# ACB tracking with BMO ETF



## james4beach (Nov 15, 2012)

How is a BMO ETF holder supposed to track the ACB?

iShares puts out a tax characteristics document each year (in PDF format) that lets me read the return of capital and reinvested distributions. It's very easy from this to track the ACB number. And of course it's evidence I can keep for future CRA disputes.

I thought that BMO released a similar document, the "bmo etf tax parameters" like this one from 2014
https://www.bmo.com/assets/gam/docs/bmo_etf_tax_parameters_cash_flow_advisor_etf_eng.pdf

Where on earth is the 2015 document? How can it be August 2016 and they haven't posted one for 2015 yet?

I also read something about finding this information in a spreadsheet from CDS Innovations, but that was obscure to locate, and it contains macros (which I can't open on my Linux system). Why the hell is it so hard to find this vital information that *everyone* needs for ACB tracking? It absolutely should be in PDF format, so you can easily view and print it for your files.

You'd think their marketing department would know this is important. I'm thinking of advising that my parents shift nearly 100K into a BMO ETF, but unless I get confident that I can track the ACB easily, I'm not going to do it. I need simple documentation that's easily locatable, that is released in a timely format every year, and I don't want to rely on a third party to do it. (The brokerage already tracks ACB and I need to be able to independently calculate it myself).


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## Market Lost (Jul 27, 2016)

james4beach said:


> How is a BMO ETF holder supposed to track the ACB?
> 
> iShares puts out a tax characteristics document each year (in PDF format) that lets me read the return of capital and reinvested distributions. It's very easy from this to track the ACB number. And of course it's evidence I can keep for future CRA disputes.
> 
> ...


According to BMO's site, they issue you a T3, which you then would use to correct your ACB at the end of the year.


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## Woz (Sep 5, 2013)

On CDS Innovations you can view the data on Linux without macros. You just need to unhide the hidden sheet. In LibreOffice right click the Macros sheet tab --> Show.


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## james4beach (Nov 15, 2012)

Market Lost said:


> According to BMO's site, they issue you a T3, which you then would use to correct your ACB at the end of the year.


I don't think the T3 provides enough info, since it lumps everything together. To properly calculate ACB you need that document that shows ROC & reinvested amounts broken down month-by-month. Imagine you place a trade at a certain month... I've tried dissecting this info from T3's before and it just isn't clear enough. You don't get that time granularity you need to properly do the ACB calculation.


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## james4beach (Nov 15, 2012)

Woz said:


> On CDS Innovations you can view the data on Linux without macros. You just need to unhide the hidden sheet. In LibreOffice right click the Macros sheet tab --> Show.


Thanks, that worked with LibreOffice... awesome! This is the 2015 month-by-month that I was looking for. Do they post these in a timely fashion so you can actually see this before you file your 2015 tax return?

The spreadsheets are a bit funky; I see that distribution breakdowns are by %. Handling this stuff is ridiculous. Look at the bizarre process you have to go through to interpret this information correctly, described in this Canadian Couch Potato article:
http://canadiancouchpotato.com/2014/04/07/tax-tips-for-bmo-etf-investors/

Does the ETF industry seriously expect us to do this? This really makes me question whether it's worth investing with ETFs. One can not reasonably expect an investor to properly interpret these documents to track ACB.


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## james4beach (Nov 15, 2012)

An insightful comment in that Canadian Couch Potato article is: *It’s kind of ironic that we Couch Potato investors are looking for a “simple” approach to investing and we are rewarded with this kind of complexity.*

I'm dismayed by this too. There is nothing simple about tracking ACB in non-registered accounts and I think that applies to both ETFs and mutual funds. And heaven forbid you get audited and must show CRA your evidence... ridiculous!


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## Spudd (Oct 11, 2011)

You can get a premium membership to adjustedcostbase.ca and then import the tax information from CDS Innovations in one click to track your ACB. It's $39 per year, which is kinda pricey, but I decided it was worth it to save all the effort.


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## scorpion_ca (Nov 3, 2014)

I made a mistake while calculating ACB for ZPR at the beginning of this year as BMO reports the breakdown in percentage. I sent an email to Justin Bender and here is his response -

"BMO reports the breakdown in percentage amount, so 7.70480 us actually 7.70480%. 

For example, in order to determine the ROC dollar amount per unit for the January 2016 distribution of ZPR, multiply the Total Cash Distribution ($) Per Unit of 0.04800 by 7.70480%, or

0.04800 × 0.077048 = 0.0036983 ROC per unit

Hope this helps!"


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## Woz (Sep 5, 2013)

The CDS sheets are updated as soon as the info’s reported by the funds. Tends to be the week leading up to the T3/T5 filing due dates (end of Feb/end of March).

I’m with you that it’s a pain to track ACB. I’m sure there are many who don’t adjust their ACB at all. There’s a box for the amount resulting in cost base adjustment on your T3 (box 42), but brokerages (at least mine) only seem to put the RoC there. It’d be nice if they included the non-cash distributions.

Also for the breakdowns by %/$ on CDS be sure to check the calculation method (box G15) before using the numbers as it varies by fund.


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## Market Lost (Jul 27, 2016)

james4beach said:


> I don't think the T3 provides enough info, since it lumps everything together. To properly calculate ACB you need that document that shows ROC & reinvested amounts broken down month-by-month. Imagine you place a trade at a certain month... I've tried dissecting this info from T3's before and it just isn't clear enough. You don't get that time granularity you need to properly do the ACB calculation.


The T3 should only show a ROC in the non-taxable box - I forget the one off my head. The capital gains is your reinvested amounts that adds to your ACB. 

I'm not sure why you need a month-by-month break down, unless you are actively buying and selling the ETF all the time. Even if this were to be the case, the T3 should capture the proper reinvested and returned amounts. I used to do this all the time, do you have some example amounts I can work on?

*edit, just saw the link for the CCP site, and it's Box 42 for the non-taxable ROC.


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## Market Lost (Jul 27, 2016)

james4beach said:


> An insightful comment in that Canadian Couch Potato article is: *It’s kind of ironic that we Couch Potato investors are looking for a “simple” approach to investing and we are rewarded with this kind of complexity.*
> 
> I'm dismayed by this too. There is nothing simple about tracking ACB in non-registered accounts and I think that applies to both ETFs and mutual funds. And heaven forbid you get audited and must show CRA your evidence... ridiculous!


I've been through a CRA review before in a similar situation with a previous client. All that was required was to show that the T3 info was properly recorded.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> How is a BMO ETF holder supposed to track the ACB? ...


Which particular one?

When I pick some samples at http://www.bmoetfs.ca/, then drill into a particular ETF - there is a bar for "Overview", "Price & Performance", "Tax & Distributions" or "Holdings". Overview is the default selected one.

Switch this to "Tax & Distributions". 

Use the drop box to select the year, such as "2015".

The bottom chart populates with the breakdown for the year. It is also available for download to an Excel spreadsheet, where the spreadsheet has multiple years in it - from the "Download Distribution Tax (Excel)" icon.


The default for the year is 2016 so the distribution chart is partially populated and the yearly tax breakdown is blank. I'm not sure when the annual breakdown is published but suspect it may be around March or April of the following year.


Cheers


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## Eclectic12 (Oct 20, 2010)

Market Lost said:


> The T3 should only show a ROC in the non-taxable box - I forget the one off my head...


I'll have to check mine ... if it is labelled "non-taxable" this is misleading. 

My understanding is that where one's ACB is zero or positive, the RoC should be reducing one's ACB. This is deferring the capital gains taxes that will eventually be paid. Where the ACB turns negative, the investor is supposed to report the RoC payments as a capital gain ... until another transaction raises the ACB.




Market Lost said:


> ... The capital gains is your reinvested amounts that adds to your ACB ..


My understanding is the capital gains are the part of the cash paid that is classed as capital gains.

What will raise the ACB is usually one of two things. DRIPs that automatically convert cash paid into more units or re-invested distributions where the number of units was held constant (i.e. phantom distributions).



