Investing

timing of dividends, taxation ... Interactive Brokers.

  • Last Updated:
  • Apr 3rd, 2021 1:39 am
[OP]
Newbie
Jun 4, 2018
39 posts
17 upvotes

timing of dividends, taxation ... Interactive Brokers.

Hi there!

IB has issued me a 2020 T3 for VUS (ETF) that include a distribution of foreign income and capital gains that were paid January 8, 2021 but had an "EX-date" of December 30, 2020.

Should these be reported as income in 2020 or 2021?

I have read that IB sometimes makes mistakes in their tax slips.
10 replies
Sr. Member
May 2, 2019
505 posts
602 upvotes
Vancouver
I'd like to know the answer too. But personally, I just go with T3 and T5 unless there are obvious mistakes. Filing the last moment usually, just to give IB a chance to correct bugs if any. Not worth my time to verify every single number, if the amounts are not huge. The brokers have enough information to do these right. That's unlike T5008, where I assume the responsibility to file the proper gains/losses.
[OP]
Newbie
Jun 4, 2018
39 posts
17 upvotes
It's roughly a $3,000 dividend. Hate to for it to be included in my tax slips for both 2020 and 2021 by mistake ;)
Deal Addict
Dec 4, 2011
1773 posts
1327 upvotes
Montréal
I think (do not quote me on this) the dividend is considered settled at T+1 after ex-div date, which would be Jan 4 2021 in this case (last day of trading in Canada was Dec 29). So technically it should be in 2021. But I would just pay it personally this year (slip says 2020) and make sure they do not issue the same one next year.

But I am not a certified accountant.
Deal Expert
User avatar
Dec 12, 2009
20915 posts
9168 upvotes
Toronto
I received a 2020 T3 for ZSP also. The distribution was credited in 2021. I am always under the impression that taxation is based on the year in which income is received. For me it is a small amount. I am not going to lose sleep over whether it should be a 2020 or 2021 taxation item. I see 2020 on the T3 slip and so it goes into the 2020 tax return. If the CRA take exception, I think I have good alibi.
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[OP]
Newbie
Jun 4, 2018
39 posts
17 upvotes
S5 wrote: Record date is Dec 31 and should be reported on 2020 taxes. Make sure to also adjust your ACB for the large reinvested capital gain to avoid double payment of taxes when sold.

https://www.vanguardcanada.ca/advisors/ ... 551/equity
Agreed that the record date is Dec. 31. Do you have any support for your contention that this means it should be reported in 2020? It is quite clear that in the U.S., it is the actual receipt of the dividend, not the record date that matters. There is plenty of tax law to confirm this. I am looking for something authoritative for Canada.
Deal Addict
Oct 4, 2009
2742 posts
1612 upvotes
Montreal
I don’t have an authoritative source and came up empty looking for one in the amount of time I’m willing to spend looking, sorry. I can tell you from personal experience from non IB, big bank brokers that’s how it is done and has been reported as such numerous times on other forums when this question is asked by new investors. Hopefully someone else will find a source that satisfies you.
Deal Addict
Oct 4, 2009
2742 posts
1612 upvotes
Montreal
Not from the horse’s mouth but hopefully this link helps. https://www.adjustedcostbase.ca/blog/un ... ent-dates/
Also, any transactions involving distributions for ETF’s / funds / trusts (such as Return of Capital, Capital Gains Dividends, and Reinvested Capital Gains Distributions) should use the record date that applies for the distribution. Again, this ensures that any applicable capital gains and losses are reported for the correct year.
[OP]
Newbie
Jun 4, 2018
39 posts
17 upvotes
Thank you, that's a least in the horse's vicinity ;)

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