T5 would only report the flow-through capital gains for individual investors to declare ...


My understanding is that the ETF will report _taxable_ CG on the T3 slip.

If you are saying that taxable phantom distributions are not on the T3 slip for the ETF, how are they being reported?

OTOH, if you are saying cash paid that was classed as CG are not on the T3 slip, again how are they being reported?




Tostig said:


> ... The ACB doesn't matter until the shares or some of the shares are sold.


Sure ... but it's easier to make the adjustments when the info is easily available instead of having to get through potentially decades of adjustments.

It was painful to dig out about a decades worth of info for the REIT I sold. It didn't help that REIT was bought out by another REIT part way though.

Doing the updates annual takes maybe thirty minutes for capturing the info and updating the numbers.




Tostig said:


> ... This is the kind of thing I wish could be standardized in brokerage statements. It's all computerized anyway so it shouldn't be so hard for your brokerage to do the updated ACB for each stock you have and tabulating it in a Schedule 3 Capital Gains table all ready for you to use.


And if there's two brokerage accounts holding the same investment?

Or more importantly, if the brokerage isn't updating the cost base, what then?




Tostig said:


> ... That kind of calculation is also the reason why I had instructed BMO Investorline to remove the DRIP option from my taxable accounts.


Removing the DRIP does cut down on the number of adjustments but where one holds REITs and ETFs in a taxable account, ACB adjustments are required.

While I'm happy the broker is doing a better job, there is no way I'd simply trust the broker's numbers.


Cheers


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## Tostig (Nov 18, 2020)

Spudd said:


> I believe it is reinvested capital gains distributions. The capital gains distribution for this year was 3.23, which is about 6% of the stock price, and 942:1000 is about a 6% difference.
> 
> 
> 
> ...


I found XIT on page 16. $3.23066 per share just like you stated.
Also on page 16 is XIU which I also own in a taxable account. $0.10921/share.
Interesting that the Yahoo Finance Historical Data does not show any stock split for XIU on December 2021.

All my other iShare ETFs are in RRSPs and TFSAs. So now I'm searching for Vanguard's and BMO's ETF Capital Gains distributions and add them all into my taxable accounts.


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## james4beach (Nov 15, 2012)

Tostig said:


> That kind of calculation is also the reason why I had instructed BMO Investorline to remove the DRIP option from my taxable accounts.


I agree, DRIP is a disaster for ETFs in non registered. I'm really frustrated by how complicated reinvested distributions are.

They are the one recurring nuisance for Canadian ETF investors. Brokerages have made this easier with their own cost base tracking, but as @Eclectic21 says, we still have to calculate and verify the numbers.


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## Eclectic21 (Jun 25, 2021)

For me, not knowing about them and having to play catch up with limited info was far worse.
Knowing about them and having a system I can live with makes it tedious but not particularly complicated.

To each their own.


Cheers


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