Canuckbusiness

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Where do I enter a T5008 slip on my tax return?

“I have a trading account and my bank sent me a T5008 slip and a trading summary for the year. Do I have to enter both of these on my tax return or just one? If so, which one?”

Ack! Whatever you do, do not enter both! You’ll end up paying double the tax. Now that I have your attention…

So what is a T5008 slip anyway?

You mean besides a slip I absolutely hate? I know, hate is a strong word. I wish I had the vocabulary to come up with something stronger.

You see, the T5008 is not sent out by your broker or bank to “assist you in preparing your taxes,” despite what the letter says that accompanies the slip. The Canada Revenue Agency requires your broker to prepare and send these out to you whenever certain types of trades/transactions occur. And, of course, your broker must send a copy of the T5008 slip to the CRA. So, the T5008 slip is really just a sneaky way for the CRA to keep an eye on people selling stocks.

What information is on the T5008?

The selling price of the security is always on the slip. The CRA knows exactly how much you received in proceeds for dumping the latest dog. As for the cost of the security (or ACB, adjusted cost base in tax talk) sometimes it’s on the slip, sometimes it’s not. Occasionally it may even be accurate. Usually it’s not.

So…if the cost is not correct on the slip, how do I calculate my taxable gain on my tax return?

I know! Right?? This is further complicated by the fact that not all types of trades need to be recorded on T5008’s, so often they are not even an accurate portrayal of everything a taxpayer has sold in a given year. The taxpayer is required by law to calculate accurate ACB’s of any stocks bought and sold throughout the taxation year. Relying only on the flimsy T5008’s is a recipe for disaster.

So what do you use the T5008 for then?

I put my coffee cup on it. Works great. Then I use the trading summary to enter all my trades for the year on Schedule 3. Just remember to use a weighted average when calculating the ACB’s of any stocks sold in the year. I’ll talk more about that in another post since it deserves its own.

For now, just remember what to use the T5008 for.

Nothing.

 

March 28, 2014 - Posted by | Personal Tax, Random Questions, tax | , ,

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