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"AndyHancock" <andymhancock@gmail.com> wrote in message 
news:7c7bfab9-64bd-4a4a-b078-1c696cc3cb0c@b20g2000yqo.googlegroups.com...
> Investment isn't my thing, and I rely on a big bank mutual fund 
> for
> both RRSP and investment in general.  The T3 gives box 42 that
> contains a figure used for adjusting the cost base (ACB) of fund 
> units/
> shares.  The CRA explanation is at 
> http://www.cra-arc.gc.ca/E/pub/tg/rc4169.
> This seems to indicate that you have to delve into the individual
> sales of units/shares, but the whole reason I went with big bank
> mutual funds is that I want to treat it like a black box and not 
> get
> into the details.  I get what I think are quarterly or 
> semi-annaul
> reports, which I don't often look at because I can't do anything 
> about
> the results without first finding the time to research options to 
> a
> certain level of confidence.  So far, CRA hasn't complained about 
> my
> not using box 42.  I'm not sure that even a paid accountant would
> descend into the depths of individual transactions, since they 
> don't
> have access to those details.
>
> Are there any clear and significant consequences of not 
> optimizing my
> tax return using that figure?  I already make use of the IMA fees 
> as
> carrying charges in Schedule 4.  (A pet peeve of mine is that 
> there is
> no elucidation of what IMA stands for, but they are fund 
> management
> fees of some sort).  I figure that since ACB merely accounts for 
> the
> cost of transactions, then IMA plays the same role, albeit 
> handled
> differently.
>
> P.S. Sure would be nice of usenet became moderated.  Look at what 
> has
> happened over the decades.

The original ACB of an holding is what it originally cost you, I.e. 
the actual cost of the units including any commission or service 
fee directly related to the purchase.  When ever you get a T3 slip 
for that investment which would represent either a distribution 
paid by cash into your account OR a distribution paid in the form 
of more units (reinvestment) AND there is a entry in Box 42, that 
simply means that SOME or all of the distribution came from your 
original capital. That figure should 1: be recorded on that year's 
tax return in the appropriate T3 box and 2. be subtracted from the 
original ACB of the fund. So, when you eventually SELL any or all 
of the units in that fund, and go to calculate your capital gain or 
loss, you WILL use the adjusted ACB and NOT the originally ACB, 
when calculating your profit or loss. Many people will confronted 
with the above, turn their taxes over to a professional to ensure 
the proper reporting and calculation of losses and MANY financial 
institutions do NOT issue T5008 slips for each sale but, instead, 
put all relevant transactions on an annual report, usually sent out 
with the December yeare end statement but NOT ALWAYS. Sometimes, 
like with Manulife, one has to REQUEST such a report. It often gets 
lost in the paper shuffle because people are so programmed into 
expecting SLIPS for all tax relating matters.


 

On Apr 22, 3:11 am, "Sharx35" wrote:
>"AndyHancock" wrote in message
>> Investment isn't my thing, and I rely on a big bank mutual fund for both RRSP and investment in general.  The T3 gives box 42 that contains a figure used for adjusting the cost base (ACB) of fund units/ shares.  The CRA explanation is at http://www.cra-arc.gc.ca/E/pub/tg/rc4169.  This seems to indicate that you have to delve into the individual sales of units/shares, but the whole reason I went with big bank mutual funds is that I want to treat it like a black box and not get into the details.  I get what I think are quarterly or semi-annaul reports, which I don't often look at because I can't do anything about the results without first finding the time to research options to a certain level of confidence.  So far, CRA hasn't complained about my not using box 42.  I'm not sure that even a paid accountant would descend into the depths of individual transactions, since they don't have access to those details.
>>
>> Are there any clear and significant consequences of not optimizing my tax return using that figure?  I already make use of the IMA fees as carrying charges in Schedule 4.  (A pet peeve of mine is that there is no elucidation of what IMA stands for, but they are fund management fees of some sort).  I figure that since ACB merely accounts for the cost of transactions, then IMA plays the same role, albeit handled differently.
>>
>> P.S. Sure would be nice of usenet became moderated.  Look at what has happened over the decades.
>
> The original ACB of an holding is what it originally cost you, I.e.  the actual cost of the units including any commission or service fee directly related to the purchase.  When ever you get a T3 slip for that investment which would represent either a distribution paid by cash into your account OR a distribution paid in the form of more units (reinvestment) AND there is a entry in Box 42, that simply means that SOME or all of the distribution came from your original capital. That figure should 1: be recorded on that year's tax return in the appropriate T3 box and 2. be subtracted from the original ACB of the fund. So, when you eventually SELL any or all of the units in that fund, and go to calculate your capital gain or loss, you WILL use the adjusted ACB and NOT the originally ACB, when calculating your profit or loss. Many people will confronted with the above, turn their taxes over to a professional to ensure the proper reporting and calculation of losses and MANY financial institutions do NOT issue T5008 slips for each sale but, instead, put all relevant transactions on an annual report, usually sent out with the December yeare end statement but NOT ALWAYS. Sometimes, like with Manulife, one has to REQUEST such a report. It often gets lost in the paper shuffle because people are so programmed into expecting SLIPS for all tax relating matters.

