# Unstanding HISA MF tax calculations



## Eclectic12 (Oct 20, 2010)

Hi Folks:

I've never held a MF in a taxable account before this year. I ended up holding a HISA MF for a while until the stock I wanted to move the money into hit a price I liked. So on my 2013 tax return I'm going to have some tax calculations for when I sold the MF.

I'm thinking that I'll get a T3 or T5 that lists the interest income.
So how does the capital gains calculation work so that I'm not reporting any capital gains?


Does anyone have experience with this?


Cheers


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## CanadianCapitalist (Mar 31, 2009)

Is this a CAD HISA MF? Then there should be no capital gains or losses because the HISAs typically trade at the same price.

For a USD HISA, you may have capital gains or losses based on CAD-USD conversion. If you use annual BoC USD rate and you bought and sold in 2013, there should be no capital gains or losses.


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## Guban (Jul 5, 2011)

You'll get a T3 for the interest. Unless it was a huge amount of money for a long time, it won't change your tax position significantly. As you know, the interest rates are pretty low!


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## Eclectic12 (Oct 20, 2010)

CanadianCapitalist said:


> Is this a CAD HISA MF?
> 
> Then there should be no capital gains or losses because the HISAs typically trade at the same price.


Yes it is CAD.

So the additional units are added to the ACB?

For example, if there were 100 purchased, 1 was added in Jan then another in Feb and then it was sold. 
That's a sale of 102 units where the proceeds are going to be larger than the original purchase.

Looking at ACB formula at Tax Tips
http://www.taxtips.ca/personaltax/investing/taxtreatment/mutualfunds.htm

The way I see no capital gain is if the additional units are added to the ACB as a "re-invested distribution".




Guban said:


> You'll get a T3 for the interest. Unless it was a huge amount of money for a long time, it won't change your tax position significantly. As you know, the interest rates are pretty low!


Yes ... though I'd rather make sure of the process when it's small, easy to figure out and has almost no chance of a mistake raising any flags with CRA.


Cheers


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## CanadianCapitalist (Mar 31, 2009)

Eclectic12 said:


> Yes it is CAD.
> 
> So the additional units are added to the ACB?
> 
> ...


Let's take TDB8150 as an example. It always trades at $1. Since the value of the fund stays level, there is never any capital gains. For your reinvested units, you'll be issued a T3.

Example:
Buy 100 units of TDB8150 for $100. ACB = $1. BV = $100.
Reinvest 1 unit of TDB8150 for $1. ACB = $1. BV = $101.
Reinvest 1 unit of TDB8150 for $1. ACB = $1. BV = $102.
Sell 102 units of TDB8150 for $1. Proceeds = $102.

Capital gains = 0.

You have $2 in interest and $0 in capital gains / losses.


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## Eclectic12 (Oct 20, 2010)

Thanks for confirming what I was thinking was the case.


Cheers


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## james4beach (Nov 15, 2012)

CanadianCapitalist said:


> Capital gains = 0.
> 
> You have $2 in interest and $0 in capital gains / losses.


I've been wondering about this too. Yes the T3 will show interest income, so nothing complicated there... same as a bank account.

Even though cap gains are nil, does one still have to include the ISA in the Schedule 3 listing in your taxes?


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## stardancer (Apr 26, 2009)

james4beach said:


> I've been wondering about this too. Yes the T3 will show interest income, so nothing complicated there... same as a bank account.
> 
> Even though cap gains are nil, does one still have to include the ISA in the Schedule 3 listing in your taxes?


No, it's like a bank account; you report straight interest on line 121


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## Eclectic12 (Oct 20, 2010)

stardancer said:


> james4beach said:
> 
> 
> > ... Even though cap gains are nil, does one still have to include the ISA in the Schedule 3 listing in your taxes?
> ...


So the computers are smart enough to filter out that annual trading summary is showing a MF that is not being recorded on schedule 3?
I was going to record it so that everything would be consistent.


Cheers


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