# iShares 2015 tax characteristics document



## james4beach (Nov 15, 2012)

Has this been posted yet? Where do we find these? Last year's was called: iShares Funds - 2014 Distribution Characteristics

It's critical for ACB tracking because it shows ROC and reinvested distributions on a month-by-month basis. As far as I know it's the only reliable source for this information.


----------



## AltaRed (Jun 8, 2009)

https://www.blackrock.com/ca/indivi...e/2015-final-distribution-breakdown-en-ca.pdf


----------



## scorpion_ca (Nov 3, 2014)

I think you can also get it from CDS Innovations website. 

http://services.cds.ca/applications...s/-EN-LimitedPartnershipsandIncomeTrusts?Open


----------



## james4beach (Nov 15, 2012)

Thanks for the replies - this is great.

Do you know if TD Direct Investing still generates T3s for ETFs? The T3 doesn't have all the info, but with the T3 plus this final distribution document, one has all the info to report ETF taxes.


----------



## AltaRed (Jun 8, 2009)

I would assume every brokerage issues T3s for ETFs. They typically are not released (mailed) until late March.


----------



## james4beach (Nov 15, 2012)

AltaRed check out my other thread with the warning on XIU & XIC. I'm helping my parents out and it looks like they will have several thousand $ of taxable capital gains distributions... big surprise


----------



## humble_pie (Jun 7, 2009)

*beware* might be too strong a word, though. The XIU capital gain is peanuts when translated into dollars & cents.

for example, 1000 shares of XIU means a capital gain of 324.51, of which only 162.26 is taxable, which means tax owing at marginal rate will be less. Tax could be as low as nothing or a few dollars.

an investor owning 10,000 shares of XIU - market value something like $190,000 - would have a gain of 3245.10, of which only 1622.55 would be taxable at marginal rate. This is also peanuts, relatively speaking. This investor doesn't need to *beware* of a minimal capital gain like this - which gain he was likely anticipating anyhow - all he needs to do is merely report it on the gains/loss schedule.

btw the capital gain for XIC is higher because XIC is weighted, therefore more selling, balancing & re-buying goes on.


----------



## AltaRed (Jun 8, 2009)

james4beach said:


> AltaRed check out my other thread with the warning on XIU & XIC. I'm helping my parents out and it looks like they will have several thousand $ of taxable capital gains distributions... big surprise


I am never fussed about such things. Those things will happen from time to time beyond one's control at any particular time in any particular ETF. It depends what happens to stocks within the ETF. If a stock gets taken out such as Tim Horton's, then the ETF must dump that one and replace it with another. 2016 could be a year of no re-invested distributions OR if some of the energy/commodity stocks get taken out by a foreigner, then we will see more of the same.

And as per HP, the numbers are not significant in relative terms.


----------



## dubmac (Jan 9, 2011)

I have CYH (an iShares ETF) that released a special distribution of $3.92992 per unit on Nov 26th 2013, and paid on Dec 3. The ETF is in a non-reg account. There is no transaction in the account that relates to this distribution - the only reference to it can be found on the Ishares website. (I think that the ETF managers had changed the structure of the fund, and generated a capital gain that was passed to unit holders at that time - it was a one-off event)

I drip and reinvest the monthly distribution. I claimed the capital gains in my taxes the following year. I having been "trying" to track the ACB (using a spreadsheet produced by CC, Thanks CC if you are out there).

There is a big difference between the number of shares that I expect in the account, and the number of shares that are actually there! I can not explain the difference without assuming that a transaction has taken place that has not been recorded in the account. How does one manage a case as this one from an ACB point-of-view.?