The thing is that the document linked to in my original post describes
mutual funds as flow-through.  And mine are actively managed, and I
found a 2012 Client Tax Statement - Gains(Losses) from Sale of
Securities sheet with countless transaction line items, dated, with a
"Proceeds from Sale", an "Average Cost" column, and a Gain(Loss)
column.  So I was wrong about not having the details, looks like a get
a sheet of all the transactions made by the fund manager.
Unfortunately, it doesn't look anything like the examples in the
documents that my original post links to.

That document says that even if units are sold and rolled back in, the
funds are still assumed to have flowed to me.  I assume that things
are sold in one part of the fund in order to buy in another part of
the fund as the manager adjusts the mix of "pools" (that's what
they're called, apparently).  I never really redeem shares in the
overall fund.  To tell you the truth, it's not clear whether the fund
is the collection of pools, which the bank simply refers to as an
account, or whether each pool is a fund.

I have a feeling that I have to sit down with the bank financial
manager to sort out the lingo and do what normal people (everyone else
in my investor category, I suppose) do.

Thanks.

"AndyHancock" <andymhancock@gmail.com> wrote in message 
news:361e5fcd-feb7-49ee-bf09-a8b888e585fa@l5g2000yqe.googlegroups.com...
> On Apr 22, 3:11 am, "Sharx35" wrote:
>>"AndyHancock" wrote in message
>>> Investment isn't my thing, and I rely on a big bank mutual fund 
>>> for both RRSP and investment in general.  The T3 gives box 42 
>>> that contains a figure used for adjusting the cost base (ACB) 
>>> of fund units/ shares.  The CRA explanation is at 
>>> http://www.cra-arc.gc.ca/E/pub/tg/rc4169.  This seems to 
>>> indicate that you have to delve into the individual sales of 
>>> units/shares, but the whole reason I went with big bank mutual 
>>> funds is that I want to treat it like a black box and not get 
>>> into the details.  I get what I think are quarterly or 
>>> semi-annaul reports, which I don't often look at because I 
>>> can't do anything about the results without first finding the 
>>> time to research options to a certain level of confidence.  So 
>>> far, CRA hasn't complained about my not using box 42.  I'm not 
>>> sure that even a paid accountant would descend into the depths 
>>> of individual transactions, since they don't have access to 
>>> those details.
>>>
>>> Are there any clear and significant consequences of not 
>>> optimizing my tax return using that figure?  I already make use 
>>> of the IMA fees as carrying charges in Schedule 4.  (A pet 
>>> peeve of mine is that there is no elucidation of what IMA 
>>> stands for, but they are fund management fees of some sort).  I 
>>> figure that since ACB merely accounts for the cost of 
>>> transactions, then IMA plays the same role, albeit handled 
>>> differently.
>>>
>>> P.S. Sure would be nice of usenet became moderated.  Look at 
>>> what has happened over the decades.
>>
>> The original ACB of an holding is what it originally cost you, 
>> I.e.  the actual cost of the units including any commission or 
>> service fee directly related to the purchase.  When ever you get 
>> a T3 slip for that investment which would represent either a 
>> distribution paid by cash into your account OR a distribution 
>> paid in the form of more units (reinvestment) AND there is a 
>> entry in Box 42, that simply means that SOME or all of the 
>> distribution came from your original capital. That figure should 
>> 1: be recorded on that year's tax return in the appropriate T3 
>> box and 2. be subtracted from the original ACB of the fund. So, 
>> when you eventually SELL any or all of the units in that fund, 
>> and go to calculate your capital gain or loss, you WILL use the 
>> adjusted ACB and NOT the originally ACB, when calculating your 
>> profit or loss. Many people will confronted with the above, turn 
>> their taxes over to a professional to ensure the proper 
>> reporting and calculation of losses and MANY financial 
>> institutions do NOT issue T5008 slips for each sale but, 
>> instead, put all relevant transactions on an annual report, 
>> usually sent out with the December yeare end statement but NOT 
>> ALWAYS. Sometimes, like with Manulife, one has to REQUEST such a 
>> report. It often gets lost in the paper shuffle because people 
>> are so programmed into expecting SLIPS for all tax relating 
>> matters.
>
> The thing is that the document linked to in my original post 
> describes
> mutual funds as flow-through.  And mine are actively managed, and 
> I
> found a 2012 Client Tax Statement - Gains(Losses) from Sale of
> Securities sheet with countless transaction line items, dated, 
> with a
> "Proceeds from Sale", an "Average Cost" column, and a Gain(Loss)
> column.  So I was wrong about not having the details, looks like 
> a get
> a sheet of all the transactions made by the fund manager.
> Unfortunately, it doesn't look anything like the examples in the
> documents that my original post links to.
>
> That document says that even if units are sold and rolled back 
> in, the
> funds are still assumed to have flowed to me.  I assume that 
> things
> are sold in one part of the fund in order to buy in another part 
> of
> the fund as the manager adjusts the mix of "pools" (that's what
> they're called, apparently).  I never really redeem shares in the
> overall fund.  To tell you the truth, it's not clear whether the 
> fund
> is the collection of pools, which the bank simply refers to as an
> account, or whether each pool is a fund.
>
> I have a feeling that I have to sit down with the bank financial
> manager to sort out the lingo and do what normal people (everyone 
> else
> in my investor category, I suppose) do.
>
> Thanks.