> Problem was, the vast majority of the distribution wasn’t paid in cash but was reinvested by the fund. What’s more, *the amount that was reinvested wasn’t broken out separately on his T3 tax slip or on his brokerage statement.*


http://www.theglobeandmail.com/glob...by-phantom-etf-distributions/article18225076/

BMO seems to be reporting phantom distributions as part of individual payments where the column "Reinvested Distribution Per Unit" has note 2 that "Distributions by the BMO ETF that are not paid in cash should be accounted for by investors for tax purposes by adding the distribution amount to the adjusted cost base of the units held."




Market Lost said:


> I'm not sure why you need a month-by-month break down, unless you are actively buying and selling the ETF all the time ...


Agreed.





Market Lost said:


> Even if this were to be the case, the T3 should capture the proper reinvested and returned amounts. I used to do this all the time, do you have some example amounts I can work on?


The T3 will show the increased amounts for having bought additional units via a DRIP but as I understand it, will not include the units bought via a DRIP or additional purchase, nor the phantom distributions. All three of these would mean the ACB needs to be updated.


Cheers


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## james4beach (Nov 15, 2012)

Market Lost said:


> the T3 should capture the proper reinvested and returned amounts. I used to do this all the time, do you have some example amounts I can work on?


This earlier thread has a discussion on whether the T3 info is enough to track ACB Properly
http://canadianmoneyforum.com/showthread.php/17979-Tracking-that-pesky-ROC-using-T3-slips

The point is made in that thread that the T3 does not always show reinvested distributions. This is supported by the taxtips web page
http://www.taxtips.ca/personaltax/investing/taxtreatment/etfs.htm

That above source also illustrates the problem of using the T3; these do not reliably show reinvested distributions in the same sense as the ACB adjustment calculation needs. Instead you get a convoluted number that you may or may not be able to reverse-engineer into the ACB's sense of reinvested distributions



> The amount of reinvested distributions from an ETF are not identified separately in a box on your T3, but the reinvested distribution per share might be detailed in the footnotes box, or on your T3 summary as a non-cash distribution. Reinvested capital gains distributions will be included as capital gains on your T3, but a portion of the capital gains reported on the T3 may have been part of a cash payment.


So the T3 does not reliably capture reinvested distributions. It may also lump multiple securities distributions together. In that thread pwm says that tracking ACB based on the T3 is practically impossible due to all the various share actions that can occur over time.

And that's what I mean. This isn't simply a matter of reading the T3 and transcribing the information; from the information I've seen, while ROC may be reported, the reinvested distributions are either NOT reported, or they are indirectly reported -- which is the wrong number to use anyway.


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## Market Lost (Jul 27, 2016)

Eclectic12 said:


> I'll have to check mine ... if it is labelled "non-taxable" this is misleading.
> 
> My understanding is that where one's ACB is zero or positive, the RoC should be reducing one's ACB. This is deferring the capital gains taxes that will eventually be paid. Where the ACB turns negative, the investor is supposed to report the RoC payments as a capital gain ... until another transaction raises the ACB.


My mistake, I was just going off memory and it's getting short these days . It's box 42, and is other income that relates to ACB. It's not taxable on your tax return, which is where I mixed things up.



> My understanding is the capital gains are the part of the cash paid that is classed as capital gains.
> 
> What will raise the ACB is usually one of two things. DRIPs that automatically convert cash paid into more units or re-invested distributions where the number of units was held constant (i.e. phantom distributions).
> 
> ...


This depends on the fund, and I was going off the experience I had when I did taxes in wealth management. We used to issue T3 slips for our clients as we managed their trusts. When assets were sold and produced a gain, the funds were reinvested, so there was no disbursement, just an increase in the ACB. Many funds I've seen since this time do the same thing. 





> The T3 will show the increased amounts for having bought additional units via a DRIP but as I understand it, will not include the units bought via a DRIP or additional purchase, nor the phantom distributions. All three of these would mean the ACB needs to be updated.
> 
> 
> Cheers


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## Market Lost (Jul 27, 2016)

james4beach said:


> This earlier thread has a discussion on whether the T3 info is enough to track ACB Properly
> http://canadianmoneyforum.com/showthread.php/17979-Tracking-that-pesky-ROC-using-T3-slips
> 
> The point is made in that thread that the T3 does not always show reinvested distributions. This is supported by the taxtips web page
> ...


I must admit this is new to me. I worked in a department where we used to manage trusts and we would issue the T3s. I also did a few thousand tax returns over my career, and I didn't run into this issue, but I left this work behind before ETFs became as popular as they are now. The mutual funds all were rather straight forward, and even during reviews I never ran into any issues. Then again, maybe Rev Can was just as confused as anyone else.


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## james4beach (Nov 15, 2012)

It could be that this entirely new to ETFs. According to that taxtips link, ETFs are different than mutual funds because the ETFs have reinvested distributions that are not explicitly spelled out on T3s. These are hidden and not visible unless you go looking for them.

When you did tax returns, before the rise of ETFs, you would not have encountered this with mutual funds.

For those people using T3s for ACB. Sure, you won't get in trouble doing that, because you're over-paying taxes. If you're not taking into account reinvested distributions, there is no way to realize this -- but you are paying more taxes than you are required to.


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## Eclectic12 (Oct 20, 2010)

Market Lost said:


> My mistake, I was just going off memory and it's getting short these days . It's box 42, and is other income that relates to ACB. It's not taxable on your tax return, which is where I mixed things up ...


As I say, everything I have read says only the investor (or their agent) who has re-calculated their ACB knows whether the RoC paid is going to result a deferred capital gain when the units are sold or an immediate capital gain that is reported in all or in part on that particular tax year's tax return.



> ... it is possible that years of ROC distributions will reduce the ACB to zero. Any ROC received after ACB reaches zero must be reported in the tax return for the year of receipt as a capital gain ...


http://howtoinvestonline.blogspot.ca/2010/07/return-of-capital-separating-good-from.html

http://www.taxtips.ca/personaltax/investing/taxtreatment/incometrusts.htm

Or if you are a fan of CRA's web site ....


> If the ACB of the trust units is reduced below zero during the tax year, the negative amount is deemed to be a capital gain in the year ... Enter the amount of the capital gain on line 132 of your Schedule 3 (place a zero on line 131 since there is no actual sale of units).


http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-e.html#P1180_82238


If all of this is not confusing enough, my broker rolls multiple investments that pay RoC into a single T3 form. Should say XIC be one of them, where the last couple of RoC payments turned the ACB negative so that those small amounts need to be reported as a capital gain - then the number than needs to be reported might be tiny compared to what could be five different investments, all summed up in box 42 of a single T3 form.





james4beach said:


> It could be that this entirely new to ETFs. According to that taxtips link, ETFs are different than mutual funds because the ETFs have reinvested distributions that are not explicitly spelled out on T3s. These are hidden and not visible unless you go looking for them.


I believe this is the case as I seem to recall reading that MFs would give more units which is more obvious. The ETF on the other hand, gives the gain then re-consolidates the units so there is nothing beyond the reporting to indicate a change.


Cheers


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## Market Lost (Jul 27, 2016)

james4beach said:


> It could be that this entirely new to ETFs. According to that taxtips link, ETFs are different than mutual funds because the ETFs have reinvested distributions that are not explicitly spelled out on T3s. These are hidden and not visible unless you go looking for them.
> 
> When you did tax returns, before the rise of ETFs, you would not have encountered this with mutual funds.
> 
> For those people using T3s for ACB. Sure, you won't get in trouble doing that, because you're over-paying taxes. If you're not taking into account reinvested distributions, there is no way to realize this -- but you are paying more taxes than you are required to.


This seems to be the case. I remember that each fund would issue a statement that showed exactly what was paid, and how to calculate the ACB. Still doesn't mean it's worth the extra fees, though.


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## james4beach (Nov 15, 2012)

Let me recap here ... yes the RoC shows up on the T3, but the ETF's reinvested distributions (aka phantom distributions) do not.

As the reinvested distributions are just as critical an adjustment as RoC, and occur frequently across all kinds of ETFs, that means that T3 slips alone are not enough to track the ACB. If you're only using T3s for ETF tracking, then you might overpay taxes substantially. An example, our XSP holding has an ACB of 34.8 k with reinvested distributions (done properly) but only 29.7 k if you omit them. Your penalty for omitting the reinvested distributions? $5100 extra in capital gains which the CRA will never correct you on, because nobody there will calculate this properly either.

