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Same shares, different brokers

I will rely on the wisdom of the forum for professional advice on the following situation:
A client buys shares of “X” through his broker. After a few years he opens an account with another broker and buy more shares of “X”. Now he owns shares of the same company with different ACB in two separate accounts. Are these two investments separate from each other for capital gain/losses?
I hope the information is sufficient. Thanks.

Yes, definitely totally separate.

No, you definitely don’t need to keep them separate! CRA, (and even for your own records) requires you to keep a running total of the ACB for tax purposes. Having multi accounts or more than one or two brokers is not part of the equation for tax purposes. ACB is calculated based on a running tallies of transactions (buy and sell + transaction cost). If overtime it become cumbersome, seek the help of a tax specialist.

no

Regards

Jim

When an individual owns the same security in multiple trading/brokerage accounts, adjusted cost base should not be calculated separately for each account. It may seem as though you should calculate adjusted cost base separately for each account, but the Canada Revenue Agency (CRA) requires that it be calculated jointly, as if all brokerage accounts were merged together.

They are identical properties.

It is the total cost of all shares of that security owned in all non-registered investment accounts, and is divided by the total number of shares owned in all non-registered investment accounts (Income Tax Act s. 47(1) identical properties) to get the cost basis per share, or weighted average cost per share.

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Yes, you do need to keep them separate because they have different ACB’s unless you purchase them at the same ACB from different brokers.

Not separate. See Rein’s response.

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And that is an answer which completely violates section 47 of the Income Tax Act, so personally I would not be telling clients that…

IMHO Rein has provided a good answer above.

(BTW to the OP: “Professional Advice” may be overstating a description, as such is generally not obtained on the internet - the best one can hope for are opinions and references… )

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Are the shares the same class of a publicly traded company? If so they are clearly identical properties and the adjusted cost base should be averaged. Be very careful when tracking ACB from 2 different brokers as certain losses may be denied if not correctly (ie superficial loss rules).

Thank you, Mary.

People might possibly misunderstand you when you say that, since Section 47 most definitely does NOT say “Add the two totals and divide by two”.

Instead, Section 47 of the Act should be VERY CAREFULLY followed.

Much as we sometimes may like, it is not within the capacity of the individual taxpayer to re-write sections of the Income Tax Act from time to time as they may please… :slight_smile:

I agree with the consensus: the shares are identical properties and the ACBs must be combined on a moving average basis for Canadian tax purposes. Since 1971 (yes I’ve been at it that long) I have actively discouraged clients from holding identical properties in different non-registered accounts. It can be a real issue with clients who are active traders.

Thank you all for the input and the references to the Act and other sites.
And Joe, you are right. I should have used the term “opinion” instead of “advice”.