Yes, do discuss it with their expert. SOMETIMES switches between 
mutual funds (which might otherwise result in taxable gains or 
losses) do NOT result in taxable transactions. It all depends on 
the corporate structure of the particular mutual fund. In other 
words, some switches are like going from room to room in the same 
house--not taxable.  Others are like going from house to house 
(taxable). The bank's person should know the difference.



 

On 21/04/2013 6:01 PM, AndyHancock wrote:

> P.S. Sure would be nice of usenet became moderated.  Look at what has
> happened over the decades.


Problem with moderated is it leaves the system open to censorship and 
though control.

I can freely say, we have the most corrupt system back room money can 
buy and our tax system assures we pay.

No moderation means you can say it as it is.  Unlike CBC that will 
censor you at every turn to appease some losers like government unions, 
first nations or immigration abusers.  You can just post your thoughts 
without another idiots approval.  Its the usenet's strength.


-- 
Liberal-socialism is a great idea so long as the credit is good and 
other people pay for it.  When the credit runs out and those that pay 
for it leave, they can all share having nothing but debt and discontentment.

On 22/04/2013 1:11 AM, Sharx35 wrote:
>
>
> "AndyHancock" <andymhancock@gmail.com> wrote in message
> news:7c7bfab9-64bd-4a4a-b078-1c696cc3cb0c@b20g2000yqo.googlegroups.com...
>> Investment isn't my thing, and I rely on a big bank mutual fund for
>> both RRSP and investment in general.  The T3 gives box 42 that
>> contains a figure used for adjusting the cost base (ACB) of fund units/
>> shares.  The CRA explanation is at
>> http://www.cra-arc.gc.ca/E/pub/tg/rc4169.
>> This seems to indicate that you have to delve into the individual
>> sales of units/shares, but the whole reason I went with big bank
>> mutual funds is that I want to treat it like a black box and not get
>> into the details.  I get what I think are quarterly or semi-annaul
>> reports, which I don't often look at because I can't do anything about
>> the results without first finding the time to research options to a
>> certain level of confidence.  So far, CRA hasn't complained about my
>> not using box 42.  I'm not sure that even a paid accountant would
>> descend into the depths of individual transactions, since they don't
>> have access to those details.
>>
>> Are there any clear and significant consequences of not optimizing my
>> tax return using that figure?  I already make use of the IMA fees as
>> carrying charges in Schedule 4.  (A pet peeve of mine is that there is
>> no elucidation of what IMA stands for, but they are fund management
>> fees of some sort).  I figure that since ACB merely accounts for the
>> cost of transactions, then IMA plays the same role, albeit handled
>> differently.
>>
>> P.S. Sure would be nice of usenet became moderated.  Look at what has
>> happened over the decades.
>
> The original ACB of an holding is what it originally cost you, I.e. the
> actual cost of the units including any commission or service fee
> directly related to the purchase.  When ever you get a T3 slip for that
> investment which would represent either a distribution paid by cash into
> your account OR a distribution paid in the form of more units
> (reinvestment) AND there is a entry in Box 42, that simply means that
> SOME or all of the distribution came from your original capital. That
> figure should 1: be recorded on that year's tax return in the
> appropriate T3 box and 2. be subtracted from the original ACB of the
> fund. So, when you eventually SELL any or all of the units in that fund,
> and go to calculate your capital gain or loss, you WILL use the adjusted
> ACB and NOT the originally ACB, when calculating your profit or loss.
> Many people will confronted with the above, turn their taxes over to a
> professional to ensure the proper reporting and calculation of losses
> and MANY financial institutions do NOT issue T5008 slips for each sale
> but, instead, put all relevant transactions on an annual report, usually
> sent out with the December yeare end statement but NOT ALWAYS.
> Sometimes, like with Manulife, one has to REQUEST such a report. It
> often gets lost in the paper shuffle because people are so programmed
> into expecting SLIPS for all tax relating matters.

But given the investor is unsophisticated, they probably should not own 
ACB type stocks or mutuals.  While ACB can be good, for many it is 
deceit to the person holding the securities.

While many are good, many are not and here is an example many bad ones 
pull off. Simplified to show the bad news:

You pay $1000 to get a ACB revenue stream.  They pay say 10%, $100 a 
year in dividends classified as return of capital.  Thus, you don't pay 
taxes on it.  But the tax situations adjusts your cost base down to 
$900...so when you sell you will pay more taxes on it as the ACB.

The reality is many just return your capital and get you in a tax 
situation, no real earnings are behind many of them so the net after tax 
gains are negative.  Especially after inflation.

It isn't to say not to use them, many are good but should be considered 
only for advanced investors doing the math behind the investment.  As 
the return of capital and cost basis adjustments can be deceptive to 
fool novice investors.

-- 
Liberal-socialism is a great idea so long as the credit is good and 
other people pay for it.  When the credit runs out and those that pay 
for it leave, they can all share having nothing but debt and discontentment.