We're all in the same boat. Calculating this stuff is very difficult and nobody knows how to do it, so I'm just trying to brainstorm.

As far as I can tell, for BMO ETFs, the CDS Innovations (or one of those web site services) are the only way you can calculate this yourself. For iShares, you can use the annual tax characteristics document which I think is easier to work with than CDS Innovations. And you can always check against the broker's records. Am I covering all the methods?

I want to make sure I'm using the right methodology and also want to make sure that I have the collateral in case the CRA disagrees. Showing them the broker's statements will probably not cut it. So what can I show CRA? A print-out of the CDS Innovations spreadsheet, combined with scribble notes showing how I convert their percents to dollars? This makes me nervous. I want to report taxes accurately, but I also want to be able to back up my claims.


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## Woz (Sep 5, 2013)

I wouldn't be nervous about the CDS spreadsheets. The CRA would definitely accept it as a valid source. CDS is owned by the TMX group, the people who run the Toronto Stock Exchange and are mandated by the Canadian Government to collect this information.

http://www.fin.gc.ca/n07/07-058-eng.asp


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> Let me recap here ... yes the RoC shows up on the T3, but the ETF's reinvested distributions (aka phantom distributions) do not.
> 
> As the reinvested distributions are just as critical an adjustment as RoC, and occur frequently across all kinds of ETFs, that means that T3 slips alone are not enough to track the ACB. If you're only using T3s for ETF tracking, then you might overpay taxes substantially ...


Yes ... plus one needs to consider that the number of ETFs distributing phantom distributions looks like it is increasing. According to the article that has a link below, when comparing 2011 to 2012, the number of funds that did so almost doubled (from 45 to 74).

For those like me who have held popular iShares funds for a long time, two of those have phantom distributions totaling $7 a unit (likely higher now as it's a 2013 article).

http://www.bertmulder.com/avoid-paying-tax-twice-on-etf-distributions/


It doesn't matter to me for now as I have them in registered accounts but some of them will have to be de-registered at some point.


Cheers


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## Eclectic12 (Oct 20, 2010)

Woz said:


> ... I’m with you that it’s a pain to track ACB. I’m sure there are many who don’t adjust their ACB at all. There’s a box for the amount resulting in cost base adjustment on your T3 (box 42), but brokerages (at least mine) only seem to put the RoC there. It’d be nice if they included the non-cash distributions ...


Trouble is ... until the consumer revolts, who has any incentive to change?

The brokerages won't want to spent the extra time/effort and CRA/the Feds are happy to get extra capital gains taxes to help with their pet projects.




james4beach said:


> ... As far as I can tell, for BMO ETFs, the CDS Innovations (or one of those web site services) are the only way you can calculate this yourself. For iShares, you can use the annual tax characteristics document which I think is easier to work with than CDS Innovations. And you can always check against the broker's records. Am I covering all the methods? ...


You seem to have missed post #12.

Where BMO's web site is providing a "for that year" breakdown of the tax types *and* the same for the phantom distributions - what's missing that makes it so hard to calculate?

Or are you saying you don't trust the numbers from BMO web site?


Cheers


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## Numbersman61 (Jan 26, 2015)

I found that calculating ACB in ETFs was a pretty complex exercise. My solution - restrict investing in ETFs to registered accounts.


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## Eclectic12 (Oct 20, 2010)

Getting the information on a timely basis is the main issue I've had ... the math is tedious but nothing a spreadsheet can't handle, when designed with some planning.

The phantom distributions are what's unique to ETFs but unless I'm missing something, as outlined in post #12 ... BMO seems to have handled it reasonably well.


Cheers


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## james4beach (Nov 15, 2012)

Eclectic12 said:


> Getting the information on a timely basis is the main issue I've had ... the math is tedious but nothing a spreadsheet can't handle, when designed with some planning.
> 
> The phantom distributions are what's unique to ETFs but unless I'm missing something, as outlined in post #12 ... BMO seems to have handled it reasonably well.


I missed that post, thanks for repeating it. You're saying to look at the Tax tab under the BMO ETF web pages.

You're right, the phantom/reinvested distribution is shown here and can be downloaded in their nice spreadsheet -- this is great. This is the only place I have seen these clearly summarized!

And return of capital is shown in the summary table for the year, which is also good. The only thing this does not capture is which month the RoC occurred in. In the case of iShares, this has monthly granularity so if you buy or sell during the year you'll need to know which month the RoC occurred. Do you know if BMO's funds work differently, perhaps ROC is just a single year-end event?

But yes I agree, their Tax tab shows all the detail you need for Reinvested Distributions. Yay!


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> I missed that post, thanks for repeating it. You're saying to look at the Tax tab under the BMO ETF web pages.
> 
> You're right, the phantom/reinvested distribution is shown here and can be downloaded in their nice spreadsheet -- this is great. This is the only place I have seen these clearly summarized!


Cool ... when the views disconnect so much, I wonder if I missed something. :biggrin:




james4beach said:


> And return of capital is shown in the summary table for the year, which is also good. The only thing this does not capture is which month the RoC occurred in. In the case of iShares, this has monthly granularity so if you buy or sell during the year you'll need to know which month the RoC occurred. Do you know if BMO's funds work differently, perhaps ROC is just a single year-end event?


I wouldn't expect they'd be yearly ... but will have to check as I don't own any of them.

However, I get the granularity from the broker summary statement for the T3. For example, a particular T3 might roll up three investments but the associated details sheet will show the info. For example, for investment #1 on Feb 25th - there are two entries. The first is box 49 of $12 (i.e. dividends) and the second is box 42 (i.e. RoC) of $72.


Cheers


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## james4beach (Nov 15, 2012)

This might be useful context. I basically manage (with allocations they determined) an ETF portfolio for my parents. I posted some details earlier... over 9 years it's performed better than most mutual funds they own and they want me to keep running it. As part of helping them out with this, I'm also handling their ACB reporting to make life easier. So far this has gone well. They would not bother with the discount brokerage unless I was helping them out with this and I'm desperately trying to keep them away from Investors Group high MER funds.

Because I live in a different city, and can't easily see their T3s, I want a way to do the ACB tracking that I can do with data available to me.

Luckily, the share holdings are very static, so the RoC data I can get from the BMO web site (not monthly) plus the reinvested distribution data should be enough for me to keep on top of ACB. iShares funds are already ok; their annual tax characteristics document has everything I need.

Some time this year I plan to switch a bunch of their fixed income into ZDB, a tax efficient bond fund from BMO, and before I got them into a BMO fund I wanted to be crystal clear on how I'd track the ACB.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> ... Because I live in a different city, and can't easily see their T3s, I want a way to do the ACB tracking that I can do with data available to me ...


Can they get their T3's from the broker as PDFs by signing up with the broker for electronic delivery of their tax documents?

Then either by them granting signin access or dumping the PDFs to a CD then sending it to you (or whatever delivery method the two of you are comfortable using) - the location shouldn't be an obstacle.


If they have the T3's & summary documents in a filing cabinet in paper form - it would probably take some co-ordination but a scanner would give you the back history. Having electronic versions going forward plus the BMO web site should make it manageable, though tedious.


Cheers


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## Mike-RetireEarly (Feb 28, 2016)

Not sure if you've looked at the website www.adjustedcostbase.ca for tracking the ACB. If nothing else they have some interesting info in their blog. The following link discusses the capital gains phantom distributions: 
http://www.adjustedcostbase.ca/blog/phantom-distributions-and-their-effect-on-adjusted-cost-base/

I think you really need to use both the T3 / T5 and the CDS Innovations info to correctly track the ACB.

For your parents, they could set you up as their representative for their CRA My Account, then you can review their T3 / T5 online.


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## Eclectic12 (Oct 20, 2010)

Mike-RetireEarly said:


> ... I think you really need to use both the T3 / T5 and the CDS Innovations info to correctly track the ACB.


From what I recall of the write up of how to find phantom distributions from the CDS Innovations info - I am wondering why one would want to add to one's work instead of using BMO's nice table?

