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I was reading up on ACB...

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  • Feb 18th, 2017 12:09 am
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Deal Addict
Nov 12, 2008
1983 posts
389 upvotes
Aurora

I was reading up on ACB...

I was reading up on ACB and as this will affect me next year, I'd like to be pro-active so I don't have a headache later on.
In case it matters, this is mostly for e-series in TDDI, and Tangerine Balanced Growth Fund.

1) When calculating ACB, is it recommended I update a spreadsheet after each transaction, or can I download a history of transactions at the end of the year and enter it into the speadsheet all at once?

2) When initially buying the funds (last month) I set it up as dividends re-invested as I didn't know any better at the time. Should I cancel having the dividends re-invested to simplify calculating ACB? Or is it not really more difficult to calculate when set up as DRIP and I should just leave it as-is?

3) Does CRA ask for "proof" showing that I calculated this correctly?

4) Does this need to be calculated for bonds (TDB909)?

5) I've seen a few spreadsheets floating around - is there a recommended one that is simple to use?
16 replies
Member
Jan 8, 2009
464 posts
79 upvotes
1) no idea, but i do it as i go. once you get the formulas set up in a spreadsheet it's not very hard and you can keep track of your gains anyways
2) i don't find DRIPs that hard. any shares you DRIP is another cost. any cash leftover is just gains
3) i think you attach a printout or something? i'm pretty sure if they want to audit, it should be fine as long as you have your spreadsheet
4) no idea
5) i just made my own. it's really not very hard and if you already have a spreadsheet type tracker, you just set it up once and you're good to go afterwards. there are a few online but since i already had one set up, i just adjusted it to calculate ACB.
Deal Addict
Dec 11, 2007
1958 posts
582 upvotes
Markham
1. Updating after every transaction might be tedious if you are doing automatic investing every 2 weeks. Similarly, doing it at the end of the year may seem daunting, as you'll have the entire year's worth of transactions to pour through. Perhaps doing it once a month, or once a quarter would be a good balance? I would recommend you go with whatever you are comfortable with.

2. I used to DRIP and stopped it a while ago. I had 2 reasons. First, it was annoying to constantly update the ACB every quarter for every stock. Second, I prefer to direct funds to where I see value instead of blindly reinvesting at any price. If I were investing in e-series, I would DRIP though, since the first issue is minimal, and the second is irrelevant (since you're being passive anyway)

3. No, you just fill out the final results to calculate cap gains. They don't ask for proof of the entire process at tax filing time, but if you get audited, you could be asked to provide the proof at a later date.

4. No idea either. I don't invest in bonds

5. I made my own as well
Member
Jan 18, 2007
339 posts
27 upvotes
Gweedz wrote: 5) I've seen a few spreadsheets floating around - is there a recommended one that is simple to use?
I like https://www.adjustedcostbase.ca/ for keeping track of ACB. It's pretty easy and has a few hints when entering transactions - for example pointing out superficial loss rule scenarios. The site also allows you export spreadsheet of the transactions which I keep locally (in case site ceases to exist). The blog posts on the site are also pretty good.
Member
Nov 30, 2015
221 posts
36 upvotes
Mississauga, ON
I created my own Google spreadsheet to track ACB.

I can now access it anywhere and i am not afraid of losing it.

Setting it up should be fairly easy but PM me if u need help
Deal Addict
User avatar
Feb 1, 2012
2214 posts
3798 upvotes
Thunder Bay, ON
1) Annually should be often enough if you keep good records and don't trade a lot. At first try doing it every transaction so you learn faster.

2) Try it as-is, if it is too much of a PITA, change to non-DRIP. I have 2 ETFs (non-drip) and 2 MFs (DRIP) in my non-reg account. One MF has monthly distributions and the other has quarterly. So 16 DRIP transactions a year, which I don't find onerous.

3) Not normally. You declare capital gain/loss when you sell on income tax schedule 3. You should keep records though, in case you get audited.

4) Yes, bonds can have capital gain/loss which needs to be on Schedule 3 when you sell.

