# Pls help with this CG/ACB calculation



## digitalatlas (Jun 6, 2015)

Hi everyone,

So I think I paid for a costly lesson in TY 2019, and looking back, I've totally done a face palm because I should have known better. It was the first year I've ever sold a stock in a non-registered account, and I didn't even need to do it, it's cause I'm anal and wanted to keep things organized so I shifted things around. But in a NR account, I guess that triggers some capital gains.

I thought I could just sell some shares and buy them back up the next day, but because I had already owned shares from TY 2018, the gains was not just based on the small spread between the 2 days between buying and selling, but based on the cost accounting for gains I'd made since 2018. At least that's my understanding of it anyway, and it didn't occur to me when I had done it. Rookie mistake.

Anyway, this year I got a Realized gain/loss report from BMOIL, and that's when it occurred to me. But some of my numbers are slightly off from what they report, and I thought I was doing the ACB calculations correctly, but maybe I'm off somewhere. I'm hoping perhaps you guys can help me out? I've only made 4 transactions in 2018 and 2019. Here's an example using ZCN.

Oct 12, 2018
Bought 960 @ $20.79 = $19,958.40 plus $9.95 commission = $19,968.35 ACB, $20.80 ACB/share (this was actually split into 2 proportional transactions for 900 and 60 shares, I just combined them here)

Oct 31, 2018
Got a T3 saying I got a ROC of $0.83, so $19,967.52 ACB

Oct 3, 2019
Bought 200 @ $22.00 = $4,400 plus 9.95 commission = $4,409.95 = $24,377.47 ACB for 1160 shares, $21.015 ACB/share (I rounded to 3 decimal places in Excel but I think excel actually uses more regardless of what's displayed, should I round this manually and to how many places? Does it make a difference?)

Oct 3, 2019
Sold 200 @ $ 22.07 = $4,414 plus 9.95 commission = $4,404.05 = $19,973.42 ACB for 960 shares, $20.806 ACB/share

Oct 4, 2019
Bought 200 @ @22.15 = $4,430 plus 9.95 commission = $4,439.95 = $24,413.37 ACB for 1150 shares, $21.046 ACB/share

So when I sold 200 shares on Oct 3, I thought I bought for $22.00 and sold for $22.07, I thought I would pay CG on the $0.07 difference, but now realized that in fact my ACB/share was $21.015 for the 1160 shares before selling 200.

So selling Oct 3, 200 shares at $22.07 would be ($22.07 - $21.015)*200 = *$210.99* (per excel, it's $211 if you use $21.015, $210 if you use $21.02)

My problem is that the BMOIL report says my realized gain for this transaction is *$204.33*.

I thought I did the math right, but maybe there's something I'm missing? Maybe they charged some fee somewhere I didn't account for, cause more expense would reduce my gain, right? Something to the tune of $6.66?

I have a similar problem with ZDB, just slightly off. And I also have XAW but I've never sold anything, but I imagine this could be a problem in the future if I don't figure it out.

What do you do? Do you just consolidate your own records and use the one provided by the bank? Go dispute the bank? I have this small discrepancy for both ETFs, so it's probably systemic and not just a one off error. I would think that our records should match the bank. Thanks for any help!


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## Money172375 (Jun 29, 2018)

I use my own calculations and this free website to track transactions and ACB. 

I’m not sure why the bank ACBs always seem a little off. I’ve only sold assets in a NR account a few times in my life. Others will chime in....I suspect most, if not all, are calculating it themselves. Obviously those who may hold the same asset in different accounts.


https://www.adjustedcostbase.ca/


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## like_to_retire (Oct 9, 2016)

Most ETF's distribute more than one type of income that you have to account for in your cost base calculation.