AFAICT ... everything needed except the breakdown of when specific amounts of RoC was paid is on BMO's web site. The T3 summary info or the CDS Innovations can help with this but will only be required where there are multiple buys in the year or a DRIP.




Mike-RetireEarly said:


> ... For your parents, they could set you up as their representative for their CRA My Account, then you can review their T3 / T5 online.


It is good to know about this relatively recent choice.

For those who need the totals, this is good. 

OTOH, the OP says he needs the date & amount of RoC paid during the year. Unless CRA is also providing the broker summary document that breaks down the totals, by investment ... it might not suffice for his needs.

Can anyone confirm that the broker summary documents are included in addition to the T3 that was issued?

Cheers


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## james4beach (Nov 15, 2012)

Eclectic12 said:


> From what I recall of the write up of how to find phantom distributions from the CDS Innovations info - I am wondering why one would want to add to one's work instead of using BMO's nice table?


I tend to agree with you here. I still can't even view the CDS Innovations table on OpenOffice. (I can on LibreOffice by un-hiding the Macro sheet, but that doesn't work in OpenOffice). In comparison, BMO's table is nice and simple -- beautiful.

The ROCs are a minor concern in my case because shares are purchased once and held for long periods. It was really the reinvested distributions that had me worried, and BMO's table answers that.


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## Mike-RetireEarly (Feb 28, 2016)

I suppose I find it easier, less work, to log onto the CDS website and then grab the CDS spreadsheet for each ETF that I need, rather than going to the different ETF companies websites and finding that information. Maybe it's just because that's how I first started to track it. I also find that the CDS spreadsheet is easier to understand and follow than the info from BMO or iShares, because it has all of the information I need. From the CDS spreadsheet you can see the breakdown of each distribution (return of capital, capital gain, etc) and if they are non cash, which is more helpful than just a yearly breakdown that BMO provides.

For example in 2014 ZLB had a non cash Reinvested Distribution Per Unit at the end of December of $0.628834, of which it was made up of a Capital Gain of 99.2047% and 0.7953% was Return of Capital. You could figure this out from the T3 Summary and the BMO website, since BMO does tell you what the reinvested distribution amount was for December 2014. Looking at the CDS spreadsheet it's very clear that ZLB really did have non cash RoC.

I don't believe that the CRA My Account has the trading summary info from the broker, just the T slips. Between the T slips from the CRA and the CDS spreadsheet he can see the breakdown or each distribution. Although it would be better to also have the summary from the broker to verify against.


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## Woz (Sep 5, 2013)

The reason to use the CDS Innovations spreadsheets is because they’re the definitive source of truth when it comes to the distributions. There have been instances of ETF providers providing incorrect information on their websites. See http://www.moneysense.ca/save/taxes/tax-tip-for-vanguard-etf-investors/ about how Vanguard was misreporting their tax characteristics.


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## james4beach (Nov 15, 2012)

Yes unfortunately there has been more than one instance of ETF providers giving incorrect info. I've experienced that first-hand.

Interesting that CDS Innovations is the definitive source. Perhaps the best strategy is rely on these as they do in fact show all distributions.

However they really need to change that format. Their document format does not have good compatibility. Using macros and proprietary formats for this purpose is considered very bad style in computing and data sharing.


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## james4beach (Nov 15, 2012)

Seriously, how the hell does one even open these CDS Innovations spreadsheets? Now I'm trying it with Microsoft Excel 2011. When I open the spreadsheet, I get a question about macros. I said to Enable macros, and now Excel tells me: "Compile error in hidden module: ThisWorkbook". The resulting spreadsheet is blank -- nothing visible.

Even if you manage to open these, I doubt that these are going to work as proof/collateral for the long term since they are not easy to open. You really think the CRA is going to be able to open one of these spreadsheets 10 years in the future?

I have a masters degree in Computer Engineering.


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## GreatLaker (Mar 23, 2014)

james4beach said:


> Seriously, how the hell does one even open these CDS Innovations spreadsheets? Now I'm trying it with Microsoft Excel 2011. When I open the spreadsheet, I get a question about macros. I said to Enable macros, and now Excel tells me: "Compile error in hidden module: ThisWorkbook". The resulting spreadsheet is blank -- nothing visible.
> 
> Even if you manage to open these, I doubt that these are going to work as proof/collateral for the long term since they are not easy to open. You really think the CRA is going to be able to open one of these spreadsheets 10 years in the future?
> 
> I have a masters degree in Computer Engineering.


It works for me on 2 computers, both Win10, one Excel 2010, the other Excel 2013.

1) Opens with a yellow banner that says "Protected View Be careful bla blah blah Enable Editing", and below that it says in red "Sorry you must enable macros...". At this point i just click "Enable Editing" in the top yellow banner.

2) Another yellow banner that says "Security Warning Macros have been enabled with the same red "Sorry you must enable macros". At this point click "Enable Content" and the sheet opens. I did not have to go into options or settings to enable macros at all, just click the Enable buttons on the sheet.

Is that not your experience?

Also I think someone else mentioned upthread that BMO reports in %, whereas iShares and Vanguard report in $.


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## scorpion_ca (Nov 3, 2014)

james4beach said:


> I have a masters degree in Computer Engineering.


After reading your post, I just remember this FedEx advertisement.

https://www.youtube.com/watch?v=NcoDV0dhWPA


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## Eclectic12 (Oct 20, 2010)

Mike-RetireEarly said:


> I suppose I find it easier, less work, to log onto the CDS website and then grab the CDS spreadsheet for each ETF that I need, rather than going to the different ETF companies websites and finding that information.


One site is good ... though I'm not sure I am switching anytime soon as I am having a hard time finding the few I would need.
Or does the login let you set some filters? 





Mike-RetireEarly said:


> Maybe it's just because that's how I first started to track it. I also find that the CDS spreadsheet is easier to understand and follow than the info from BMO or iShares, because it has all of the information I need.


If/when I can get a copy I can see ... it will be easier to tell.




Mike-RetireEarly said:


> ... From the CDS spreadsheet you can see the breakdown of each distribution (return of capital, capital gain, etc) and if they are non cash, which is more helpful than just a yearly breakdown that BMO provides.


As I keep repeating from post #12. after setting the year one wants ... two tables are on the same page. The yearly breakdown *and* any non-cash distributions. I can see why one document may be preferred but BMO is providing more than "just a yearly breakdown".





Mike-RetireEarly said:


> ... For example in 2014 ZLB had a non cash Reinvested Distribution Per Unit at the end of December of $0.628834, of which it was made up of a Capital Gain of 99.2047% and 0.7953% was Return of Capital. You could figure this out from the T3 Summary and the BMO website, since BMO does tell you what the reinvested distribution amount was for December 2014 ...


??? ... why would one need a T3 summary for the re-invested distribution (aka phantom)?

After filtering for "ZLB" and "2014", the first table has a Dec 24th re-invested payment, where the note for that column explicitly says "Distributions by the BMO ETF that are not paid in cash should be accounted for by investors for tax purposes by adding the distribution amount to the adjusted cost base of the units held."

The second table has the breakdown for the different types.


Or am I missing something?




Mike-RetireEarly said:


> ... Between the T slips from the CRA and the CDS spreadsheet he can see the breakdown or each distribution ...


I thought the CDS spreadsheets were complete so I'm not following why the CRA T slips and/or the broker T slip summaries would be needed?

Or are you thinking the OP might have the wrong number of ETF units from his parents?


Cheers


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## Eclectic12 (Oct 20, 2010)

GreatLaker said:


> ... Also I think someone else mentioned upthread that BMO reports in %, whereas iShares and Vanguard report in $.


I'll have to search the thread to be sure of my memory that the CDS Innovations sheets use %.

When I checked 2015 ZLB distribution charge on BMO's web site against yahoo's historical dividends, the dates & $ matched. It seems clear BMO's web site is reporting $$, just as iShares and from what I recall, Vanguard does.


Cheers

*PS*

The OP in post # 5 says the CDS Innovations is by %.