On 23/04/2013 1:24 AM, Sharx35 wrote:
>
>
> "AndyHancock" <andymhancock@gmail.com> wrote in message
> news:361e5fcd-feb7-49ee-bf09-a8b888e585fa@l5g2000yqe.googlegroups.com...
>> On Apr 22, 3:11 am, "Sharx35" wrote:
>>> "AndyHancock" wrote in message
>>>> Investment isn't my thing, and I rely on a big bank mutual fund for
>>>> both RRSP and investment in general.  The T3 gives box 42 that
>>>> contains a figure used for adjusting the cost base (ACB) of fund
>>>> units/ shares.  The CRA explanation is at
>>>> http://www.cra-arc.gc.ca/E/pub/tg/rc4169.  This seems to indicate
>>>> that you have to delve into the individual sales of units/shares,
>>>> but the whole reason I went with big bank mutual funds is that I
>>>> want to treat it like a black box and not get into the details.  I
>>>> get what I think are quarterly or semi-annaul reports, which I don't
>>>> often look at because I can't do anything about the results without
>>>> first finding the time to research options to a certain level of
>>>> confidence.  So far, CRA hasn't complained about my not using box
>>>> 42.  I'm not sure that even a paid accountant would descend into the
>>>> depths of individual transactions, since they don't have access to
>>>> those details.
>>>>
>>>> Are there any clear and significant consequences of not optimizing
>>>> my tax return using that figure?  I already make use of the IMA fees
>>>> as carrying charges in Schedule 4.  (A pet peeve of mine is that
>>>> there is no elucidation of what IMA stands for, but they are fund
>>>> management fees of some sort).  I figure that since ACB merely
>>>> accounts for the cost of transactions, then IMA plays the same role,
>>>> albeit handled differently.
>>>>
>>>> P.S. Sure would be nice of usenet became moderated.  Look at what
>>>> has happened over the decades.
>>>
>>> The original ACB of an holding is what it originally cost you, I.e.
>>> the actual cost of the units including any commission or service fee
>>> directly related to the purchase.  When ever you get a T3 slip for
>>> that investment which would represent either a distribution paid by
>>> cash into your account OR a distribution paid in the form of more
>>> units (reinvestment) AND there is a entry in Box 42, that simply
>>> means that SOME or all of the distribution came from your original
>>> capital. That figure should 1: be recorded on that year's tax return
>>> in the appropriate T3 box and 2. be subtracted from the original ACB
>>> of the fund. So, when you eventually SELL any or all of the units in
>>> that fund, and go to calculate your capital gain or loss, you WILL
>>> use the adjusted ACB and NOT the originally ACB, when calculating
>>> your profit or loss. Many people will confronted with the above, turn
>>> their taxes over to a professional to ensure the proper reporting and
>>> calculation of losses and MANY financial institutions do NOT issue
>>> T5008 slips for each sale but, instead, put all relevant transactions
>>> on an annual report, usually sent out with the December yeare end
>>> statement but NOT ALWAYS. Sometimes, like with Manulife, one has to
>>> REQUEST such a report. It often gets lost in the paper shuffle
