We need more information on how transactions are made in your ESPP and what you get for tax slips that CRA would receive. It's been a long time since I've had an ESPP

 

Regarding filling schedule-3 - Section 3 - publicly traded shares

1- Is it okay to subtract the sell brokerage commission add fees from the proceeds of disposition, and set the outlays and expenses to zero?

The purpose of Schedule 3, Part 3 - column 3 is "Proceeds of disposition" while column 4 is "Outlays and Expenses (from dispositions)". With these two columns explicitly setup for specific purposes - I strongly doubt messing with values is okay.

What's the point of potentially having problems in the future, should CRA audit you by doing something different than the column headings and what CRA describes?

... 2- This question is irrelevant if the answer to the first question is yes. I have an ESPP and my employer stock is traded in USD. The exchange rates used does not match the BoC rate, and it can be much worse. Is it okay to use the actual rate to calculate the ACB and proceeds of disposition?

I only had the first buy in CAD with all subsequent buys being in USD, from the dividends paid. For that first buy and the eventual sale, I use the USD exchange rate that the transaction happened at.

... Or I have to calculate the difference in the exchange rate and add it to the outlays and expenses.

Outlays and Expenses as I understand it are only at the time of the sale and only things like the brokerage sell commission.

The USD exchange rate for buy transactions should be documented from the ESPP transactions then recorded in your own personal spreadsheet tracking the ACB, in CAD. Or potentially you could use something like https://www.adjustedcostbase.ca/.


My ESPP might be different as it was voluntary, with no options/stock being granted based on employment.


Did your ESPP grant options and/or stock as part of your employment.


Cheers

 

The OP needs to advise how the employer's stock is bought and sold in the ESPP. Some plans may make bulk purchases once a month on some forumula based "multiple day" market price on some formula based "exchange" rate. In those cases, the ACB to the employee will be whatever that is (in plan statements) rather than a true acquisition price based on a BoC exchange rate on a specific date. Similarly dispositions may be based on some plan formula that we are unaware of. That said, I am guessing there will still be a T5008 showing 'net proceeds' and that can be the disposition price (no outlays or expenses). Until we know some specifics, we are flailing in the dark.

 

Good points ... I didn't spell it out but my ESPP statements show the amount of share(s) as well as the USD price paid and date, providing most of the info needed.

My ESPP is for a US company so I won't get a T5008 but whatever the US equivalent is.


Cheers

 

Fair enough. We don't even know if the OP's ESPP is administered by a Canadian or a US company. My parent company was an American multi-national but our ESPP was administered by a Canadian full service brokerage.

Separately, my stock option, and eventually RSU plan was managed by a US brokerage. Lots of permutations.

 

Sorry, some clarifications ..

For my first question: I thought so, because in T5008 I received from Questrade (Canadian account), in Box 21 "Box 21 - Proceeds Of Disposition", they actually deduct the commission.


For my second question:
The ESPP/RSU is administered by a US company (ETrade) so I do not get a T5008. I get some statements show the exchange rate used for each ESPP purchase.

For the ESPP, there is an amount deducted from each paystub. Every 6 month, they buy stocks at a 15% discount of the minimum of the market price of the first and last day of the 6 month period.

For the buy transaction: the exchange rate is slightly different from the BoC rate, it might be the average over the 6 month period.
For the sell transaction: normally I use BoC rate. However, once by mistake I ordered the check n CAD, and the exchange rate they used was similar to the bank rates, so lost around 2-3%.

 

... For my first question: I thought so, because in T5008 I received from Questrade (Canadian account), in Box 21 "Box 21 - Proceeds Of Disposition", they actually deduct the commission.

Odd ... I guess this means it varies broker to broker?

My broker has consistently provided the gross amount in the T5008 box 21 while the monthly statement has the net amount. So if the stock was sold for $2K with a $10 sell commission, the T5008 box 21 amount is $2K and the monthly statement has $1990.


The few times the two have been equal is when there is a buyout where the buying company covered the sale commission. In that case, I have left the Schedule 3, part 3 column 4 as $0.


Cheers

 

1Q Theoretically, you should enter the Gross Proceeds before commission and then include commission in Outlays and Expenses. That is what I do regardless of the T5008 showing Net Proceeds. CRA won't be fussed either way though since it is Net that is used in the CG calculation.

2Q For your Buys, use the exchange rate used by ETrade and the discounted price for your ACB. It is outside of your control. On the sell side, I would stick with the BoC rate even if you lost 2-3% in exchange rate.....simply because you did not have to incur that penalty converting back to CAD. I'd error on the 'conservative' side rather than try to claim forex conversion as an Outlay/Expense. Consider it a learning experience rather than potentially invite CRA to ask later for documentation.

 

Thanks everyone

2Q For your Buys, use the exchange rate used by ETrade and the discounted price for your ACB.

Actually, the discount is added to my paystub/T4 and it's fully taxed. So, when I calculate the ACB I use the market price.

 

I used to be in a similar situation, we had an employee stock plan where it was administered in the US and everything was in USD. However, because I was a Canadian employee, they provided me with statements showing me the converted values to CAD whenever I sold some stock. The statement would show something like "cost: $10 USD $14 CAD, proceeds: $13 USD $18 CAD". I had CRA ask me for proof of my capital gains a couple of times, I simply provided them with those statements and they accepted them without any problems.

So I would say you can use whatever the actual exchange rate was as shown on your statements assuming you have it.

 

I'll do that. Thank you.