One of the often forgotten distributions each year is 'reinvested capital gain'. You usually have to look to the ETF's web site to find it each year. It's taxable as capital gains. No cash received. No new units - but consolidated. It's added to your cost base. There are also sometimes special distribution of 'dividends'. Taxable as dividend income. No cash received. No new units. Added to your cost base. There's also a mix of both interest income and dividend income and sometimes foreign income. You have to keep track of all these to get an accurate cost base.

ltr


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## digitalatlas (Jun 6, 2015)

Where does one find info about these other distributions? I can only see the CG report right now, T3 is due out week of March 30. Is it reported on the T3?

I looked at my 2018 T3, and the $0.83 ROC is reported in box 42 (along with ZDB). I've included this ROC in my calculation, and yet I'm still off from the CG report. Is there somewhere else those other kinda of income are reported?

The ZCN website for instance has links to its annual performance and such, but is there a more straight forward way to get this information?


I also tried adjustedcostbase.ca, and it looks like a nifty tool but I basically had recreated it in an excel spreadsheet. I would totally use it except I'm worried that it might not be there one day, whereas I can always keep my spreadsheet. But I put my same numbers in, and got ANOTHER value *$201.04 *!! So I'm super confused about why the numbers are different, this is just supposed to be simple arithmetic.


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## Money172375 (Jun 29, 2018)

digitalatlas said:


> Where does one find info about these other distributions? I can only see the CG report right now, T3 is due out week of March 30. Is it reported on the T3?
> 
> I looked at my 2018 T3, and the $0.83 ROC is reported in box 42 (along with ZDB). I've included this ROC in my calculation, and yet I'm still off from the CG report. Is there somewhere else those other kinda of income are reported?
> 
> ...


I’m guessing, but perhaps the banks don’t include the commission? Most MFs won’t have commission, but ETFs and stocks do....I wonder if the systems are programmed to ignore the commission?


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## Money172375 (Jun 29, 2018)

digitalatlas said:


> Where does one find info about these other distributions? I can only see the CG report right now, T3 is due out week of March 30. Is it reported on the T3?
> 
> I looked at my 2018 T3, and the $0.83 ROC is reported in box 42 (along with ZDB). I've included this ROC in my calculation, and yet I'm still off from the CG report. Is there somewhere else those other kinda of income are reported?
> 
> ...


Have you tried here? https://www.bmo.com/gam/ca/advisor/...ns#fundUrl=/fundProfile/ZCN#tax&distributions


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## like_to_retire (Oct 9, 2016)

digitalatlas said:


> Where does one find info about these other distributions?


I'm not familiar with your specific ETF, but I have owned BlackRock ishares in the past such XIC. 

Here's a typical 2019 tax distribution characteristics for all their ETF's as an example for you. You should be able to find something similar for your ETF at the company that owns it.

ltr


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## Money172375 (Jun 29, 2018)

like_to_retire said:


> Most ETF's distribute more than one type of income that you have to account for in your cost base calculation.
> 
> One of the often forgotten distributions each year is 'reinvested capital gain'. You usually have to look to the ETF's web site to find it each year. It's taxable as capital gains. No cash received. No new units - but consolidated. It's added to your cost base. There are also sometimes special distribution of 'dividends'. Taxable as dividend income. No cash received. No new units. Added to your cost base. There's also a mix of both interest income and dividend income and sometimes foreign income. You have to keep track of all these to get an accurate cost base.
> 
> ltr


Explained here. https://www.theglobeandmail.com/investing/education/article-taming-your-etfs-phantom-menace/


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## Eclectic12 (Oct 20, 2010)

digitalatlas said:


> ... It was the first year I've ever sold a stock in a non-registered account, and I didn't even need to do it, it's cause I'm anal and wanted to keep things organized so I shifted things around. But in a NR account, I guess that triggers some capital gains ...


No offense ... but if you somehow forgot that selling in a NR account triggers either capital gains (CG) or a capital loss (CL) - how are you going to be on top of the complications of an ETF that pays mixed income?