>>> because people are so programmed into expecting SLIPS for all tax
>>> relating matters.
>>
>> The thing is that the document linked to in my original post describes
>> mutual funds as flow-through.  And mine are actively managed, and I
>> found a 2012 Client Tax Statement - Gains(Losses) from Sale of
>> Securities sheet with countless transaction line items, dated, with a
>> "Proceeds from Sale", an "Average Cost" column, and a Gain(Loss)
>> column.  So I was wrong about not having the details, looks like a get
>> a sheet of all the transactions made by the fund manager.
>> Unfortunately, it doesn't look anything like the examples in the
>> documents that my original post links to.
>>
>> That document says that even if units are sold and rolled back in, the
>> funds are still assumed to have flowed to me.  I assume that things
>> are sold in one part of the fund in order to buy in another part of
>> the fund as the manager adjusts the mix of "pools" (that's what
>> they're called, apparently).  I never really redeem shares in the
>> overall fund.  To tell you the truth, it's not clear whether the fund
>> is the collection of pools, which the bank simply refers to as an
>> account, or whether each pool is a fund.
>>
>> I have a feeling that I have to sit down with the bank financial
>> manager to sort out the lingo and do what normal people (everyone else
>> in my investor category, I suppose) do.
>>
>> Thanks.
>
> Yes, do discuss it with their expert. SOMETIMES switches between mutual
> funds (which might otherwise result in taxable gains or losses) do NOT
> result in taxable transactions. It all depends on the corporate
> structure of the particular mutual fund. In other words, some switches
> are like going from room to room in the same house--not taxable.  Others
> are like going from house to house (taxable). The bank's person should
> know the difference.

Should know the difference but will they tell you?  Remember they work 
for the bank.

I wouldn't take a bankers advise without thoroughly understanding it in 
depth.  I just finished with a banker/investor service meeting 2 months 
ago and I almost ran then off and didn't use their services as much of 
what the tout is pure BS.

Take RRSPs.  Banks always recommend them but for most it is a tax trap 
especially if taken too far.  What they will not tell people is there is 
a higher than average probability you will pay more taxes out as a 
percentage than you defer going in.  For 95% of the people, they are 
better off in TFSAs.

Another issue is the banker said 3% return is good.  BS again.  To 
retain value the equation is inflation plus taxes on inflation, so 3.2% 
inflation needs returns north of 4.6% just to retain purchasing value. 
Anything less is a purchasing value loss to you and isn't even tax 
deductible.

The banks are loaded with myths and thus a real bad place to get good 
advise.  And there isn't a bank mutual fund in Canada I would own as 
they have negative value returns after inflations and taxes.

-- 
Liberal-socialism is a great idea so long as the credit is good and 
other people pay for it.  When the credit runs out and those that pay 
for it leave, they can all share having nothing but debt and discontentment.