----------



## AltaRed (Jun 8, 2009)

dubmac said:


> I have CYH (an iShares ETF) that released a special distribution of $3.92992 per unit on Nov 26th 2013, and paid on Dec 3. The ETF is in a non-reg account. There is no transaction in the account that relates to this distribution - the only reference to it can be found on the Ishares website. (I think that the ETF managers had changed the structure of the fund, and generated a capital gain that was passed to unit holders at that time - it was a one-off event)
> 
> I drip and reinvest the monthly distribution. I claimed the capital gains in my taxes the following year. I having been "trying" to track the ACB (using a spreadsheet produced by CC, Thanks CC if you are out there).
> 
> There is a big difference between the number of shares that I expect in the account, and the number of shares that are actually there! I can not explain the difference without assuming that a transaction has taken place that has not been recorded in the account. How does one manage a case as this one from an ACB point-of-view.?


Internally re-invested distributions in an ETF do not result in additional shares (unlike DRIPs that do). They simply increase your ACB.

Cannot comment how to handle it in the CC spreadsheet since I've never used it.


----------



## dubmac (Jan 9, 2011)

AltaRed said:


> Internally re-invested distributions in an ETF do not result in additional shares (unlike DRIPs that do). They simply increase your ACB.
> 
> Cannot comment how to handle it in the CC spreadsheet since I've never used it.



Thanks Alta. 
Do you know whether the increased ACB is my responsibility to track wrt capital gains upon selling said ETF? 
I would assume that it is, and that I would need to call Ishares people on how to record the ACB.


----------



## AltaRed (Jun 8, 2009)

dubmac said:


> Thanks Alta.
> Do you know whether the increased ACB is my responsibility to track wrt capital gains upon selling said ETF?
> I would assume that it is, and that I would need to call Ishares people on how to record the ACB.


Yes, it is your responsibiilty to track it and to use the right ACB when you sell the ETF to calculate cap gains (losses). Ishares folks have nothing to do with it, nor do they track it, nor do they care what you do about it. Simply add the re-invested distribution amount to your ACB.

Added: With an ETF, you could several adjustments to your ACB over time. You will have ACB additions due to DRIPs, you could ACB decreases due to ROC and you could have ACB increases due to these phantom re-invested distributions that only show up on the provider's website.

Generally speaking, the major discount brokerages do a pretty good job of adjusting your book value (ACB) over time for changes due to DRIPs, and ROC, but I suspect only a few make adjustments for phantom re-invested distributions. As always, you are solely responsible for tracking your ACB.

Example for X ETF:

Early 2015 - Buy 100 shares at $10 - ACB is $1000+buying commission = $1010.
Mid-2015 - Buy 2 additional units due to DRIP at $12 - Add $24 to ACB . Now have 102 shares at cost of $1034.
End 2015 - ROC of $22 on T3 tax slip you get end of this month, ACB is now 102 shares at $1012.
End 2015 - Re-invested distribution of $30 on the provider's website. ACB is now 102 shares at $1042.


----------



## dubmac (Jan 9, 2011)

AltaRed said:


> Yes, it is your responsibiilty to track it and to use the right ACB when you sell the ETF to calculate cap gains (losses).
> Generally speaking, the major discount brokerages do a pretty good job of adjusting your book value (ACB) over time for changes due to DRIPs, and ROC, but I suspect only a few make adjustments for phantom re-invested distributions. As always, you are solely responsible for tracking your ACB.


I get it. Thanks for your time Alta - much appreciated. I know what to do now.


----------



## james4beach (Nov 15, 2012)

The T3 can sometimes aggregate information from several ETFs, so it may not be the best source for the return of capital information. I personally would not use the T3's ROC information, instead I'd go straight to the real source:

This PDF link that AltaRed posted at the start of this thread is the vital source of information. This is the data you need to do your ACB adjustments each year.

See this taxtips page. When you hold an ETF, you must track the ACB. The broker tries to do it too, and their number may be good enough. In my years at TD Direct Investing, their cost base number (ACB) matches my own calculation, even with reinvested distributions so I think it's pretty solid. But I track it myself.

For tracking ACB, I ignore the T3 and I use this iShares document. The cost base is adjusted by:

*+ add "Reinvested Distribution Per Unit"
- subtract "Return of Capital"
*

This iShares document is critical; the ACB is what is required when you eventually sell the units and report capital gain/loss.