Never mind why would you want to pay CG taxes now for a minor adjustment?




digitalatlas said:


> ... I thought I could just sell some shares and buy them back up the next day, but because I had already owned shares from TY 2018, the gains was not just based on the small spread between the 2 days between buying and selling, but based on the cost accounting for gains I'd made since 2018. At least that's my understanding of it anyway, and it didn't occur to me when I had done it. Rookie mistake ...


What's TY 2018? I am not following what you were thinking.

Say you bought in three purchases in 2016, 2017 and 2018. When you sold a bit in 2019, you need to know what the adjusted cost base (ACB) across all NR accounts for that investment. I prefer the "ACB per unit/share" as it's lets me multiply "number sold" x "ACB per unit/share" for the number sold. Some articles spell out how to calculate "total ACB" ... but then you have to scale it to what you sold.




digitalatlas said:


> ... I got a Realized gain/loss report from BMOIL, and that's when it occurred to me. But some of my numbers are slightly off from what they report, and I thought I was doing the ACB calculations correctly, but maybe I'm off somewhere ... Here's an example using ZCN ...


IIRC, others have posted BMOIL ACB numbers (assuming no other NR accounts holding the same investment that BMOIL wouldn't know about!!) as good.
I'm guess you are using an ACB calculation that ignores that ETFs pay mixed income where some of the income can decrease the cost base (i.e. return of capital or RoC). The more problematic is re-invested capital distributions aka phantom distributions. They result in no more units but *increase* your ACB.

Basically in addition to buying/re-investing income to buy more units/selling affecting the total ACB, RoC will decrease the total ACB while re-invested capital distribution will increase total ACB.

So buy 10 units for $10 gives a total ACB of 10 x $10 (ignoring commissions and multiple buys to keep things simple) = $100. If the income paid by the time of selling was $6 RoC and $15 phantom distributions then total ACB is $100 - RoC + phantom distribution = $100 - $6 + $15 = $109. Per unit ACB = $109 / 10 = $10.90

The key here is that income as cash (i.e. RoC) changed the total ACB and non-cash income (i.e. phantom distribution) also changed the total ACB.

If you sold 2 units then it's 2/10 x total ACB = 2/10 x $109 = $21.80.
Or 2 units x per unit ACB = 2 x $10.90 = $21.80


https://www.adjustedcostbase.ca/blog/return-of-capital-and-how-it-affects-adjusted-cost-base/
https://www.adjustedcostbase.ca/blog/phantom-distributions-and-their-effect-on-adjusted-cost-base/

Or if you prefer a complete treatment ... https://www.adjustedcostbase.ca/blog/phantom-distributions-and-their-effect-on-adjusted-cost-base/



digitalatlas said:


> Where does one find info about these other distributions?


IIRC ... BMO ETFs give both the annual amounts as well as the phantom distributions on the same page. For some other ETF providers, you have to find a separate document that spells out *if* there was a phantom distribution that particular year then what the amount was.




digitalatlas said:


> ... I also tried adjustedcostbase.ca, and it looks like a nifty tool but I basically had recreated it in an excel spreadsheet. I would totally use it except I'm worried that it might not be there one day, whereas I can always keep my spreadsheet. But I put my same numbers in, and got ANOTHER value *$201.04 *!! So I'm super confused about why the numbers are different, this is just supposed to be simple arithmetic.


I seem to recall you can export from them to keep your own copy. If they disappear, you'd only need to find the differences and update it.

You'll have to find the BMO ETF published numbers for both RoC and phantom distributions, taking into account when additional purchases were made. If you added units during the year, RoC will change. Phantom distributions are in Dec so the units held in Dec will set the amount for that year.


Cheers


*PS*
Another source of possible issues is if the T3 form is rolling up multiple investments that pay RoC onto the same form. In my case, all but one is typically on the first T3 form. If it's one of those, I need to dig into the summary sheets to find out that say $16 of the total $48 RoC reported belongs to investment Y.

