[GreatLaker]

Seriously, how the hell does one even open these CDS Innovations spreadsheets? Now I'm trying it with Microsoft Excel 2011. When I open the spreadsheet, I get a question about macros. I said to Enable macros, and now Excel tells me: "Compile error in hidden module: ThisWorkbook". The resulting spreadsheet is blank -- nothing visible.

Even if you manage to open these, I doubt that these are going to work as proof/collateral for the long term since they are not easy to open. You really think the CRA is going to be able to open one of these spreadsheets 10 years in the future?

I have a masters degree in Computer Engineering.

It works for me on 2 computers, both Win10, one Excel 2010, the other Excel 2013.

1) Opens with a yellow banner that says "Protected View Be careful bla blah blah Enable Editing", and below that it says in red "Sorry you must enable macros...". At this point i just click "Enable Editing" in the top yellow banner.

2) Another yellow banner that says "Security Warning Macros have been enabled with the same red "Sorry you must enable macros". At this point click "Enable Content" and the sheet opens. I did not have to go into options or settings to enable macros at all, just click the Enable buttons on the sheet.

Is that not your experience?

Also I think someone else mentioned upthread that BMO reports in %, whereas iShares and Vanguard report in $.

 

[GreatLaker]

I'll have to search the thread to be sure of my memory that the CDS Innovations sheets use %.

When I checked 2015 ZLB distribution charge on BMO's web site against yahoo's historical dividends, the dates & $ matched. It seems clear BMO's web site is reporting $$, just as iShares and from what I recall, Vanguard does.


Cheers

PS

The OP in post # 5 says the CDS Innovations is by %.

Yes, to clarify my previous comment in post #37, all the ETF provider tax documents I have seen publish distribution details in $, and all the CDS spreadsheets I have seen except for BMO publish distribution details in $. It is only the BMO spreadsheets on CDS that publish distribution details in %. In the CDS spreadsheet this is indicated in cell G15 that the calculation method is either rate or %.

To get distribution details in $ I think you would have to multiply the % values by the total distribution $ per unit in line 19.

 

[GreatLaker]

I do recall TDDI having a significant delay on a Vanguard distribution. Check out the trade date and settlement date.
View attachment 21487

That's the way ETF reinvested distributions always appear in TDDI. The ETF provider waits until the end of the year to determine the overall capital gains distribution for the year, rather than pay them out throughout the year. That way if there are capital gains early in the year and capital losses later in the year they can use the later capital losses against the earlier capital gains rather than paying them out. They need all the ETF's holdings to report their financials by the Feb 28 deadline, which they then factor into the ETF's financials. That's why the deadline for issuing T3s is Mar 31, not Feb 28.

 

[GreatLaker]

Check your eServices, folks. I now have a T3 for my BMO ETFs - potentially of interest to @GreatLaker @Eclectic12 @AltaRed

This also confused me about something. The T3 details document shows $5.42 ROC on my ZSP position. Therefore, in my own position tracking spreadsheet, I have subtracted 5.42 from my ACB. If there was a reinvested distribution, I would fix that up too, but ZSP had none last year.

However, within TDDI's Holdings, I don't see this adjustment (and they usually do show the correct ACB). Instead I see the original book cost before any distributions happened. Does this mean that TDDI will apply these adjustments after some time delay?

Yes, I have noticed that in the past. The cost base adjustment for the RoC will appear later. It should true up in a month.

 

[GreatLaker]

I'm certain the amount in the example in post #47 is Reinvested Capital Gains. Regular distributions will be a one-sided transaction... cash deposited into the account. Even with a broker (synthetic) drip the dripped amount will be full shares, so most likely some cash left over. Reinvested distributions always have two transactions with the exact same dollar value, one positive for the distribution, and the other negative for the reinvestment. Reinvested distributions are posted to TDDI accounts some time in March but back-dated to a payment date of early January (which would actually have a record date of December).

VBAL had a reinvested capital gains distribution of $0.114319 per unit, multiplied by 3280 units = $374.97, the same as the total shown in the example.

I use TDDI. For RoC I use the actual values from box 42 on the Summary of Trust Income, which is the detailed breakdown of all the boxes on the T3. For Reinvested Distributions I use the amounts from the Reinvested Distribution transactions on my March statement. I double check against either the ETF provider's website or against the CDS tax breakdown spreadsheets, but have never found a discrepancy.