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## james4beach (Nov 15, 2012)

Eclectic12 - you're right, I can find all the information (both ROC and reinvested distributions) on the BMO web pages for each ETF. And that's fine ... that source will be OK for my purpose. We very rarely buy or sell units, so the single ROC numbers for the year are sufficient and will not cause a problem; monthly breakdown of ROC is not an issue.



GreatLaker said:


> It works for me on 2 computers, both Win10, one Excel 2010, the other Excel 2013.


Here are the steps I'm trying for the CDS Innovations sheet. I started from the BMO ETF dashboard, and follows this CDS Innovations link. From here I downloaded "BMO DISCOUNT BOND INDEX ETF" by clicking on the Excel icon. I saved the XLS file.

I'm trying this with Excel 2011. When I open the XLS file, I see a warning (like yours) and have choices: Enable Macros, Do Not Open, or Disable Macros. I chose Enable Macros.

At this point, I see an error indicating that the scripts contained within the spreadsheet have a bug. I've attached a screen shot of this warning (Compile error). After this error, I see an empty spreadsheet.


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## GreatLaker (Mar 23, 2014)

Eclectic12 said:


> I'll have to search the thread to be sure of my memory that the CDS Innovations sheets use %.
> 
> When I checked 2015 ZLB distribution charge on BMO's web site against yahoo's historical dividends, the dates & $ matched. It seems clear BMO's web site is reporting $$, just as iShares and from what I recall, Vanguard does.
> 
> ...


Yes, to clarify my previous comment in post #37, all the ETF provider tax documents I have seen publish distribution details in $, and all the CDS spreadsheets I have seen except for BMO publish distribution details in $. It is only the BMO spreadsheets on CDS that publish distribution details in %. In the CDS spreadsheet this is indicated in cell G15 that the calculation method is either rate or %.

To get distribution details in $ I think you would have to multiply the % values by the total distribution $ per unit in line 19.


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## Spudd (Oct 11, 2011)

james4beach said:


> I'm trying this with Excel 2011. When I open the XLS file, I see a warning (like yours) and have choices: Enable Macros, Do Not Open, or Disable Macros. I chose Enable Macros.
> 
> At this point, I see an error indicating that the scripts contained within the spreadsheet have a bug. I've attached a screen shot of this warning (Compile error). After this error, I see an empty spreadsheet.


I tried with Excel 2013 and it worked fine. Maybe it's not compatible with Excel 2011? Seems crazy.


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## james4beach (Nov 15, 2012)

I wonder if it's because I'm running a Mac version. Either way, this doesn't give me confidence in their spreadsheet format. It shouldn't have any macros to begin with ... the CDS Innovations documents do not bode well for longevity of data storage. Simple spreadsheets like CSVs or platform agnostic formats like PDF must be used for long term data retention, and for estate planning, we should all keep that in mind.


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## Spudd (Oct 11, 2011)

Very good point.


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## james4beach (Nov 15, 2012)

Check your eServices, folks. I now have a T3 for my BMO ETFs - potentially of interest to @GreatLaker @Eclectic12 @AltaRed 

This also confused me about something. The T3 details document shows $5.42 ROC on my ZSP position. Therefore, in my own position tracking spreadsheet, I have subtracted 5.42 from my ACB. If there was a reinvested distribution, I would fix that up too, but ZSP had none last year.

However, within TDDI's Holdings, I don't see this adjustment (and they usually do show the correct ACB). Instead I see the original book cost before any distributions happened. Does this mean that TDDI will apply these adjustments after some time delay?


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## Money172375 (Jun 29, 2018)

james4beach said:


> Check your eServices, folks. I now have a T3 for my BMO ETFs - potentially of interest to @GreatLaker @Eclectic12 @AltaRed
> 
> This also confused me about something. The T3 details document shows $5.42 ROC on my ZSP position. Therefore, in my own position tracking spreadsheet, I have subtracted 5.42 from my ACB. If there was a reinvested distribution, I would fix that up too, but ZSP had none last year.
> 
> However, within TDDI's Holdings, I don't see this adjustment (and they usually do show the correct ACB). Instead I see the original book cost before any distributions happened. Does this mean that TDDI will apply these adjustments after some time delay?


I do recall TDDI having a significant delay on a Vanguard distribution. Check out the trade date and settlement date.


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## GreatLaker (Mar 23, 2014)

Money172375 said:


> I do recall TDDI having a significant delay on a Vanguard distribution. Check out the trade date and settlement date.
> View attachment 21487


That's the way ETF reinvested distributions always appear in TDDI. The ETF provider waits until the end of the year to determine the overall capital gains distribution for the year, rather than pay them out throughout the year. That way if there are capital gains early in the year and capital losses later in the year they can use the later capital losses against the earlier capital gains rather than paying them out. They need all the ETF's holdings to report their financials by the Feb 28 deadline, which they then factor into the ETF's financials. That's why the deadline for issuing T3s is Mar 31, not Feb 28.


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## GreatLaker (Mar 23, 2014)

james4beach said:


> Check your eServices, folks. I now have a T3 for my BMO ETFs - potentially of interest to @GreatLaker @Eclectic12 @AltaRed
> 
> This also confused me about something. The T3 details document shows $5.42 ROC on my ZSP position. Therefore, in my own position tracking spreadsheet, I have subtracted 5.42 from my ACB. If there was a reinvested distribution, I would fix that up too, but ZSP had none last year.
> 
> However, within TDDI's Holdings, I don't see this adjustment (and they usually do show the correct ACB). Instead I see the original book cost before any distributions happened. Does this mean that TDDI will apply these adjustments after some time delay?


Yes, I have noticed that in the past. The cost base adjustment for the RoC will appear later. It should true up in a month.


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## james4beach (Nov 15, 2012)

GreatLaker said:


> Yes, I have noticed that in the past. The cost base adjustment for the RoC will appear later. It should true up in a month.


Thanks. Good to hear TD is still able to track these in the Holdings cost base. I think it's a nice way to double check my own records.


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## james4beach (Nov 15, 2012)

I've struggled a bit with this ACB tracking, so I'd like to double check to see if this is how other people are doing it these days. There are two adjustments required to a position's cost base: the reinvested distribution (+) and the ROC (-).

It seems that using the iShares and BMO web sites, the reinvested distribution is straightforward. It shows up in the distribution history on the web. And the ROC can be found on the T3 and its detail summary (as sent by TD), which automatically has calculated how much ROC applies to my share holdings throughout the year.

So that's all that's needed to keep my ACB up to date, right?


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## james4beach (Nov 15, 2012)

Money172375 said:


> I do recall TDDI having a significant delay on a Vanguard distribution. Check out the trade date and settlement date.


Something to be careful about is that a "capital gain distribution" is not the same as the "reinvested distribution". You would not want to update your ACB with that figure you showed. To keep your ACB up to date, make sure you check the ETF's reinvested distribution.

To see how they're different, look at iShares XSP. The web site shows the 2019 "Capital Gains" distribution was 0.32882. However, in the iShares tax distribution document, you will see that the "Reinvested distribution per unit" was actually 0.30432 which is somewhat different.

This is why I find this stuff complicated. You have to make sure that you find figures for the Reinvested Distribution. For BMO ETFs, this can be found through the distribution info on the web site. For iShares however, the distributions part of the web site doesn't show it. Instead you have to download the special PDF file they publish on tax characteristics each year.


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## off.by.10 (Mar 16, 2014)

james4beach said:


> So that's all that's needed to keep my ACB up to date, right?


Yes, reinvested distributions and return of capital are all you need. But indeed, finding the information is a major PITA each year. I wish there was an equivalent to box 42 for reinvested distributions. Of course, the government only cares about your ACB going down so that's not likely to happen any time soon.


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## GreatLaker (Mar 23, 2014)

I'm certain the amount in the example in post #47 is Reinvested Capital Gains. Regular distributions will be a one-sided transaction... cash deposited into the account. Even with a broker (synthetic) drip the dripped amount will be full shares, so most likely some cash left over. Reinvested distributions always have two transactions with the exact same dollar value, one positive for the distribution, and the other negative for the reinvestment. Reinvested distributions are posted to TDDI accounts some time in March but back-dated to a payment date of early January (which would actually have a record date of December). 

VBAL had a reinvested capital gains distribution of $0.114319 per unit, multiplied by 3280 units = $374.97, the same as the total shown in the example.

