Using AdjustedCostBase.ca to Complete Your Tax Return with SimpleTax

SimpleTax is a web-based tax software application that allows Canadian taxpayers to complete and submit tax returns online.  It’s one of the few tax software packages that’s offered for free (it has a “pay what you want” pricing policy).  It’s fairly easy to use and doesn’t take long to sign up.  Since it’s web-based, you can access and work on your tax return from anywhere.

To use SimpleTax, visit their web site and you can start working on a tax return right away.  SimpleTax provides help and support documentation on their web site, so detailed instructions about this will not be provided here.  Here we’ll discuss how to transfer your adjusted cost base and capital gains information from AdjustedCostBase.ca into SimpleTax and use the two tools together.

To begin entering the information into SimpleTax, first you’ll need to pull up the “Capital Gains (or Losses)” form.  To do so, search for “capital gains” in the “Add” box inside the “Income, Deductions, and Credits” section as follows:

SimpleTax: Search for Capital Gains (and Losses) Form

You’ll then see a blank “Capital Gains (or Losses)” form:

SimpleTax Capital Gains (or Losses) Form (Blank)

SimpleTax allows you to enter dispositions in different “sets.”  This can allow you to apply a percentage share to multiple dispositions when properties are held jointly.  But in these instructions we’ll assume the securities in question aren’t jointly owned, and a single set will be used.

You can view a list of your transactions for the year on AdjustedCostBase.ca by clicking on “View All Transactions” and using the “Filter by Year” function.  First, let’s assume that the following transactions took place during the 2014 tax year and have been recorded into AdjustedCostBase.ca:

Filter Transactions by Year

When completing your tax return, you only need to focus on the transactions resulting in capital gains or capital losses for the tax year in question.  The relevant transactions that have implications for the 2014 tax year are highlighted above and are as follows:

  1. Sell 50 shares of BBRY with a capital loss of $429.99
  2. Sell 600 shares of XIU for a capital gain of $1,088.02
  3. Capital Gains Dividend for XRE totaling $815.06

Now we can begin transferring this information into SimpleTax.  All these securities are publicly traded shares so for all entries select “Publicly traded shares, mutual fund units, deferral of eligible small business corporation shares, and other shares” as the type.

Starting with the BBRY transaction, input “BBRY” as the description (or any other identifying text as you see fit).  Next enter the amount from the sale transaction of $512.50 into the “Proceeds” column (this amount excludes the $9.99 commission).  Next, the “ACB” column corresponds to the total adjusted cost base of the shares that were sold.  This can be found by looking at the “Change in ACB” column from the transactions list on AdjustedCostBase.ca.  In this case the amount is $932.50.  Note that it’s shown as —$932.50 because the total ACB for BBRY is reduced by $932.50 as a result of this transaction.  But the positive value should be inputted into the “ACB” column on SimpleTax.  Therefore, enter $932.50 in the “ACB” column.  Finally, the “Outlays” box should be populated with the commission, if applicable.  In this case it’s $9.99.  After entering all this information, the SimpleTax “Capital Gains (or Losses)” form should appear as follows:

SimpleTax Capital Gains (or Losses) Form After Entering BBRY Disposition

Note that the capital loss is $429.99 is computed automatically by SimpleTax (it does not need to be inputted).  As a sanity check, this value should match the capital gain (or loss) reported by AdjustedCostBase.ca (there may be a slight discrepancy due to rounding errors).

Next, we can add an entry for the sale of 600 XIU shares.  In this case, put “XIU” as the description, $12,834.00 as the “Proceeds”, $11,735.99 as the “ACB” and $9.99 for “Outlays.”  The form should now appear as follows:

SimpleTax Capital Gains (or Losses) Form After Entering XIU Disposition

Once again SimpleTax’s computed value for the gain of $1,088.02 matches the value computed by AdjustedCostBase.ca.

Finally we have the “Capital Gains Dividend” of $815.06 transaction for XRE.  However, this transaction should not be included in the “Capital Gains (or Losses)” form.  The reason for this is that the capital gain distribution should appear on the T3 slip you get from your brokerage.  T3 slips values are entered elsewhere in SimpleTax.  It’s important not to enter this amount twice or you’ll be overpaying taxes.

SimpleTax allows you to view all your completed tax forms at any point.  In the “Tax Documents” section you can click on “Schedule 3” to see the completed version of the “Capital Gains (or Losses)” document that makes up part of your tax return.  For this example, this is what it looks like:

SimpleTax - Schedule 3

Assuming that you’ve entered the $815.06 capital gains dividend as part of your T3 slip for XRE, the total capital gains should match between AdjustedCostBase.ca and SimpleTax (there may be a tiny discrepancy due to rounding).

Finally, when you view line 127 on the T1 form, the value should be directly transferred over from line 199 of Schedule 3 (note that this value is half of the total amount of capital gains since capital gains are 50% taxable):

SimpleTax - T1 with Capital Gains

16 thoughts on “Using AdjustedCostBase.ca to Complete Your Tax Return with SimpleTax

  1. K Rafih

    Hello,

    Thanks for using the example with SimpleTax.

    I would like to ask that you extend the example further, buy looking at multiple sell transactions for the same security. So, using your example of XIU, how would you input the disposition and ACB into SimpleTax when you have sold it multiple times? Do you just aggregate the total disposition and ACB or do you list each separate sell transaction of XIU as a separate disposition in SimpleTax.

    Thanks for your help.

