We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.
The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ...
Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.
Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.
May 8, 2017 – 0 comments
It’s been four years since we released our white paper, As Easy as ACB. The paper provided investors with step-by-step instructions on how to track the book value of their ETFs, using the free online resource, Adjusted Cost Base.ca. We were the first to admit that the title of our paper was misleading – tracking your ACB is about as easy as reciting the alphabet backwards.
Adjusted Cost Base.ca has further simplified the ACB tracking process by offering an upgrade to their basic features for $49 per year. The main benefit for premium subscribers is the ability to import all phantom distributions and return of capital for their ETFs, saving precious time and possibly avoiding an overpayment of taxes.
Source: Adjusted Cost Base.ca
The service allows you to import up to ten years of data (you can download any missing information from the Canadian Depository for Securities (CDS) website, using their tax breakdown service). If there were any unit splits (such as for the iShares Core S&P/TSX Capped Composite Index ETF 4-for-1 unit split on August 8, 2008), these will also need to be inputted manually.
After upgrading to premium subscriber status, the process for importing ETF tax information was very straight-forward. To illustrate the steps, I’ve included an example below for the iShares Core MSCI EAFE IMI Index ETF (XEF). The example assumes that 2,000 units of XEF were purchased for $53,300 on January 15, 2016.
After choosing the 2016 tax year from the drop-down menu, enter XEF as the ETF symbol and then click on Search. Once the search results appear, click on the fund name.
Once you’ve reviewed the return of capital and non-cash (phantom) distribution information, click on Apply Transactions. If you held the ETF during other tax years, repeat Steps 1 through 3, changing the tax year each time in Step 2.
The return of capital transactions have now been automatically included (decreasing the ACB by $2.26 and $1.06 respectively). The reinvested capital gains (phantom) distribution has also been included, increasing the ACB by $219.88. If an investor forgot to adjust their cost base for this non-cash distribution, they would eventually pay an extra $58.85 in tax (assuming an Ontario resident in the highest marginal tax bracket [$219.88 × 50% × 53.53%]). The additional cost of the premium service would have easily paid for itself in this scenario.
As always, there will be a small percentage of investors that will cringe at the thought of paying $49 annually for information that is available for free online. Based on the feedback I receive from DIY investors, most of them will find this service to be totally worth the fee.