I use TDDI. For RoC I use the actual values from box 42 on the Summary of Trust Income, which is the detailed breakdown of all the boxes on the T3. For Reinvested Distributions I use the amounts from the Reinvested Distribution transactions on my March statement. I double check against either the ETF provider's website or against the CDS tax breakdown spreadsheets, but have never found a discrepancy.


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## Covariance (Oct 20, 2020)

We also use the "Summary of Trust Income" which we receive for each fixed income ETF in each account. It shows the breakdown of each monthly distribution into the three buckets - ie an amount for each of box 25,26,42 for every distribution.


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## gardner (Feb 13, 2014)

james4beach said:


> see if this is how other people are doing it these days


When I have sold MFs, I have used the book value that TD records for it. With all the constant drips of numerous random types of distributions going on, I do not feel I have any reasonable means to calculate anything more accurate.


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## james4beach (Nov 15, 2012)

gardner said:


> When I have sold MFs, I have used the book value that TD records for it. With all the constant drips of numerous random types of distributions going on, I do not feel I have any reasonable means to calculate anything more accurate.


I flip flop between thinking I should calculate it all (as I wrote above) and just using TD's book value. So far, the book values I've seen appear to be perfectly good.

Until now I have gotten away with keeping all my ETFs inside registered accounts, but now that I'm finally holding some non reg, I'm still confused about the whole thing. Capital gains distributions are not the same as reinvested distributions; the reinvested distributions are often hard to find; and ROC is paid along with each quarterly distribution so if you've placed trades in the year, everything gets more complicated. The T3 helps, but overall, I find the whole process very confusing.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> I've struggled a bit with this ACB tracking, so I'd like to double check to see if this is how other people are doing it these days. There are two adjustments required to a position's cost base: the reinvested distribution (+) and the ROC (-). .... So that's all that's needed to keep my ACB up to date, right?


Assuming you didn't buy or sell anything during the year ... sure reinvested distribution and RoC is all you need. 








TaxTips.ca - Tax treatment of income from exchange traded funds


TaxTips.ca - Tax treatment of income from investments in exchange traded funds (ETFs); How to calculate the capital gain or loss on ETFs.




www.taxtips.ca





Cheers


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## james4beach (Nov 15, 2012)

Eclectic12 said:


> Assuming you didn't buy or sell anything during the year ... sure reinvested distribution and RoC is all you need.


I agree, it's greatly simplified if there were no transactions during the year.

And god help you if you DRIP


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## gardner (Feb 13, 2014)

james4beach said:


> And god help you if you DRIP


Yes. Somewhere in this thread I diverged out into Mutual Fund territory. I hold some fractional unit mutual fund from Scotia (BNS385) in my TDDI taxable account. It's a sizable amount, so the distribution amounts are significant. I've held it a long time, so the effects of ROC and other exotic distributions have had a long time to build up to relevant magnitudes. These things only drip, and result in a constant stream of new fractional units. Without Scotia and/or TDDI keeping track, I don't think I have any chance on my own to work out the true ACB.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> ... This is why I find this stuff complicated. You have to make sure that you find figures for the Reinvested Distribution.


Not sure what is confusing you. If the cash paid is classed as a CG then it be reported on one's T3 slip so there's really nothing to do, beyond waiting for the T3 slip. Same for the RoC.
Where one wants to spot check, pick a simple year and compare your numbers against the T3 slip.

For the phantom distributions, find whatever method you prefer for getting the phantom distribution numbers. Most ETF vendors I have checked publish it multiple ways, in addition to the CDS Innovations web site.




james4beach said:


> ... For iShares however, the [phantom] distributions part of the web site doesn't show it. Instead you have to download the special PDF file they publish on tax characteristics each year.


I used to think that as well but someone replied to my post showing how to get the annual reinvested amounts off the particular ETF's web page. I'll have to find that post again as I don't recall the details and when I tried to retrieve it I seem to be overlooking the spot, just like was I was before .




james4beach said:


> ... I flip flop between thinking I should calculate it all (as I wrote above) and just using TD's book value. So far, the book values I've seen appear to be perfectly good.


When my ETFs have to go into the non-registered account, I plan to spot check them every year or two ... the same as I am doing now for the REIT ACB.

I expect it will be fine as I see the phantom distribution detail line items and RoC ones in my registered accounts, each year.




james4beach said:


> ...I'm still confused about the whole thing. Capital gains distributions are not the same as reinvested distributions; the reinvested distributions are often hard to find; and ROC is paid along with each quarterly distribution so if you've placed trades in the year, everything gets more complicated. The T3 helps, but overall, I find the whole process very confusing.


I think you are confusing yourself.

If you trust the T3 then it reports the CG in box 21 and the RoC in box 42. The issue I see if the broker rolls up multiple investments, making one check the detailed summary that is also provided. It will be more difficult to spot check where one has bought/sold as one will need a version that breaks it down by payment, which CDS Innovations covers.

The phantom distributions are once a year so the buying/selling won't matter as long as you know the number of units in mid Dec. Once you know what term the ETF provider likes for phantom distributions, is it that hard to google "2020" ETF provider "phantom distribution name of choice"? 


Cheers


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## AltaRed (Jun 8, 2009)

Each of the major ETF providers also provide the phantom re-invested distributions/unit for each of their funds via the newswires in the last week of December each year. Don't even have to go to the ETF provider websites or CDS. IOW, they make it easy via news releases, at least for BMO, Blackrock and Vanguard (which between myself, my spouse and my ex...we have some from each of those providers).

The challenge for investors is to know this information in the first place....which in theory, they should know all those nuances before investing in the first place, but often do not. Once they learn it once, it is a 'no brainer' thereafter. Kind of like novices and neophytes jumping into stock or bond investing before knowing anything about calculating ACB, or even how cap gains are taxed, or attribution of income, etc.


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## james4beach (Nov 15, 2012)

Eclectic12 said:


> Not sure what is confusing you. If the cash paid is classed as a CG then it be reported on one's T3 slip so there's really nothing to do, beyond waiting for the T3 slip. Same for the RoC.
> Where one wants to spot check, pick a simple year and compare your numbers against the T3 slip.


I can't tell if you are talking about taxable amounts, or ACB fixups.

You keep bringing up the CG in your post. But let's be clear... the CG is a taxable amount and reported for tax purposes, but doesn't impact the ACB.

The ACB has to be adjusted using the reinvested distribution and ROC.



Eclectic12 said:


> If you trust the T3 then it reports the CG in box 21 and the RoC in box 42.


Yes and that's a taxable amount. But of no use for the ACB.

Does everyone agree with the following?










As @AltaRed mentions, that last item, the "reinvested distribution" which is vital for ACB tracking, can be found off the news wire. Or you can google for the tax characteristics documents. In the case of BMO's web site, it's also easy to find in the usual place you'd expect it.


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## GreatLaker (Mar 23, 2014)

james4beach said:


> Does everyone agree with the following?
> 
> View attachment 21495


I agree.

ETF distributions are taxable in the year they are received, and they appear on a T3 under their various categories (interest, dividends, foreign income, capital gains ...). Some of those distributions are paid in cash, which has no effect on the ACB, just as a stock dividend paid in cash or bond interest paid in cash have no effect on the ACB. Some distributions are reinvested by the ETF provider. You need to increase your ACB by the amount of the reinvested distribution. Since you pay tax on the distributions when they are received, if you don't adjust your ACB upwards by the reinvested amount, you will pay tax again (in the form of capital gains tax) when you sell. To be clear, reinvested distributions are part of the total distributions declared by the ETF, they are taxable in the year they are received, and they are included in the distributions listed on the T3. But unlike RoC, they are not listed separately on the T3, as RoC is listed in box 42.

The difference between ETFs and mutual funds is that mutual funds can issue fractional units so when distributions are reinvested, they increase the number of units you hold to account for the exact amount of the distribution. ETFs do not issue fractional units, so they cannot simply increase the number of units to account for the exact amount of the distribution. Instead they consolidate the number of units, and the unit holder must manually increase their ACB.

