Capital Gain Iinformation reported to CRA from your brokerage house
- Thread starter aznguy99
- Start date
And if they don't know the actual cost, they use zero, so that the sale of your RIM shares looks like you made a huge capital gain when you actually lost your shirt.i.e. do they provide them with actual cost of each stock purchase and proceeds received. And does CRA keep track of these??
I guess the question is: if you have purchased the same stock say RIM in different years, instead of calculating adj cost base, Can I just used the higher cost price so as to reduce Capital Gains??
Yr 1 Bought 1000 shares of RIM at $30
Yr 2 Bought 1000 shares of RIM at $10
Yr 3 Sold 1000 shares of RIM at $26
I know the proper way is to do the Adj cost base i.e. RIM/share price to be $20, and I will have a capital gain of 1000x$6=$6000
If instead I only use the cost to be 1000 at $30, and declare a capital lost of 1000x$4=$4000.......will CRA catch this and go after me for that??
Yr 1 Bought 1000 shares of RIM at $30
Yr 2 Bought 1000 shares of RIM at $10
Yr 3 Sold 1000 shares of RIM at $26
I know the proper way is to do the Adj cost base i.e. RIM/share price to be $20, and I will have a capital gain of 1000x$6=$6000
If instead I only use the cost to be 1000 at $30, and declare a capital lost of 1000x$4=$4000.......will CRA catch this and go after me for that??
There is a form T5008 that goes to you and CRA It's supposed list cost and commissions as well as proceeds but a lot of times only lists proceedsI believe they get capital gain info from dispositions within a mutual fund, etc.
For dispositions of non-fund type investments that are not managed by a trustee, etc., you must report those details on your own.
I can not say with 100% certainty that CRA does not collect trade execution data, however if you think about the daily volume of trades executed across multiple exchanges by Canadian retail investors its improbable they will know your adjusted cost base and flag your return based on that item.I guess the question is: if you have purchased the same stock say RIM in different years, instead of calculating adj cost base, Can I just used the higher cost price so as to reduce Capital Gains??
Yr 1 Bought 1000 shares of RIM at $30
Yr 2 Bought 1000 shares of RIM at $10
Yr 3 Sold 1000 shares of RIM at $26
I know the proper way is to do the Adj cost base i.e. RIM/share price to be $20, and I will have a capital gain of 1000x$6=$6000
If instead I only use the cost to be 1000 at $30, and declare a capital lost of 1000x$4=$4000.......will CRA catch this and go after me for that??
That being said you are considering committing a crime by filing a false return
If you are willing to fudge your ACB , what are the odds you may be aggressive in other areas of your tax return in order to evade taxes?
I took a tax course many years ago.
The instructor indicated the surest way to have your return flagged is to be overly aggressive
e.g. running a business that loses money for 7 years in a row. CRA will ask how is this business still able to operate?
Similarly, they may question an investor who never claims a gain, but does claim big losses year after year. Is he just unlucky, a poor investor or something else?
If you get audited, you will need to produce the trade confirmations from your broker to backup the ABC you submitted on your claim
These obviously do not exist with the costs you claim
In an audit,CRA can ask to review old tax returns ( 7 years ??), so in addition to any skeletons in your closet from years gone by, you will have the possibility of this transgression coming back to haunt you for a long time going forward.
If they catch you, the penalties and interest can greatly exceed the tax owed
Think proctology exam administered by Andre the Giant.
I hope this helps you decide if you want to commit a crime
I forget the name of the company but it was Royal Trust, JDS or Nortel. Employees exercised their stock options and suffered a huge taxable benefit. Some held on to their stock which crashed and burned and suffered huge capital losses but the CRA said you cannot offset capital losses against taxable benefits suffered when you exercised the stock options a few years ago. I think the law has been changed since then to allow you to defer the taxable benefit until you sell the shares.
If ACB is missing, then you're forced to come up with it unless you want to pay more tax.There is a form T5008 that goes to you and CRA It's supposed list cost and commissions as well as proceeds but a lot of times only lists proceeds
I guess the question is: if you have purchased the same stock say RIM in different years, instead of calculating adj cost base, Can I just used the higher cost price so as to reduce Capital Gains??
Yr 1 Bought 1000 shares of RIM at $30
Yr 2 Bought 1000 shares of RIM at $10
Yr 3 Sold 1000 shares of RIM at $26
I know the proper way is to do the Adj cost base i.e. RIM/share price to be $20, and I will have a capital gain of 1000x$6=$6000
If instead I only use the cost to be 1000 at $30, and declare a capital lost of 1000x$4=$4000.......will CRA catch this and go after me for that??
I repeat John LaRue's post.
There are rules that dictate the calculation of ACB. It's not a discretionary computation.
Remember that when you sign a tax return, you are declaring that it's true and correct or fully states your income.
Different issue for a different thread.why wouldn't you use tfsa to invest
This year you can only put $5500 in your TFSA. That's not much too invest with these days.Different issue for a different thread.
