Paying taxes on capital gains I never got?

[species5618w]

I just received my T3 form from TD bank. Last year, my CAN Equity fund had a capital gain of $841.15, yet according to my statement, my investment only went up by $696.01. So I am paying taxes for $150 that I never got? :mad:

Would moving all my money to an e-series index fund avoid the problem? What if I sell the fund, should I then claim $150 capital lost?

[pitz]

I just received my T3 form from TD bank. Last year, my CAN Equity fund had a capital gain of $841.15, yet according to my statement, my investment only went up by $696.01. So I am paying taxes for $150 that I never got? :mad:


You invested in a flow-through mutual fund trust, that is required, by law, to flow any of its realized capital gains through to its unitholders.

You add the capital gains to your cost base, reducing your future capital gains liability.




Would moving all my money to an e-series index fund avoid the problem? What if I sell the fund, should I then claim $150 capital lost?

Yes, your cost base would be adjusted. And yes, index funds tend to be more tax efficient due to their strategy of not trading very much.

[species5618w]

You invested in a flow-through mutual fund trust, that is required, by law, to flow any of its realized capital gains through to its unitholders.

You add the capital gains to your cost base, reducing your future capital gains liability.

Yes, your cost base would be adjusted. And yes, index funds tend to be more tax efficient due to their strategy of not trading very much.

Thank you. I never knew that. I guess I should have kept track all my T3s over the years to calculate the final cost. Although easyweb does show a much higher book value than I spent originally on the fund, maybe that's the cost I should use to calculate the taxes?

Another question, would ETFs like XIC be even more tax efficient than index funds? I am trying to decide whether I should move my e-funds into ETFs once per year, kind of a two stages couch potato profolio. It's a bit of a hassle and I have to pay taxes on the capital gains for the first year, but maybe it's a good idea to avoid future surprises like this?

Thanks again.

[ali1800]

Thank you. I never knew that. I guess I should have kept track all my T3s over the years to calculate the final cost. Although easyweb does show a much higher book value than I spent originally on the fund, maybe that's the cost I should use to calculate the taxes?

Another question, would ETFs like XIC be even more tax efficient than index funds? I am trying to decide whether I should move my e-funds into ETFs once per year, kind of a two stages couch potato profolio. It's a bit of a hassle and I have to pay taxes on the capital gains for the first year, but maybe it's a good idea to avoid future surprises like this?

Thanks again.

Saw an article tonight you might be interested in regarding ETF's
http://www.reportonbusiness.com/servlet/story/RTGAM.20080222.wstmain0223/BNStory/SpecialEvents2/home

[pitz]

Thank you. I never knew that. I guess I should have kept track all my T3s over the years to calculate the final cost. Although easyweb does show a much higher book value than I spent originally on the fund, maybe that's the cost I should use to calculate the taxes?

Another question, would ETFs like XIC be even more tax efficient than index funds? I am trying to decide whether I should move my e-funds into ETFs once per year, kind of a two stages couch potato profolio. It's a bit of a hassle and I have to pay taxes on the capital gains for the first year, but maybe it's a good idea to avoid future surprises like this?

Thanks again.


Yeah with mutual funds, the fund company takes care of that stuff by issuing units for the capital gains, and then re-investing them. So the numbers on easyweb should be correct.

For ETFs, obviously, you have to keep track of these things by hand, because your broker probably won't.

[species5618w]

Yeah with mutual funds, the fund company takes care of that stuff by issuing units for the capital gains, and then re-investing them. So the numbers on easyweb should be correct.

For ETFs, obviously, you have to keep track of these things by hand, because your broker probably won't.

Thanks. I found out where that $841.15 came from. It showed up as "Re-invested Dividend" on my activity list. Of course, it's not really a dividend, so I find the term confusing. Now I just need to figure out why they call interests from bonds as "Other Income". :)

TD waterhouse actually does a very good job of record keeping. TD Canada Trust only does one statement every three month and only keep three statements. Neither provides an easy way to query the data. :(