I am curious if anyone has seen in their practice a review on the ACB calculation on the sale of public company shares. Whether on a T1 return, Trust or T2?
In recent years banks have gotten much better at including the “Book Value” (which they make very clear is not the ACB for tax purposes) on the T5008s. But in the past and still sometimes these are missing. Please share your experience if you’ve been through any kind of questioning on these calculations by CRA.
Thanks!
For the most part…notwithstanding the bank’s comments…the value on the T5008 IS indeed the ACB.
What they allude to (as far as I can tell) is that they do not know if those are part of a group of purchases or not that may have been executed at other brokers, or if they are shares acquired as part of a split etc.
That’s your job. 
There are lots of reasons why the ACB on a T5008 would need adjustment… the stock is held across other accounts, the stock was purchased in increments in a foreign currency, previous elections were made, short sells, options trading… etc. And Yup its my job. Which is why I am asking if anyone has been through a review on these. The calculations can get complicated, especially when there are many shorts and options.
About 30 years ago…on a guy who worked inside some brokerage as their in-house trader. The auditor basically had no clue and passed the files without adjustment. But that’s probably not a lot of use now.
The odd random check since on one or more trades, but really…can’t remember anything more than that in my practice anyway, even with relatively active traders. Crypto might change that though?
(And yes…it’s a pain.)
If I have kept records of a client’s buy/sell since day 1, then I have the ACB. Ignore T5008 cost. Brokers year end statements of gains/losses never seem to take into account ROC over the years, which is a reduction of the ACB. Without the historical documents, I use the T5008 ACB, if supplied. If not, I have the client guess at the cost. Probably way over the actual cost, but CRA has never come calling.
I can remember only one (a long time ago now) questioning capital gains calculations. This is when I requested a clearance certificate for a deceased client.
The deceased shared a joint portfolio with their spouse who passed away a few years prior. At the time of the first spouse’s death I elected under subsection 70(6.2) not to have the spousal rollover provisions of 70(6) apply to half of their joint portfolio. What this meant was we triggered capital gains on the portion of the portfolio belonging to the deceased.
Of course, the stock brokerage did not up update the book value of the investments to reflect the increased ACB to the surviving spouse, but left their record of book values at what the couple had originally paid for the stocks and shares.
As a follow up to the CRA’s inquiry regarding the capital gains calculated on the deemed disposal of the portfolio upon the death of the remaining spouse I sent the brokerage statement along with the schedule 3 of the spouse who died a few years earlier, and a copy of the 70(6.2) election.
The clearance certificate was issued quite a while later without any further question.