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.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.
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.