 

[GreatLaker]

Does everyone agree with the following?

View attachment 21495

I agree.

ETF distributions are taxable in the year they are received, and they appear on a T3 under their various categories (interest, dividends, foreign income, capital gains ...). Some of those distributions are paid in cash, which has no effect on the ACB, just as a stock dividend paid in cash or bond interest paid in cash have no effect on the ACB. Some distributions are reinvested by the ETF provider. You need to increase your ACB by the amount of the reinvested distribution. Since you pay tax on the distributions when they are received, if you don't adjust your ACB upwards by the reinvested amount, you will pay tax again (in the form of capital gains tax) when you sell. To be clear, reinvested distributions are part of the total distributions declared by the ETF, they are taxable in the year they are received, and they are included in the distributions listed on the T3. But unlike RoC, they are not listed separately on the T3, as RoC is listed in box 42.

The difference between ETFs and mutual funds is that mutual funds can issue fractional units so when distributions are reinvested, they increase the number of units you hold to account for the exact amount of the distribution. ETFs do not issue fractional units, so they cannot simply increase the number of units to account for the exact amount of the distribution. Instead they consolidate the number of units, and the unit holder must manually increase their ACB.

This iShares page has good info, particularly the first three points.
blackrock.com/ca/investors/en/resources/faqs/distributions-and-tax
You can also find it at blackrock.com/ca under Resources / Tax Information Center

This is complex and truly understanding it is not easy due to the different types and tax treatment of distributions. But incorporating it into your cost base is not that hard. 1) Increase or decrease your cost base every time you buy or sell. 2) Subtract RoC from your ACB, based on the values in box 42. 3) Add reinvested distributions to your ACB, based on amounts published by the ETF providers and available on their web sites and on CDS tax breakdown postings. Reinvested distributions also appear as transactions on TDDI March statements, but I don't know if other brokers do that.

 

[GreatLaker]

It seems I placed a ZSP trade right on the brink of the reinvested distribution. I can't figure out if I "got" the reinvested distribution.

ZSP had
Ex-dividend date: Dec 29, 2021
Record date: Dec 30, 2021

As luck would have it, I bought a significant number of shares on Dec 29, settled Dec 31.

My interpretation is that the "ex dividend date" is the date that the fund starts trading without dividend. So I think that when I bought on Dec 29, that I bought ZSP without its distribution... and therefore I should not fix up my ACB by the amount shown in the press release.

Do I have this right?

The short answer is yes, your understanding is correct.

The ex-dividend date is just the date that the fund price drops due to the impending dividend or distribution. It is the date by which you must enter your order to have it settle in time for you to get the dividend. That's why the price drops: on a buy order, if you enter it on the ex-dividend date you pay less because you get the dividend. (I think you are one of the advocates of dividends largely being irrelevant because of this.)

Here is what Adjusted Cost Base says:
Understanding Trade Dates and Settlement Dates | Adjusted Cost Base.ca Blog

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. Even more importantly, when using per share amounts for a distribution, using the record date is

If you own the shares on Dec 30 (i.e any orders must have a settlement on or before Dec 30) you will receive the Reinvested Capital Gains Distribution. Your order settled on Dec 31 (i.e. you owned the units starting Dec 31). My interpretation is you did not own the units on Dec 30, therefore you did not get the distribution.

I use TDDI and Reinvested Capital Gains Distributions for ETFs are always listed on my March statement as a Capital Gains Distribution transaction, offset by a DRIP transaction of exactly the same $ value.

 

[GreatLaker]

Interesting, I wonder why they do it this way. But beware, if the statement is showing a "capital gain distribution", that's not necessarily the same as the reinvested distribution. So it would not be correct to update your ACB based purely on a "capital gain distribution". For the same reason, the capital gain distribution that appears on a T3 is not useful for adjusting your ACB.

Some people seem to think these are the same (because they often are) but the numbers can differ. Here are some examples:

The iShares 2020 tax distributions document shows the GCNS fund had a reinvested distribution per unit of 0.35671 but had 0 capital gains.