If you want a per unit T3 form, you can also get them at https://services.cds.ca/application...s/-EN-LimitedPartnershipsandIncomeTrusts?Open


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## Money172375 (Jun 29, 2018)

Eclectic12 said:


> No offense ... but if you somehow forgot that selling in a NR account triggers either capital gains (CG) or a capital loss (CL) - how are you going to be on top of the complications of an ETF that pays mixed income?
> 
> Never mind why would you want to pay CG taxes now for a minor adjustment?
> 
> ...


The Globe article above describes these phantom distributions as “reinvested distributions”. Per the BMO ZCN chart (link above) this fund had some in 2017, but none since then.


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## Eclectic12 (Oct 20, 2010)

While that's good to know there are no reinvested distributions for ZCN ... it seems important for the OP to know about the possibility, n'est pas?


Cheers


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## GreatLaker (Mar 23, 2014)

When you buy, your total ACB and ACB/share both change. When you sell, your total ACB drops, but your ACB/share does not change.

Your ACB calculation for your Oct 3, 2019 sale is incorrect. You lowered your ACB by the proceeds of disposition for the sale. You should have lowered the ACB by the ACB per share x the # of shares sold. The capital gain of $201.04 of that transaction is correct, per adjustedcostbase.ca. After that sale your ACB/share is still $21.02. This is based on the info you have given.

So the difference between BMO and ACB.ca = 204.33-201.04 = $3.29. Since BMO's gain is higher, then BMO's ACB/share was lower by $.016 / share. Since RoC lowers ACB, maybe you missed some RoC, or there is a timing difference. 

You said you received a T3 Oct 31, 2018 that had RoC on it. That's strange since T3s are usually for the calendar year. RoC may be issued multiple times per year, but will be consolidated for the year in T3 box 42. And sometimes one T3 will be issued covering multiple ETFs or mutual funds. So if you are selling mid-year, you need to adjust the ACB of the sale transaction for any RoC that was issued up to the date of the sale, not just as of the end of the year. 


Adjustedcostbase.ca lets you download your transactions as a spreadsheet. I do that once per year.

For RoC, my broker (TDDI) provides the info on a T3, plus it is also broken down for each distribution on an accompanying document called Summary of Trust Income. For reinvested distributions, TDDI includes them on my March statement as a cash distribution plus a reinvested capital gain, two transactions that appear to cancel each other out. I add that amount to my ACB.

The fund websites will list distributions, but you may have to hunt around for them, and they may only give annual values, not quarterly breakdowns.

For the ne plus ultra of ACB reporting, check out *this white paper from PWL Capital*, that can be used with the *Tax Breakdown Postings from CDS Innovations*

So I don't think solved your problem, but suspect it is something to do with Roc being missed, or the timing of the recording of RoC.
You really need to track down what is causing the difference between the $204.33 gain reported by BMO and the $201.04 gain calculated by ACB.ca. Or you could take the easy way out and just use the value reported by BMO, since it is higher and will keep CRA happy if they decide to take a look at your taxes. :subdued:

Edit:
I think the difference between the CG reported by BMO and calculated in ACB.ca is that you have not accounted for the 2019 RoC in ACB.ca, whereas BMO has. 

In 2019, ZCN issued the following RoC (from my 2019 TDDI Summary of Trust Income) that would affect the ACB at your sale date:
2019-04-02: $.0065/share
2019-07-03: $.0065/share
2019-10-02: $.0069/share

Plug those values into your calculations and see how close you get.


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## digitalatlas (Jun 6, 2015)

Yah, I admitted there was egg on my face. Of course I knew a CG would be triggered, but in the moment, I thought it would be on the 200 shares that I bought for 22 then sold for 22.07 later, but in fact I had already bought shares at a lower price a year earlier so it wasn't a matter of 22.07 - 22 because the ACB/unit was lower than 22. But it was the first time I'd sold anything in an NR account, so it was an honest oversight but will not be making this mistake again.