This iShares page has good info, particularly the first three points.
blackrock.com/ca/investors/en/resources/faqs/distributions-and-tax
You can also find it at blackrock.com/ca under Resources / Tax Information Center

This is complex and truly understanding it is not easy due to the different types and tax treatment of distributions. But incorporating it into your cost base is not that hard. 1) Increase or decrease your cost base every time you buy or sell. 2) Subtract RoC from your ACB, based on the values in box 42. 3) Add reinvested distributions to your ACB, based on amounts published by the ETF providers and available on their web sites and on CDS tax breakdown postings. Reinvested distributions also appear as transactions on TDDI March statements, but I don't know if other brokers do that.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> I can't tell if you are talking about taxable amounts, or ACB fixups.
> 
> You keep bringing up the CG in your post. But let's be clear... the CG is a taxable amount and reported for tax purposes, but doesn't impact the ACB.


I started with just the ACB tracking but your posts #52 and #57 added taxable CG distributions to the discussion.

It sounds like when you said "I'm still confused about the whole thing. Capital gains distributions are not the same as reinvested distributions" ... the taxable CG part was cleared up.




james4beach said:


> ... The ACB has to be adjusted using the reinvested distribution and ROC.


At the risk of "keeping bringing it up" - ACB also has to be adjusted for buys and if one is using total ACB instead of ACB per unit, sells.

Other than that ... it reads to me you have it straight and your confusion is resolved as well as knowing the multiple sources for the ACB affecting phantom distributions.


Cheers


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## james4beach (Nov 15, 2012)

GreatLaker said:


> But incorporating it into your cost base is not that hard. 1) Increase or decrease your cost base every time you buy or sell. 2) Subtract RoC from your ACB, based on the values in box 42. 3) Add reinvested distributions to your ACB, based on amounts published by the ETF providers and available on their web sites and on CDS tax breakdown postings.


Thanks for clarifying. Yeah, I agree with the above procedure.


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## james4beach (Nov 15, 2012)

It seems I placed a ZSP trade right on the brink of the reinvested distribution. I can't figure out if I "got" the reinvested distribution.

ZSP had
Ex-dividend date: Dec 29, 2021
Record date: Dec 30, 2021

As luck would have it, I bought a significant number of shares on Dec 29, settled Dec 31.

My interpretation is that the "ex dividend date" is the date that the fund starts trading _without dividend_. So I think that when I bought on Dec 29, that I bought ZSP without its distribution... and therefore I should *not* fix up my ACB by the amount shown in the press release.

Do I have this right?


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## Covariance (Oct 20, 2020)

james4beach said:


> My interpretation is that the "ex dividend date" is the date that the fund starts trading _without dividend_.
> Do I have this right?


Looks ok. Technically a shareholder of record is entitled to a dividend (or distribution). The record date is the date they pull the file and see who owns the shares. So if your settlement was after the record date you didn't own them for the divi.


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## james4beach (Nov 15, 2012)

Covariance said:


> Looks ok. Technically a shareholder of record is entitled to a dividend (or distribution). The record date is the date they pull the file and see who owns the shares. So if your settlement was after the record date you didn't own them for the divi.


Thanks!


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## GreatLaker (Mar 23, 2014)

james4beach said:


> It seems I placed a ZSP trade right on the brink of the reinvested distribution. I can't figure out if I "got" the reinvested distribution.
> 
> ZSP had
> Ex-dividend date: Dec 29, 2021
> ...


The short answer is yes, your understanding is correct.

The ex-dividend date is just the date that the fund price drops due to the impending dividend or distribution. It is the date by which you must enter your order to have it settle in time for you to get the dividend. That's why the price drops: on a buy order, if you enter it on the ex-dividend date you pay less because you get the dividend. (I think you are one of the advocates of dividends largely being irrelevant because of this.)

Here is what Adjusted Cost Base says:
Understanding Trade Dates and Settlement Dates | Adjusted Cost Base.ca Blog 


AdjustedCostBase.ca said:


> any transactions involving distributions for ETF’s / funds / trusts (such as Return of Capital, Capital Gains Dividends, and Reinvested Capital Gains Distributions) should use the record date that applies for the distribution. Again, this ensures that any applicable capital gains and losses are reported for the correct year. Even more importantly, when using per share amounts for a distribution, using the record date is


If you own the shares on Dec 30 (i.e any orders must have a settlement on or before Dec 30) you will receive the Reinvested Capital Gains Distribution. Your order settled on Dec 31 (i.e. you owned the units starting Dec 31). My interpretation is you did not own the units on Dec 30, therefore you did not get the distribution.

I use TDDI and Reinvested Capital Gains Distributions for ETFs are always listed on my March statement as a Capital Gains Distribution transaction, offset by a DRIP transaction of exactly the same $ value.


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## james4beach (Nov 15, 2012)

GreatLaker said:


> The short answer is yes, your understanding is correct.
> 
> The ex-dividend date is just the date that the fund price drops due to the impending dividend or distribution. It is the date by which you must enter your order to have it settle in time for you to get the dividend. That's why the price drops: on a buy order, if you enter it on the ex-dividend date you pay less because you get the dividend. (I think you are one of the advocates of dividends largely being irrelevant because of this.)


Thanks for the info about the timing. And yes I'm definitely one of the advocates of how dividends are irrelevant / not free money, because the share price declines as they are paid out.



GreatLaker said:


> I use TDDI and Reinvested Capital Gains Distributions for ETFs are always listed on my March statement as a Capital Gains Distribution transaction, offset by a DRIP transaction of exactly the same $ value.


Interesting, I wonder why they do it this way. But beware, if the statement is showing a "capital gain distribution", that's not necessarily the same as the reinvested distribution. So it would not be correct to update your ACB based purely on a "capital gain distribution". For the same reason, the capital gain distribution that appears on a T3 is not useful for adjusting your ACB.

Some people seem to think these are the same (because they often are) but the numbers can differ. Here are some examples:

The iShares 2020 tax distributions document shows the GCNS fund had a reinvested distribution per unit of 0.35671 but had 0 capital gains.

XGGB, had reinvested distributions 0.25625 but capital gains 0.31829

But those are outliers and nearly every other ETF shows reinvested distributions = capital gains. What fun!

My point being, a "reinvested distribution" is not the same thing as a capital gain distribution. *So I think if you see "capital gain distribution" on a broker statement,* that should not be used for updating the ACB.

A related matter, showing how confusing this is...

@AltaRed may be interested. Here was the iShares press release for 2020 taxes. Notice that Blackrock calls these "reinvested capital gains distributions" and repeatedly calls these capital gains in that press release.

But I think they're wrong! Take a look at GCNS which I mentioned above. According to the *final* Blackrock tax characteristics document, this fund has NO capital gains in 2020. And yet the press release calls it a capital gains distribution.

I think the press release should be calling it a "reinvested distribution" and dropping the words "capital gain". As written, the press release is wrong. The fund didn't have any capital gains.


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## Eclectic21 (Jun 25, 2021)

james4beach said:


> ... But beware, if the statement is showing a "capital gain distribution", that's not necessarily the same as the reinvested distribution. So it would not be correct to update your ACB based purely on a "capital gain distribution" ... Some people seem to think these are the same (because they often are) but the numbers can differ ...


Since TDDI has started doing this ... either the March entries match the phantom distribution for that particular ETF or there are no march entries when the phantom distribution is zero, regardless of what the T3 says for capital gains.





james4beach said:


> ... My point being, a "reinvested distribution" is not the same thing as a capital gain distribution. *So I think if you see "capital gain distribution" on a broker statement,* that should not be used for updating the ACB.


Maybe different brokers mix them up?
All I have personal experience with consistently aligns with the March twin entries being documentation of a phantom distribution.

I'll see what I can find for the examples.


Cheers

*PS*
If the GCNS distribution info is coming from the iShares Canada web site for 2020, this may be a system problem. Yahoo lists cash paid quarterly for XIC yet the iShares Canada annual distribution for 2020 has hypens for all columns (XIU as well).


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## Numbersman61 (Jan 26, 2015)

Since all my ETF’s are in registered accounts, I have no experience with analyzing the T3 slip in cases where the ETF had a reinvested capital distribution. Is this amount included in Box 21 of the T3? If not where is it reported so that the taxpayer reports the amount on his tax return?


