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Before making a major financial decision you
should consult a qualified professional.
Tax
Treatment Of Income From Different Investments
This information is regarding investments which
are held outside of RRSPs or other registered accounts - i.e., in
non-registered accounts.
If you have purchased an investment in a non-registered
account, it is your responsibility to keep records which will allow you to
calculate the adjusted cost base
(ACB) of that
investment, in Canadian dollars. If you have non-registered
investments held in US$, it's very important to keep accurate records of the
date the investments were purchased, and the exchange rate on that date, to
calculate your Canadian dollar ACB. Your brokerage statements will show
you the US$ ACB of your investments, but will not show you the Cdn$ ACB.
If you have disposed of an investment held in a
non-registered account, it is your responsibility to record that disposal on
your income tax return for the year in which it was sold, in Canadian
dollars.
In
Kind Transfers Not On Your T5008, Do NOT
use Autofill for T5008
Your brokerage will issue a T5008 and a trading summary
showing your purchases and sales of investments in your non-registered account,
to help you prepare Schedule 3 of your tax return. For some reason, in
kind transfers may not be shown on these documents (although it looks
like some brokerages have been including this information since 2020). You are still required to
report these deemed
dispositions on Schedule 3.
When the proceeds are in US$, they must be converted to Cdn$ using the
exchange rate at the date of the transaction. If the disposition is the
result of an in-kind contribution to a registered account, the Cdn$ amount of
the contribution is also the proceeds of disposition.
If you use Autofill Your Return, and have T5008 transactions, any US$
dispositions will only show the US$ amounts instead of Cdn$ amounts.
For dispositions of investments, the T5008 shows only the proceeds - it is up
to the taxpayer to track the Cdn$ cost of these investments to deduct from the
proceeds, to determine the gain or loss.
If you use a professional tax preparer, it is your
responsibility to provide them with all the information required to properly
record disposals and their ACB.
Tax Tip: Even if a sale is
not included on the T5008 or trading summary, it is the taxpayer's
responsibility to ensure that the sale is recorded on Schedule 3 of their tax
return. Using a professional tax preparer? It is still the taxpayer's
responsibility!!!
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