I just tested out exporting from adjustedcostbase.ca and it exports as values. I prefer having formulas so that if I need to make changes, I don't have to make them manually. Also, I figure if it uses formulas, then it helps to check along the way that I'm not making any errors if the numbers agree. 

I had known about the effect that ROC and reinvested dividends had on ACB, but thanks for the reminder to check from the fund's distribution page because it's not on the T3. I just read the Globe article and I checked the ZCN chart and yes, there were no reinvested distributions in 2019, so it shouldn't change my numbers. 

*** started replying but had to do something else, then came back to post but I guess GreatLaker posted something while I was writing my response so didn't see his until after I posted mine
***

Anyway, thanks GreatLaker! I see what you're talking about with using ACB*shares to reduce ACB on the sale. I've reconciled my spreadsheet with adjustedcostbase.ca and got $201.04. Also, I was missing the commission of 9.95 the way my cells were laid out so that's why I got 210.99.

Also, sorry about the typo regarding the T3 on Oct 31, 2018. Actually, the value was reported in the transaction summary as Jan 3, 2019 for TY 2018. I had meant to actually indicated Dec 31, 2018 to denote the end of the year.

I'm expecting a T3 end of March, and they do report all ROC in box 42 but there's also a summary with a breakdown for each ETF. Actually, the website for ZCN reports a ROC of 0.029240. For my 200 shares, that's 5.848, but that's for the whole year, right? Presumably the timing makes a difference and this will work out the difference of the $3.29 that's creating my discrepancy?

Actually I might start using adjustedcostbase.ca. It seems pretty convenient. I'd probably have to do a lot of patchwork in my own spreadsheet otherwise have to use more complex formulas to keep it elegant looking, when the website pretty much does it all already


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## Eclectic12 (Oct 20, 2010)

CG as income from phantom distributions is what will increase ACB.

If adjustedbase.ca is really using ACB/unit *there should be no change* in the ACB/unit when selling. I'm guessing that if a transaction is needed then adjustedcostbase.ca is really using total ACB.


Simple example, own 100 units with an ACB/unit of $25 then sell 40 units. ACB/unit is still $25 ... until a buy, RoC income or phantom distribution income changes the ACB. The sale itself does not change the ACB/unit. Note that the sale commission is deducted as part of the CG/CL, not the ACB calculation.

Where one is using total ACB, before seling total ACB = $2500 for 100 units. Selling changes the ACB as you've got less units left. Changed ACB after selling 40 units is old total ACB ($2500) - ACB for units sold = $2500 - (.4 x 2500) = $2500 - $1000 = $1500.


Cheers


*PS*
This illustrates why I don't like using total ACB. There's an extra calculation where the per unit version does not have one.


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## GreatLaker (Mar 23, 2014)

digitalatlas said:


> I'm expecting a T3 end of March, and they do report all ROC in box 42 but there's also a summary with a breakdown for each ETF. Actually, the website for ZCN reports a ROC of 0.029240. For my 200 shares, that's 5.848, but that's for the whole year, right? Presumably the timing makes a difference and this will work out the difference of the $3.29 that's creating my discrepancy?
> 
> Actually I might start using adjustedcostbase.ca. It seems pretty convenient. I'd probably have to do a lot of patchwork in my own spreadsheet otherwise have to use more complex formulas to keep it elegant looking, when the website pretty much does it all already


In case you did not see the edits I made on my post above, I already received a T3 for ZCN. 

In 2019, ZCN issued the following RoC (from my 2019 TDDI Summary of Trust Income) that would affect the ACB at your sale date:
2019-04-02: $.0065/share
2019-07-03: $.0065/share
2019-10-02: $.0069/share
(Plus another one of .0093/share for Q4 but this one would not affect your sale in Oct.)

If you plug those values into your calculations it is within $.01 of what BMO reports... probably a rounding error. 

I really like acb.ca, and the help explanations are excellent.


