# Brokerages that track adjusted cost base for you



## LongLiveTheMonarchy (Mar 20, 2014)

Hello everyone,

I am currently with Qtrade Investor. Although the customer service is great, one of the things that I don't like about Qtrade is that it doesn't track the adjusted cost base or average price that I paid for a stock or ETF. When it is time to pay taxes on capital gains, I have to manually enter transactions on a spreadsheet in order to determine my adjusted cost base.

I have heard that some online brokerages will keep track of the adjusted cost base for you. For example, I believe that HSBC InvestDirect does this. Does know of other brokerages that offer this service? What about RBC Direct Investing?

Thank you!


----------



## Eclectic12 (Oct 20, 2010)

I believe some brokers will report more than others but I wouldn't trust any of them to provide my ACB.

First reason is they may not have the real numbers. For example, if I transfer from one broker to another, what will likely be taken as the ACB will be FMV at the time of the transfer.

Second is I've seen some big errors when it should be have accurate.

Third is that where RoC is paid, I'm not aware of any that are willing to give the investor a cheap trade price and take on the work of waiting for the ETF/REIT/split share/stock to publish what RoC was paid so that the ACB can be adjusted appropriately.

I suspect the one you have heard of that will do this is not the discount broker but the full service one (ex. $10 commission versus $150).


As for the averages for the ACB - I prefer to update my spreadsheet when I buy/sell or when the monthly statement reports the transaction. It is fresh in my mind and much easier to do. When I wasn't doing this - it was painful to try to figure out RoC amounts from a REIT that was bought out twice so that the info wasn't easily available instead of doing it once a year.

This is similar to balancing a cheque book - if one stays on top of it and has a system that works for them, it's not bad. 


Cheers


----------



## fatcat (Nov 11, 2009)

i keep this up to date and it only takes a few minutes and it is free: http://www.adjustedcostbase.ca/


----------



## juniperpansy (Jan 5, 2013)

TDI calculates it under "Book Value." Only problem is though they calculated it wrong for me. They charged me the wrong commissions and then fixed them but I am still left with the incorrect Book Value...

Even if the brokerages calculate ACB correctly, if you then transfer your equities to another brokerage they won't have your previous ACB info so you would have to do it yourself manually anyways.
Also if you use a website, are they going to be around in 20-30+ years when you cash your funds?

Unfortunately I don't think there is any way around calculating it yourself.


----------



## Belguy (May 24, 2010)

Dumb question but does calculating the ACB apply to mutual funds or just to individual stocks and ETF' s?

In other words, what is required in the way of tax reporting when one sells units of a mutual fund?

Also, stupidly I purchased some ETF' s for my unregistered account several years ago but have maintained no ongoing ACB calculations. Thus, I now find myself in a position where I am reluctant to sell them. I have, however, kept all of my tax receipts on file. What can I do now? If I sell the ETF' s this year, could I have a tax preparer do my tax return next spring and, if I take all of my previous years' files in with me, should they be able to calculate the ACB of each of the ETF' s that I sell?

By the way, just to show my total ignorance, what is a spreadsheet?


----------



## andrewf (Mar 1, 2010)

It applies to all capital assets.


----------



## Eclectic12 (Oct 20, 2010)

Belguy said:


> Dumb question but does calculating the ACB apply to mutual funds or just to individual stocks and ETF' s?
> 
> In other words, what is required in the way of tax reporting when one sells units of a mutual fund?


These all just different flavours of the same thing.

For MF's in particular, here are some articles:
http://www.taxtips.ca/personaltax/investing/taxtreatment/mutualfunds.htm
http://canadianfinancialdiy.blogspot.ca/2007/03/adjusted-cost-base-for-etfs-and-mutual.html
http://www.moneysense.ca/columns/calculating-your-adjusted-cost-base-with-etfs

When you sell, you need the ACB (either the ACB for all units or ACB per unit which is then multiplied by number of units sold) for the ACB column of Schedule 3, section 3, where the capital gain (or loss) is being calculated.

Proceeds - ACB for all shares/units sold - Outlays or Expenses = capital gain if positive or loss if negative.




Belguy said:


> Also, stupidly I purchased some ETF' s for my unregistered account several years ago but have maintained no ongoing ACB calculations. Thus, I now find myself in a position where I am reluctant to sell them. I have, however, kept all of my tax receipts on file.
> 
> What can I do now?