All of this above is not to be confused with another type of capital gain which occurs, which is an *annual* capital gain distribution that the ETF may create. That one shows up in the "Capital Gains" column of the iShares sheet and will be T3 Box 21. This has to be entered on line 176 of Schedule 3.

Here's the overall methodology I use:

1. Grab the iShares final distribution document every year
2. Use the "reinvested distribution" and "return of capital" columns to adjust ACB
3. Compare my ACB against the broker's cost base as a checking step
4. Use the T3 slips to report dividends and this year's capital gains distribution ... ignore the ROC, done more accurately in step 2


----------



## GreatLaker (Mar 23, 2014)

There is a good explanation on iShares site on the difference between cash distributions and reinvested distributions:
http://www.blackrock.com/ca/individual/en/resources/faqs/distributions-and-tax
(You may have to click on the + sign beside "Q. What is the difference between cash distributions and reinvested distributions?" to expand it.)


----------



## james4beach (Nov 15, 2012)

I'm trying to update ACBs for ETFs.

Can someone help me find the most recent (2016) tax characteristics documents for both iShares and BMO? Like everyone else updating ACBs, I need the ROC and reinvested distribution amounts, possibly with monthly breakdowns for the ETFs where it is spread across the year.

*Edit*: I used AltaRed's earlier link and renamed 2015 to 2016 in the URL, getting
https://www.blackrock.com/ca/indivi...e/2016-final-distribution-breakdown-en-ca.pdf

Does anyone know how I can find the BMO one?


----------



## AltaRed (Jun 8, 2009)

Go to the ETF of interest and click on the "tax and disttribution" tab, and then select year. Example: https://www.bmo.com/gam/ca/advisor/...ns#fundUrl=/fundProfile/ZST#tax&distributions


----------



## james4beach (Nov 15, 2012)

AltaRed said:


> Go to the ETF of interest and click on the "tax and disttribution" tab, and then select year. Example: https://www.bmo.com/gam/ca/advisor/...ns#fundUrl=/fundProfile/ZST#tax&distributions


Thanks. I see the reinvested distributions per distribution, and I see the Return of Capital total for the year (bottom table) but aren't ROC spread out in the year? In the iShares data you see ROC and Reinvested Distributions broken down by date of distribution.

I also used "Download Distribution History (Excel)" but again, ROC isn't described here. So how does one calculate ACB if the number of shares changes during the year? Should ROC be assumed to land entirely in the December distribution?


----------



## james4beach (Nov 15, 2012)

Using your ZST link for example, say you bought it for $22.70 on December 20, 2016. Initially, your ACB per share is 22.70.

We can see the reinvested distribution on Dec 23, so your ACB goes up by 0.040 to $22.74.

Now how about the ROC (shown as 0.049209 total for the year). When did that ROC occur? Do I adjust the ACB down by the entire amount (22.74 - 0.049209 = 22.690791)? That is only correct if the Dec distribution was the only one that had ROC all year.

I think more granular information is needed to properly calculate ACB.


----------



## AltaRed (Jun 8, 2009)

The ROC would have occured during random periods in the year, and you do not know which ones, so you cannot use the total number on the website. That is why the brokerage gives you the Summary along with your T3 slip, so you know when the various bits occurred and BMO would have had the December amount of ROC for that ETF on their 2016 Summary (if you owned ZST for example). Always look at the Summaries that accompany the T3 tax slips.

The website data works when you have a static number of shares for the entire calendar year.


----------



## james4beach (Nov 15, 2012)

OK, thanks. Also beware, T3 tax slips (on their own) don't have all the info you need, so one has to combine information from the T3 along with this material on BMO's web site. And yes if the number of shares is constant through the year, this will be easy to calculate.

This older thread on ACB for BMO ETFs has much more info:
http://canadianmoneyforum.com/showthread.php/99026-ACB-tracking-with-BMO-ETF


----------