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## GreatLaker (Mar 23, 2014)

james4beach said:


> Interesting, I wonder why they do it this way. But beware, if the statement is showing a "capital gain distribution", that's not necessarily the same as the reinvested distribution. So it would not be correct to update your ACB based purely on a "capital gain distribution". For the same reason, the capital gain distribution that appears on a T3 is not useful for adjusting your ACB.
> 
> Some people seem to think these are the same (because they often are) but the numbers can differ. Here are some examples:
> 
> ...


Correct. *I only add the reinvested portion to my cost base*. ETFs issue distributions that may be from interest, dividends, cap gains etc., and those appear in the relevant box on my T3 for tax reporting. Some of those distributions get reinvested, but the nature of the distribution that gets reinvested is not relevant. I add the reinvested amount to my cost base. If I don't add it, then I end up paying tax again on capital gains when I sell. I check reinvested distributions on my statement against the amount reported in the fund company press releases to make sure they agree.


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## GreatLaker (Mar 23, 2014)

Numbersman61 said:


> Since all my ETF’s are in registered accounts, I have no experience with analyzing the T3 slip in cases where the ETF had a reinvested capital distribution. Is this amount included in Box 21 of the T3? If not where is it reported so that the taxpayer reports the amount on his tax return?


Yes, all ETF capital gains are listed in box 21 of the T3, whether they are paid in cash or reinvested.

Note these capital gains are those realized by the fund when it sells securities at a gain. Funds typically only report capital gains on an annualized basis so they can aggregate capital gains and losses for the entire year and only report capital gains when they exceed any losses for the year.

All capital gains realized when the investor sells ETF units are the investor's responsibility to track and report.


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## Numbersman61 (Jan 26, 2015)

The reason for my question is the way BlackRock prepared their schedule for 2020 distributions. Here is the link Financial Planning & Investment Management | BlackRock
When you download the link, you will note that for GCNS, the capital gains reinvested per unit is .35671 but they show 0 for Box 21. My expectation is that Box 21 should have been .35671 for 2020. It is possible that this amount will show up in Box 21 on 2021 T3.


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## james4beach (Nov 15, 2012)

Eclectic21 said:


> Maybe different brokers mix them up?
> All I have personal experience with consistently aligns with the March twin entries being documentation of a phantom distribution.


Ah that's interesting. So what you're seeing in the broker's fix-up (March) entries, appears to be = reinvested distribution.
This would make sense as they are probably using this "hack" to adjust their book values.

But I still recommend looking at the actual source (ETF issuers) to check what reinvested distribution and ROC they give there. I think many of us agree that we should do our own calculation to verify the broker's number instead of just taking the broker's numbers.

Though, the broker's cost base has always matched my own calculations in the last few years. I have never found a mismatch.



Eclectic21 said:


> If the GCNS distribution info is coming from the iShares Canada web site for 2020, this may be a system problem.


The GCNS example I gave were directly from iShares, using the final tax characteristics document they published. So in one place, iShares is calling it a capital gain distribution, but in another place, is calling it "reinvested distribution" with *zero* capital gains inside it.

So clearly there is some confusion, or some poor choice of words, even at iShares themselves. They seem confused about whether a distribution is capital gains or not.


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## GreatLaker (Mar 23, 2014)

Numbersman61 said:


> The reason for my question is the way BlackRock prepared their schedule for 2020 distributions. Here is the link Financial Planning & Investment Management | BlackRock
> When you download the link, you will note that for GCNS, the capital gains reinvested per unit is .35671 but they show 0 for Box 21. My expectation is that Box 21 should have been .35671 for 2020. It is possible that this amount will show up in Box 21 on 2021 T3.


If you look at that spreadsheet, the fund had total distribution of $1.35671, of which $1.00 was paid in cash and $.35671 was reinvested. So it sounds like one or more of the other income categories was reinvested. James also suggested in Post #71 that these are reinvested distributions, but not necessarily reinvested capital gains distributions.

I don't think that invalidates my statement that "ETF capital gains are listed in box 21 of the T3, whether they are paid in cash or reinvested." 

Another thing I noticed is that in CDS Innovations Tax Breakdown Postings for 2020, that fund has two spreadsheets, one of which is revised. You can find it here: CDS Innovations Inc :: Tax Breakdown Posting - Processed Documents (T3-2020) 

After a decade of ETF investing I am still learning


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## Numbersman61 (Jan 26, 2015)

Thanks for the link. The amended report on the CDS spreadsheet indicates that the total non-cash distribution per unit of $0.35671 consists of $0.15729 other income, $0.08367 capital gain, $0.03122 eligible dividend, $0.08009 foreign non-business income, 0.00784 return of capital, $0.00340 foreign non-business income tax paid.
I’m going to continue to avoid investing in ETF’s in non-registered accounts.


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## james4beach (Nov 15, 2012)

GreatLaker said:


> After a decade of ETF investing I am still learning


I really think the Canadian ETF industry has to change what they're doing about these reinvested distributions, capital gains, and ROCs.

This has to be made simpler IMHO. Those of us on this board are very familiar with ETFs, and yet here we still are, tracking down CDS innovations spreadsheets, or the Tax Characteristics documents, and trying to decipher what's on the T3 statements.

All these years later, still trying to make sense of properly accounting for the reinvested distributions and ROC. There are too many wacky types of distributions.

I just think this is unnecessary complexity and should be improved by the industry.


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## GreatLaker (Mar 23, 2014)

james4beach said:


> I really think the Canadian ETF industry has to change what they're doing about these reinvested distributions, capital gains, and ROCs.
> 
> This has to be made simpler IMHO. Those of us on this board are very familiar with ETFs, and yet here we still are, tracking down CDS innovations spreadsheets, or the Tax Characteristics documents, and trying to decipher what's on the T3 statements.
> 
> ...


Yes, I wonder what percent of ETF investors are accurately tracking ACB in nonreg accounts. Probably very low. And it`s complicated because neither the ETF company or the broker can be sure of the client`s ACB if they hold the same security in multiple accounts. It`s only the last few years that the cost box has been filled in for T5008s.

Maybe the capital gains could just be paid in cash rather than reinvested. That may be a concern though, for an index ETF if the index is revised, or the ETF faces a lot of redemptions that create capital gains. As an investor I would prefer reinvestment of such unpredictable cashflows (as opposed to interest and dividend distributions that are relatively consistent and some investors depend on them).

Another solution would be better broker reporting. T3s already have box 42 for RoC cost base adjustments. Maybe CRA could require a new box for cost base adjustments due to reinvested distributions. Another option would be for brokers to issue an annual cost base report, listing all transactions (buy, sell, RoC, reinvested distributions). I already get a transaction summary from TDDI, it would be easy to add RoC and reinvested distributions to that.

I already get everything I need from TDDI on my statements and Summary of Trust Income. It did take me a while to realize that though because it can be so cryptic. Even some info from the brokers on what these transactions are and how to use them for tax reporting would be a big help.


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## Eclectic21 (Jun 25, 2021)

GreatLaker said:


> ... I don't think that invalidates my statement that "ETF capital gains are listed in box 21 of the T3, whether they are paid in cash or reinvested."


Taxtips.ca says:
"Reinvested capital gains distributions will be included as capital gains on your T3, but a portion of the capital gains reported on the T3 may have been part of a cash payment ... Another thing that can be done is to compare the total of distributions that you were actually paid to the total of distributions shown on your T3 ... These reinvested capital gains distributions are included in the amount of capital gains in box 21 on the T3 slip. They are not normally included in any other of the T3 boxes. "








TaxTips.ca - Tax treatment of income from exchange traded funds


TaxTips.ca - Tax treatment of income from investments in exchange traded funds (ETFs); How to calculate the capital gain or loss on ETFs.




www.taxtips.ca





So maybe there's some situation where other boxes have ACB changing effect but so far, I haven't run into it.


There was also some comment about distributions having to be received in the calendar year, which taxtips.ca disagrees with.

"Keep in mind that a distribution that you received in January of 2020 may be included in the T3 income for 2019, because it was recorded by the ETF in December."

Cheers


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