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## digitalatlas (Jun 6, 2015)

Whoa, first of all, I head left the window open after reading the replies. But then came back later and refreshed the page to see if there were any new replies, and I guess the forum updated its user interface during that time. Everything looks different all of a sudden, I thought I was on another website!



Eclectic12 said:


> Simple example, own 100 units with an ACB/unit of $25 then sell 40 units. ACB/unit is still $25 ... until a buy, RoC income or phantom distribution income changes the ACB. The sale itself does not change the ACB/unit. Note


I figured this statement out after my calculations wouldn't reconcile. But yet, did not realize this for a long time and it was driving me nuts. Thanks. I'm going to look at it in terms of ACB/unit, prefer that, but still need to calculate ACB to get ACB/unit.



GreatLaker said:


> In case you did not see the edits I made on my post above, I already received a T3 for ZCN.
> 
> In 2019, ZCN issued the following RoC (from my 2019 TDDI Summary of Trust Income) that would affect the ACB at your sale date:
> 2019-04-02: $.0065/share
> ...


Thanks GreatLaker! I'll wait for my T3 from BMOIL, and hopefully it spells it out as well as your TDDI one does. But plugging those ROC numbers in, I've reconciled my spreadsheet to show the same $204.33 that's reported by BMO. Thanks so much for everyone's help!

But I think I'm going to start using acb.ca. My spreadsheet looks like it works now, but I dunno where there might be a problem in the future since I'm putting in some manual patches here and there. No reason to re-invent the wheel, especially for now since I don't really expect to make too many transactions.

Do you guys use the free or premium version? I've only got 3 ETFs in the NR account, and plan to pretty much keep it that way for a while for simplicity. Probably the free version works fine for me.


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## GreatLaker (Mar 23, 2014)

I use the free version. I think the paid version was added after I started using it. I have 4 ETFs and 2 mutual funds so it's not too big of a chore. Once I enter the yearend data I download transactions to my own spreadsheet... just in case.

I used to use the spreadsheets from CDS Innovations to get RoC and Reinvested Capital Gains. But then I realized that TD gives me all the info I need, with RoC on the Summary of Trust income and Reinvested Capital Gains on my statements.


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## Eclectic12 (Oct 20, 2010)

digitalatlas said:


> Whoa, first of all, I head left the window open after reading the replies. But then came back later and refreshed the page to see if there were any new replies, and I guess the forum updated its user interface during that time. Everything looks different all of a sudden, I thought I was on another website!


You seem to have done better than me!

I figured out the new interface quickly but then had a couple of days where logging in resulted in either "security error", "password invalid" or "you've been banned".




digitalatlas said:


> ... did not realize this for a long time and it was driving me nuts. Thanks. I'm going to look at it in terms of ACB/unit, prefer that, but still need to calculate ACB to get ACB/unit.


As I say, the tax/investment books I was learning from had total ACB as a step to get to ACB/unit. I had a similar experience trying to figure out the web articles that talked about "ACB" that for me was "ACB/uinit" but their sample calculations were the total ACB flavour.




digitalatlas said:


> ... My spreadsheet looks like it works now, but I dunno where there might be a problem in the future since I'm putting in some manual patches here and there ...


Not sure what you mean by patches.

I've changed column layout, added extra columns but nothing I'd call a patch.




digitalatlas said:


> ... Do you guys use the free or premium version? I've only got 3 ETFs in the NR account, and plan to pretty much keep it that way for a while for simplicity. Probably the free version works fine for me.


Only played with some bogus transactions in the free version to answer some questions.

Maybe some users can comment on how good/bad/worth it the premium version is.

Cheers


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## Eclectic12 (Oct 20, 2010)

GreatLaker said:


> ... But then I realized that TD gives me all the info I need, with RoC on the Summary of Trust income and Reinvested Capital Gains on my statements.


Me too ... though being in the "trust but verify", I'll use the company web site or CDSInnovations to spot check once in a while.


Cheers


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