Personal Finance

Capital Gains Question

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  • Mar 7th, 2009 1:44 pm
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Member
Jan 24, 2007
322 posts
8 upvotes

Capital Gains Question

Situation:

I own a RBC Direct investing account, and had a couple of profitable trades for 2008. 2008 cap gains would be about US$800.

I know that cap gains are taxed at 50%, but how do I claim this on my T1?

I received a order conf. from RBC when I bought, and then one again when I sold. But nothing else, to show a cumulative gain/loss - something like a summary.

Please provide your insight. CHeers RFD!!
14 replies
Member
Mar 17, 2006
268 posts
13 upvotes
You will need to use Schedule 3 to report the capital gains and the taxable capital gains amount (i.e. the 50%) calculated on this schedule will flow into line 127 of your return.

Since your shares are $USD shares, remember to translate them into $CAD using the right exchange rate.
Member
Jan 24, 2007
322 posts
8 upvotes
1) only downer is, i threw out the confirmation RBC sent me when I bought and sold.

2) secondly, if i dont disclose this income, what are the consequences? Can the CRA find out? if so, How?


3) Thirdly, if i WERE to report the cap gain, would i be reporting the gain using the f/x date the day i sold it?


I'm really looking for an answer to question #2.

Cheers!
Sr. Member
User avatar
Dec 21, 2006
650 posts
23 upvotes
Richmond
tiger_handheld wrote: 1) only downer is, i threw out the confirmation RBC sent me when I bought and sold.

2) secondly, if i dont disclose this income, what are the consequences? Can the CRA find out? if so, How?


3) Thirdly, if i WERE to report the cap gain, would i be reporting the gain using the f/x date the day i sold it?


I'm really looking for an answer to question #2.

Cheers!
1. Does RBC DI not allow you to look at your transaction history online? I've never used it, but it's easy to do with the 2 online brokers I've used (E*Trade and Questrade). I'm guessing you can get this information pretty easily.

2. It's tax fraud. If they determine that you knowingly tried to cheat on your taxes, you can get in a whole pile of trouble. At a minimum, it'll be a huge pain and you'll pay all sorts of penalties. You could end up with a criminal record. And for what? Tax on that $800 capital gain will be in the range of $140 (assuming a 35% marginal rate). Not worth it, IMO. Also, tax cheats are selfish jerks that are stealing from their fellow citizens, so if you have a conscience you might want to think about what you're considering.

As for how they would catch you, my guess is that they have their ways, but nevertheless I'm sure tons of people get away with not reporting things

3. You compute your cost and your proceeds based on the exchange rate on the date of the transaction. You can get daily rate information here;

http://www.bankofcanada.ca/en/rates/exchange-look.html

So use the rate on the date of your purchase to calculate how much you paid for the stock in CAD, and the rate on the date of your sale to calculate how much you received for the stock in CAD. The differences is your capital gain/loss.
Member
Jan 24, 2007
322 posts
8 upvotes
thanks darren.

i didnt want to go thru the hassel of finding all that info via rbc di. it is possible, just requires some work.

i would include it if they send me a piece of paper...
Sr. Member
User avatar
Dec 21, 2006
650 posts
23 upvotes
Richmond
tiger_handheld wrote: thanks darren.

i didnt want to go thru the hassel of finding all that info via rbc di. it is possible, just requires some work.

i would include it if they send me a piece of paper...
I really, really, really hope they catch you.
Newbie
Jul 24, 2008
91 posts
Toronto
tiger_handheld wrote: thanks darren.

i didnt want to go thru the hassel of finding all that info via rbc di. it is possible, just requires some work.

i would include it if they send me a piece of paper...
If you receive your T5 or T3, you have to report it since Gov'n for sure will know. If not, you should (not have to) include it. Gov't may not find out and for sure they will NOT send you to prison or criminal record because of few hundred dollars. But why brother. report it and make sure to deduct all expenses...
Sr. Member
User avatar
Dec 21, 2006
650 posts
23 upvotes
Richmond
Greybeaver wrote: If not, you should (not have to) include it.
Wrong. You have to report your taxable income regardless of what slips you do or do not receive.
Member
Jan 10, 2009
242 posts
Hamilton, ON
Very few banks or investment firms actually provide trading summaries showing cost / proceeds / gains (losses) for the entire year. I *wish* they all did. :(
Member
Jan 24, 2007
322 posts
8 upvotes
Question two is, I also received dividends from these companies, do i have to record those??

i received CA$20 from a canadian corp.

and US$7 from a USD corp. the US folk, also deducted a non-residential tax.

how Do I report these dividends cad and usd?
Member
Jan 24, 2007
322 posts
8 upvotes
Greybeaver wrote: If you receive your T5 or T3, you have to report it since Gov'n for sure will know. If not, you should (not have to) include it. Gov't may not find out and for sure they will NOT send you to prison or criminal record because of few hundred dollars. But why brother. report it and make sure to deduct all expenses...

what kind of expenses?
Rbc Di charges me $20/ qtr.. thats the only thing i can think of deducting.
Sr. Member
User avatar
Dec 21, 2006
650 posts
23 upvotes
Richmond
tiger_handheld wrote: Question two is, I also received dividends from these companies, do i have to record those??

i received CA$20 from a canadian corp.

and US$7 from a USD corp. the US folk, also deducted a non-residential tax.

how Do I report these dividends cad and usd?
Yes, you have to report them. I can't remember off the top of my head what box #'s are relevant, but if you use something like QuickTax it will be pretty obvious. It asks you questions about what types of income you have received and then asks you to input how much. It should also allow you to input how much withholding tax you paid on those US dividends, and will report accordingly. I'm pretty sure there's a tax treaty between the US and Canada that ensures that you get credit for that withholding tax paid to the US.
Sr. Member
User avatar
Dec 21, 2006
650 posts
23 upvotes
Richmond
tiger_handheld wrote: 2) secondly, if i dont disclose this income, what are the consequences? Can the CRA find out? if so, How?
I just looked at my annual trading summary from Questrade and saw this note:

"T5008 / RL-18. SECURITIES TRANSACTIONS ARE DISCLOSED TO THE CANADA REVENUE AGENCY AND REVENU QUEBEC (RESIDENT OF QUEBEC ONLY) ON A YEARLY BASIS. THESE TRANSACTIONS ARE TO BE REPORTED ON YOUR ANNUAL RETURN OF INCOME."

So the CRA will definitely know about your trades and will have no problem finding people who avoid reporting their capital gains.
Deal Fanatic
User avatar
Oct 23, 2006
5314 posts
2518 upvotes
Winnipeg
darren22 wrote: 3. You compute your cost and your proceeds based on the exchange rate on the date of the transaction. You can get daily rate information here;

http://www.bankofcanada.ca/en/rates/exchange-look.html

So use the rate on the date of your purchase to calculate how much you paid for the stock in CAD, and the rate on the date of your sale to calculate how much you received for the stock in CAD. The differences is your capital gain/loss.
Is this the only way to calculate (or the only way Rev Canada lets you) the exchange rate for purposes of gain/loss??

Ex.

I transferred in CDN money to USD at a set rate and then purchased stocks. I then sold the stocks and left the USD in my account and purchased more US stocks and sold, etc., some for gains some for loss.

The money is still in USD in my account.

Doesnt the adjusted cost equal the rate I originally paid?

What exchanged rate do I use for my adjusted proceeds if I haven't exchanged the money back yet?

Thanks!

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