5) I use www.adjustedcostbase.ca. Canadian Capitalist has a web page with a link to their spreadsheet. http://www.canadiancapitalist.com/free- ... -in-excel/

I use TDDI and find their average cost shown on statements and online is accurate. As long as you are not holding the same security in 2 different accounts, or transferring securities between accounts in-kind their costs should be accurate, but does not hurt to calculate your own as a comparison. Also TDDI's supporting documents are good. Every year they provide for me online for my non-reg account a trading summary and a T5008 that shows the detail for all transactions that appear on T3/T5 slips.
When I was young, I was poor. Now, after years of hard work, I'm no longer young.
Deal Addict
Nov 12, 2008
1983 posts
389 upvotes
Aurora
A lot of good info here - thanks!
At first I wasn't keen on using an online spreadsheet - but now I will at least give it a try.
Deal Addict
Nov 12, 2008
1983 posts
389 upvotes
Aurora
I was expecting this to show a price so I could enter it in my ACB spreadsheet. TDB909.

Image
Newbie
Aug 20, 2014
60 posts
254 upvotes
Edmonton, AB
It does. You bought 1.246 units at a cost of $14.33, therefore $11.50 per unit
Deal Addict
Nov 12, 2008
1983 posts
389 upvotes
Aurora
Mattthemiller wrote: It does. You bought 1.246 units at a cost of $14.33, therefore $11.50 per unit
Why doesn't it show $11.50 under "Price" and $14.33 under "Net Amount"? Like a regular buy.
Deal Addict
Nov 12, 2008
1983 posts
389 upvotes
Aurora
Now I'm really confused:

What is 'Capital Gain'
Capital gain is an increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.

Image

The Buy and Sell prices are the same - yet there's a $8.33 capital gain! ???
Jr. Member
Nov 19, 2015
120 posts
22 upvotes
Gweedz wrote: Now I'm really confused:

What is 'Capital Gain'
Capital gain is an increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.

Image

The Buy and Sell prices are the same - yet there's a $8.33 capital gain! ???
This is how ACB works...when you sell, your capital gain is based on the average purchase price for all of your shares. If you own 30 shares at an average price of $1.67 per share, when you sell 10 at $2.50 your gain is $0.83 per share. You don't get to say "I am selling these specific shares that I bought for $2.50", you have to say "I am selling 10 of my 30 shares that were bought for an average cost of $1.67".

Another way to look at it: when you sell shares you have to sell a proportional number from each batch you bought. So in your case you bought 20 at $1.25 and 10 at $2.50. When you sell 10, you are selling 6.67 shares that were purchased at $1.25, and 3.33 shares that were purchased at $2.50. The gain on the 6.67 shares is 6.67 * (2.50 - 1.25) = $8.33 and the gain on the 3.33 shares is 3.33 * (2.50 - 2.50) = $0.

The government doesn't let you pick and choose which specific shares you are selling, they are just a tally in your account.
Deal Addict
Nov 12, 2008
1983 posts
389 upvotes
Aurora
That makes more sense then all the other tutorials I've read! Thank you!
Jr. Member
Nov 19, 2015
120 posts
22 upvotes
I should clarify that in the US they can pick and choose which specific shares to sell to optimize taxes. Oldest-first (FIFO) is the default but they can use newest-first or other means if they desire. I believe they started this around 2011.
Newbie
Aug 20, 2014
60 posts
254 upvotes
Edmonton, AB
Gweedz wrote: Why doesn't it show $11.50 under "Price" and $14.33 under "Net Amount"? Like a regular buy.
I think it's because it's not a "regular buy", it's a drip. No funds are removed from your a/c to fund the transaction, therefore no "net amount" figure.
This is just a guess though.
Member
Oct 24, 2010
201 posts
70 upvotes
Toronto
Just wanted to borrow the thread since I have a question about ACB as well.

If in the same month I sold a stock at a (large) loss, but then also made some trades (using the same stock) for some (much smaller) gains, how will I be taxed? To add to all that, in the end I still have a position in the stock (unfortunately).
This is a superficial loss situation, but I want to see If my understanding is correct - I would be taxed on my gains and then the loss will essentially carryforward (a la ACB) until I finally sell my entire position for good? (unless it somehow recovers..)

Would appreciate any advice/insight on this, thank you!

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