XGGB, had reinvested distributions 0.25625 but capital gains 0.31829

But those are outliers and nearly every other ETF shows reinvested distributions = capital gains. What fun!

My point being, a "reinvested distribution" is not the same thing as a capital gain distribution. So I think if you see "capital gain distribution" on a broker statement, that should not be used for updating the ACB.

Correct. I only add the reinvested portion to my cost base. ETFs issue distributions that may be from interest, dividends, cap gains etc., and those appear in the relevant box on my T3 for tax reporting. Some of those distributions get reinvested, but the nature of the distribution that gets reinvested is not relevant. I add the reinvested amount to my cost base. If I don't add it, then I end up paying tax again on capital gains when I sell. I check reinvested distributions on my statement against the amount reported in the fund company press releases to make sure they agree.

 

[GreatLaker]

Since all my ETF’s are in registered accounts, I have no experience with analyzing the T3 slip in cases where the ETF had a reinvested capital distribution. Is this amount included in Box 21 of the T3? If not where is it reported so that the taxpayer reports the amount on his tax return?

Yes, all ETF capital gains are listed in box 21 of the T3, whether they are paid in cash or reinvested.

Note these capital gains are those realized by the fund when it sells securities at a gain. Funds typically only report capital gains on an annualized basis so they can aggregate capital gains and losses for the entire year and only report capital gains when they exceed any losses for the year.

All capital gains realized when the investor sells ETF units are the investor's responsibility to track and report.

 

[GreatLaker]

The reason for my question is the way BlackRock prepared their schedule for 2020 distributions. Here is the link Financial Planning & Investment Management | BlackRock
When you download the link, you will note that for GCNS, the capital gains reinvested per unit is .35671 but they show 0 for Box 21. My expectation is that Box 21 should have been .35671 for 2020. It is possible that this amount will show up in Box 21 on 2021 T3.

If you look at that spreadsheet, the fund had total distribution of $1.35671, of which $1.00 was paid in cash and $.35671 was reinvested. So it sounds like one or more of the other income categories was reinvested. James also suggested in Post #71 that these are reinvested distributions, but not necessarily reinvested capital gains distributions.

I don't think that invalidates my statement that "ETF capital gains are listed in box 21 of the T3, whether they are paid in cash or reinvested."

Another thing I noticed is that in CDS Innovations Tax Breakdown Postings for 2020, that fund has two spreadsheets, one of which is revised. You can find it here: CDS Innovations Inc :: Tax Breakdown Posting - Processed Documents (T3-2020)

After a decade of ETF investing I am still learning

 

[GreatLaker]

I really think the Canadian ETF industry has to change what they're doing about these reinvested distributions, capital gains, and ROCs.

This has to be made simpler IMHO. Those of us on this board are very familiar with ETFs, and yet here we still are, tracking down CDS innovations spreadsheets, or the Tax Characteristics documents, and trying to decipher what's on the T3 statements.

All these years later, still trying to make sense of properly accounting for the reinvested distributions and ROC. There are too many wacky types of distributions.

I just think this is unnecessary complexity and should be improved by the industry.

Yes, I wonder what percent of ETF investors are accurately tracking ACB in nonreg accounts. Probably very low. And it`s complicated because neither the ETF company or the broker can be sure of the client`s ACB if they hold the same security in multiple accounts. It`s only the last few years that the cost box has been filled in for T5008s.

Maybe the capital gains could just be paid in cash rather than reinvested. That may be a concern though, for an index ETF if the index is revised, or the ETF faces a lot of redemptions that create capital gains. As an investor I would prefer reinvestment of such unpredictable cashflows (as opposed to interest and dividend distributions that are relatively consistent and some investors depend on them).

Another solution would be better broker reporting. T3s already have box 42 for RoC cost base adjustments. Maybe CRA could require a new box for cost base adjustments due to reinvested distributions. Another option would be for brokers to issue an annual cost base report, listing all transactions (buy, sell, RoC, reinvested distributions). I already get a transaction summary from TDDI, it would be easy to add RoC and reinvested distributions to that.

I already get everything I need from TDDI on my statements and Summary of Trust Income. It did take me a while to realize that though because it can be so cryptic. Even some info from the brokers on what these transactions are and how to use them for tax reporting would be a big help.