T5008 vs Realized G/L

Can anyone explain why the T5008 statements are so frequently different than the realized g/l in the same package?

The transactions are the same (dates, quantity, accounts), but the totals aren’t. Shouldn’t these numbers be the same?

The t5008 lists all transactions for the year, and only the transactions for the year.

Many accumulated years copies of t5008s may assist in the maintenance of proper investment records.

The taxpayer needs to ensure that they keep proper investment records, with or without a level of assistance from their broker.
For paid/managed accounts, the broker may (or may not) offer assistance and various helpful reports.

The times I have seen a difference is when there is a commission on the transaction. The 5008 will only show the ACB and proceeds before commission. If you check the monthly statements I suspect that will be the difference. Enter the commission on line 20 of the 5008 input screen.

For the occasional or small investor, there is one circumstance in which a transaction may simultaneously be the same and correct in both.

:: If a taxpayer purchases and sells a particular stock in the same tax year, and also does not have any holdings anywhere of that stock from before.

Otherwise, you should not expect them to be the same, as the reports are for different things, based on different numbers and times.

The onus is on the taxpayer to track and maintain proper investment records.
(In particular, to track their costs pursuant to ITA S47, (Identical properties)).

For clients with investment portfolios, I try to maintain a permanent file with copies of each year’s trading summaries for each account. For investments bought at different times, I calculate the average cost up to the date of a complete or partial sale, take into account any return of capital over the years. If foreign, translate original purchase at the exchange rate in effect on the purchase date, not today’s rate or the average rate for the year. Brokers’ statements often do not show commissions separately, but roll it into the amount charged to the margin account. So, 10 shares x $100/share = $1,000, but the client’s margin account is charged $1,025. Bottom line, if I have the correct information, I override the T5008. Last year a client had over 120 T5008’s, so I exported to Excel, made the corrections, and entered “per schedule” on the S3. I have never had CRA question either the proceeds or the ACB in a schedule 3. Judging from my experience, it doesn’t seem that the T5008’s are part of CRA’s matching program at the end of each year, either. Is it obvious I’m working on a difficult project and am looking for any distraction to take me away from it?

Haha @jhd.hemeon ! Maybe a little obvious. Glad to provide a distraction for the tired mind. Thanks everyone for the responses.

Please nobody flame me for inexperience if this is simplifying things too much and I was taught wrong. At the franchise I used to work at, they had me use the realized gain and loss statement over the T5008. If fact, I had to make them get it if they didn’t bring it with them. Their reason for that being clients don’t realize that the people they pay to keep track of these things actually don’t keep track of everything (why???), especially if there are multiple employer/account/bank rollovers involved. No way the franchise was tracking this for clients. They said the G/L will be the more accurate document and to run with it. However, I question a lot of things they taught me, so here I am…

I’m not a CPA so there is a steep learning curve of understanding here, but I’m digging into it. I want to learn this process of keeping track because I want to do the best for my clients I can. If anyone has resources that would help me get this tracking process started, I would appreciate the guidance…websites to read, webinars, spreadsheets they wouldn’t mind sharing, anything.

It is not flaming that should be on the top of a tax prepares list of concerns for inexperience and lack of knowledge.
You should not get that here.

What you may get here are warnings regarding the actual legal risks, since the law (ie the Income Tax Act) can get people into serious legal trouble (for example, read sections 238/239, which not only provide for penalties, but actual jail time) for not complying with the law in it.

So in terms of this thread, it is not a matter of various forms , but rather the actual law. The resource that taxpayers MUST comply with in this case in particular is Section 47.

You should have relatively little risk from regular “T” forms reporting matters. However, in certain aspects of income from property and income from business, care, caution, and extra time should be exercised. (Or referral to colleague).

I don’t disagree with what you relate the franchise told you globally.
However, if you read the disclaimers printed on those GL reports, they make it clear that they are not preparing it in the capacity of an Accountant for tax purposes, and specifically direct the taxpayer to have their accountant use it as a guide in their own calculations.

Furthermore, even in spite of the differing basis of those T5008 and G/L reports, they are known to also contain errors from time to time.
Again, it is the taxpayer’s onus to maintain proper records. Cross-checking is the “new normal”… :slight_smile:

They definitely are part of the CRA Matching program. They don’t tend to rely much on the ACB contained in the T5008 (if the slip contains an ACB) but they do match (with some leeway) the Proceeds of Disposal with what the client has (or has not) reported.

If the client has reported no disposals but the CRA has T5008’s in the file they will definitely re-assess to include.

Years ago, the firm I worked for had the same requirement re: gain/loss reports, etc. I think the “reason” for that is more about time spent and how much you can reasonably bill the client. To go back through 10 or 20 years worth of client records and create an accurate tracking/accounting for every transaction could require weeks of work. Will your client pay you $5,000 to do that, if all they wanted was their T1 prepared (and presumably, that’s all your Engagement letter covers…)?

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Thanks all. I’m going to spend a lot of time in the off season educating myself on this better. I appreciate the insight.

I’ll add another caveat here: TD Wealth/TD Waterhouse changed systems in the middle of the 2020 year. They will maintain steadfastly - especially for their managed accounts (“Private Investment Counsel”) that the T5008s are from the “book of record” and are correct and that ANY OTHER printed, downloaded or other materials may, or may not be, correct. (I know - I’ve run this up the executive chain this year due to MANY errors in their reporting this year.)

FWIW, CRA is not likely to get too bent out of shape if someone uses a broker-supplied printed record, reports on that basis, and it (and often the T5008) is subsequently found to be incorrect. They’ll reassess, sure, but they’re not going to apply a 163(2) unless the amounts reported are not supported by anything external and appear tampered with.

For individual investors doing their own thing, it’s imperative that proper ACB/Disposition/Commission records be maintained. Most “small” differences between printed reports and T5008s I’ve run across appear to be commission-based.

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My biggest issue with the TD Wealth reports AND individual investors doing their own thing are the trades in USD. Noone seems to understand that the ACB is calculated based on the exchange rate on settlement date. Even the TD Wealth reports seems to use an incorrect exchange rate most of the time. And of course those feed into the T1135. I spend countless hours recalculating ACBs with the proper exchange rates and the client does not see the value add. They wonder why I don’t just use the current year average rate… sometimes I wonder that myself :thinking:

So far the T5008s I’ve seen have the correct ACB (ie as of settlement), but the printed Capital Gains Loss Reports (CGLs) do not; they use the trade date. Unfortunately not ever time though. The problem with the T5008s and a very active trader/account is that they don’t provide them as spreadsheets - this is a particular problem with Trusts tradiing. At least with T1s we can import the T5008s into Excel via TC.

I’ve had to build a couple of “T5008 analyzers” in Excel, ask for the T5008s as PDFs (not scans) and then break them apart for detailed verification. Not fun.

Yes most seem correct but the US accounts are in US dollars so don’t you need to recalculate the ACB based on the foreign exchange rate in affect on settlement for each trade (to convert to CAD)?

I would love it if you could share your T5008 analyzer. Any other tools that anyone has to share that help track ACB would be greatly appreciated :slightly_smiling_face: