Investing

VCN What type of transaction is this?

  • Last Updated:
  • Apr 16th, 2017 6:46 am
Deal Guru
Oct 3, 2006
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Toronto

VCN What type of transaction is this?

I'm trying to use adjustedcostbase.ca to track my ACB and on March 31, VCN paid out a distribution, but I'm not sure what type of transaction to select from the drop down list on adjustedcostbase.ca. Anyone?

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Deal Addict
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Feb 1, 2012
2214 posts
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Thunder Bay, ON
Mar 31 was a cash distribution, which does not affect Adjusted Cost, so you do not have to put it in adjustedcostbase.ca. It's just cash paid to you which is taxed as income for the year in which it is paid. It will be on your T3 for 2017.

Unless you reinvested the distribution, which is described here: https://www.adjustedcostbase.ca/blog/ca ... ans-drips/

The most common transactions affecting ACB for ETFS are:
  • Buy & Sell (obviously)
  • Return of Capital (which lowers ACB)
  • Reinvested Capital Gains Distribution (which raises ACB)

In any transaction screen you can click "Display Help" to get a brief help description. Or click "Blog" at the top of the screen and it brings you to a topic list and search box.

This WP from PWL Capital has a very detailed description on how to use adjustedcostbase.ca
https://www.pwlcapital.com/pwl/media/pw ... f?ext=.pdf
When I was young, I was poor. Now, after years of hard work, I'm no longer young.
Member
May 30, 2015
364 posts
334 upvotes
GTA
Deepwater wrote: Mar 31 was a cash distribution, which does not affect Adjusted Cost, so you do not have to put it in adjustedcostbase.ca. It's just cash paid to you which is taxed as income for the year in which it is paid. It will be on your T3 for 2017.

Unless you reinvested the distribution, which is described here: https://www.adjustedcostbase.ca/blog/ca ... ans-drips/

The most common transactions affecting ACB for ETFS are:
  • Buy & Sell (obviously)
  • Return of Capital (which lowers ACB)
  • Reinvested Capital Gains Distribution (which raises ACB)

In any transaction screen you can click "Display Help" to get a brief help description. Or click "Blog" at the top of the screen and it brings you to a topic list and search box.

This WP from PWL Capital has a very detailed description on how to use adjustedcostbase.ca
https://www.pwlcapital.com/pwl/media/pw ... f?ext=.pdf

Thank you for writing such informative posts (not just this one, but also many other posts).
I read the WP and I saved the document for future reference.
Right now I am at the very beginning of my investment experience and in 2016 I sold some TD MF e-series in order to use the money for balancing my new portfolio (CCP based on ETFs) at TDDI (a.k.a. TD Water House or TD WebBroker).

This is what is not very clear for me at this point:
- Do we need to calculate ACB for Mutual Funds (in my case I had two e-series securities)?
- Do we need to submit the ACB calculations in the Tax Return to CRA? I assume that the answer is "no".
- But, if it is "yes" how do we submit the ACB when most people probably submit their Tax Return online now? Or we just keep those in case CRA wants to see them?
- Are the amounts included in the T3 (not sure if T5 too) slips received from the bank/brokerage affected by the amounts obtained in the ACB calculations?

Sorry for asking all these questions. It is a reflection of my lack of knowledge on this subject.

Thank you.
Deal Addict
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Feb 1, 2012
2214 posts
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Thunder Bay, ON
pishta wrote: Thank you for writing such informative posts (not just this one, but also many other posts).
Glad to help.

- Do we need to calculate ACB for Mutual Funds (in my case I had two e-series securities)?
Yes. It is needed for any property where you may have a capital gain or loss, such as ETFs, mutual funds, stocks, bonds, real estate (other than primary residence), precious metals

- Do we need to submit the ACB calculations in the Tax Return to CRA? I assume that the answer is "no".
No. Capital gains are reported on Schedule 3 which has sections for different types of property, and columns for ACB, proceeds of disposition and capital gains. You need to report the ACB, but not the calculations for it.

- But, if it is "yes" how do we submit the ACB when most people probably submit their Tax Return online now? Or we just keep those in case CRA wants to see them?
You should keep the ACB calculations in case CRA requests them.

- Are the amounts included in the T3 (not sure if T5 too) slips received from the bank/brokerage affected by the amounts obtained in the ACB calculations?
No. Your ACB calculations are used to determine and report capital gain or loss when you sell shares.

T3 and T5 include capital gains or losses and income generated internally by the fund, such as interest generated by a bond fund or capital gains when a mutual fund sells a stock. They do not include capital gains that are obtained when you sell capital property.

Box 42 on a T3 is for Return of Capital. If there is a value in that box you need to include it in your ACB calculations. Return of Capital lowers ACB.


Here are some CRA web pages you may fund useful:
Calculating and reporting your capital gains and losses
CRA Schedule 3
Tax Treatment of Mutual Funds for Individuals

This stuff can be a pain the first couple of times you work through it. If you have more questions I will try to answer.
When I was young, I was poor. Now, after years of hard work, I'm no longer young.

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