The tax receipts have nothing to do with the ACB. 

That's for what taxes are due in the current tax year, regardless of whether you sell or not. For example, if part of the distribution is interest and dividends, then the T form will report these so that it is correctly recorded on your tax return.

If all you did was buy - then the ACB starts off simply ... number of units x price per unit + any cost to buy.

Ex. bought 100 units @ $10 a unit with a $10 commission on Jan 1, 2012
Starting ACB = 100 x $10 + $10 = $1010.

As you held it - did the ETF pay distributions? 

If yes, were they re-invested into more units?

To illustrate, I will assume yes ... add the amount of the distributions into the ACB. 
ETF web site says that in 2012, a distribution was paid of $1 a unit which was re-invested.

Current ACB = starting ACB + reinvested distributions = $1010 + (number of units x distribution) = $1010 + (100 x $1) = $1110.

Was any part of those distributions return of capital (RoC)? 

To illustrate, I will assume yes, which means the RoC portion paid is subtracted from the ACB.
ETF web site says that in 2012, of the $1 a unit distribution $0.30 was RoC.

The ACB changes again
Updated ACB = Current ACB - RoC = $1110 - (units x RoC portion) = $1110 - (100 x $0.30) = $1110 - $30 = $1080


That's for 2012 ... 2013 may have paid $1.33 per unit with $0.09 RoC, so it changes year to year.


I hope with this example it is clear that the info needed is not on your tax receipts and is better taken care of on a regular basis (like balancing a cheque book) versus letting it keep piling up.

The worst case I experienced with REITs was that when I realised I have to this as RoC was being paid, the REIT has been bought twice so that the yearly amount of RoC was not easily available.


I would find out if the ETFs are paying RoC as this will mean you need to start capturing those numbers asap. Next would to find out about reinvested distributions. I leave the original costs to the last as I expect you have buy slips for the original purchase plus any commissions.

Once you have this, if you are comfortable with computers, there's software such a Quicken or GnuCash that will document it for you. Or you can use a spreadsheet to do the same. Here is a link to a sample spreadsheet. http://www.canadiancapitalist.com/free-acb-capital-gains-tracker-in-excel/

Or if you don't like computers - get a ledger book and start with the pencil, paper and calculator.




Belguy said:


> By the way, just to show my total ignorance, what is a spreadsheet?


Google is your friend .... http://en.wikipedia.org/wiki/Spreadsheet
http://spreadsheets.about.com/od/excelfaqs/f/spreadsheet.htm

One of the benefits is to be able to apply formulas to specific column. So if you set it up so that when you enter into column 3 the distribution and column 4 the RoC portion as soon as you complete the data entry - column 4 automatically looks up the old ACB number and does the subtraction of the ACB for you.




Belguy said:


> If I sell the ETF' s this year, could I have a tax preparer do my tax return next spring and, if I take all of my previous years' files in with me, should they be able to calculate the ACB of each of the ETF' s that I sell?


If the tax preparer offers that service, you are likely to pay a pretty penny for it. 

I am assuming by "files" you mean your tax return plus documents (ex. T3, T4, T5 etc) - which likely won't have the costs to buy and definitely won't have the ETF distribution info.


Cheers

*PS*

Any reasonable book on either investing or taxes will have a chapter going over this.


----------



## Toronto.gal (Jan 8, 2010)

fatcat said:


> i keep this up to date and it only takes a few minutes and it is free: http://www.adjustedcostbase.ca/


Out of curiosity, I experimented with it, but the capital gains [loss]/new ACB columns don't seem to work.


----------



## Spudd (Oct 11, 2011)

What was wrong with them? I've used it before and it always looked right to me.


----------



## Synergy (Mar 18, 2013)

I made a few custom modifications to the following DRIP Log. Works for me. I like using Excel or LibreOffice Calc - the Open Office equivalent, rather than an online program that can't be customized.

http://www.dripprimer.ca/driplog


----------



## Toronto.gal (Jan 8, 2010)

^^ Gave incorrect figures under mentioned columns. As an example, did not have a single case out of my 3 examples, that gave correct capital gains. 

Could be that it was not working properly yesterday, idk, maybe I'll try again.


----------