  2. AdjustedCostBase.ca

    When you have multiple dispositions of the same security in the same year, you could either list them as separate entries or combine them into a single entry. With separate entries, the process would involve repeating the steps above. To combine the dispositions into a single entry, you would simply enter the total amount from all dispositions for each column (proceeds, ACB, outlays, and gain/loss). The result should be the same with either method.

  3. Jason

    What happen when we buy and sell Yahoo which is in USD?
    should there be an entry for USD as a security?
    Can u provide an example

  4. Jason

    I am getting quite confused, DO we need to report the currency as capital gain/loss?
    According to your site, we are supposed to do the following

    1. Buy 100 shares of Yahoo at $100, resulting in USD10K (ignore commission to simply calculation), recording the transaction as Canadian dollar (rate 1.30), which is 13000 Canadian.
    2. Sell 10K of USD, and recording the transaction as $13000 Canadian.

    3. Sell 100 shares of Yahoo at $101, resulting in USD$10100, exchange is now at 1.31, which resulting in 13231 Canadian. Profit is $231 Canadian.

    4. Brought US$10100, resulting in $13231, Canadian, profit is $231.

    5. Withdraw US$1000 for vacation, rate is now 1.32 ( I will expect to pay tax on that)

    It seems 2 and 4 are redundant, resulting in paying tax twice. However, how do we account for #5

  5. AdjustedCostBase.ca

    Jason,

    For #2, there would potentially be a gain or loss for US dollars, assuming that you used US cash to purchase the stocks, as opposed to using Canadian dollars that are immediately converted.

    For #4, this is a purchase, not a sale, so there isn’t any realized gain or loss.

    For further information on dealing with capital gains and losses in foreign currency cash, please see the following:

    http://www.adjustedcostbase.ca/blog/calculating-adjusted-cost-base-for-foreign-currency-cash/

  6. Jason

    You are right. I’m treating USD as if they’re just security. In #2, the shares are negative, and I’m assuming it is a short sell. Of course, this is not true, a negative shares will mean the fund is borrowed, which will actually reduce the profit, right.

    Another reason we cannot relied on brokerage to provide us with accurate ACB.

  7. AdjustedCostBase.ca

    Jason,

    Normally transactions involving shorting aren’t considered to be on capital account. But if you’re buying shares in a capital account transaction with borrowed funds in US dollars, you may be able to actually couple the foreign currency gain or loss together with the gain or loss on the shares to determine a capital gain or loss. See the following comment:

    http://www.adjustedcostbase.ca/blog/calculating-adjusted-cost-base-with-foreign-currency-transactions/#comment-81348

  8. Jason

    I understand that too. When I do some more thinking about that, we can actually treat USD as short sell (though shorting aren’t considered). For example

    Brought 400 shares of GPRO at $50 at 1.3. ACB = 400 *50 * 1.3 = C$26,000
    Sold 400 shares of GPRO at $51 at 1.4 exchange rate. ACB = 0, profit = C$520

    Corresponding USD transaction

    Sell US$20,000 at 1.3, ACB = -C$26,000, shares = -20,000
    Brought US$20400 (51* 400) at 1.4 exchange rate = 28560. shares = 400, ACB = 2560, loss=

    previous acb * (shares/total shares) – shares * price * rate
    = 26000 * (20400/20000) – (20400 * 1.4)
    = 26500 – 28560
    = – 2060

    That is, we are actually losing money in this transaction, we loss 2060-520 = 1540

    Is this correct?

  9. AdjustedCostBase.ca

    Jason,

    The capital gain from the shares is:

    (400 shares x USD$51/share x 1.4 CAD$/USD$) – (400 shares x USD$50/share x 1.3 CAD$/USD$)
    = CAD$2,560

    The loss incurred due to the borrowed funds is:

    (USD$20,000 x 1.4 CAD$/USD$) – (USD$20,000 x 1.3 CAD$/USD$)
    = CAD$2,000

    This loss is not really a capital loss on its own and ACB in general cannot be calculated for negative balances. Although the formulas for ACB appear to work in this case, in general the calculations will not be correct for cases where there are multiple purchases and/or sales. Therefore I’m referring to this value as a “loss on the borrowed funds” as opposed to a capital loss.

    Applying this loss on the borrowed funds against the capital gain on the shares, we find that the net capital gain on the shares is:

    CAD$2,560 – CAD$2,000
    = CAD$560

    This makes sense because CAD$560 is the final balance you would have in your account after selling the shares, paying down the borrowed funds, and converting the remainder in CAD$.

    If entering these transactions on AdjustedCostBase.ca I would suggest entering the $2,000 loss as a commission.

  10. Jason

    if there is no change in the price

    (400 shares x USD$50/share x 1.4 CAD$/USD$) – (400 shares x USD$50/share x 1.3 CAD$/USD$)
    = CAD$28000 – $26000
    = 2000

    (USD$20,000 x 1.4 CAD$/USD$) – (USD$20,000 x 1.3 CAD$/USD$)
    = CAD$2,000

    the net effect is zero. Interesting.

    By the same token, if the exchange rate goes down from 1.4 to 1.3, we will have

    (400 shares x USD$50/share x 1.3 CAD$/USD$) – (400 shares x USD$50/share x 1.4 CAD$/USD$)
    = -2000 (capital loss)

    borrowed funds
    (USD$20,000 x 1.4 CAD$/USD$) – (USD$20,000 x 1.3 CAD$/USD$)
    = CAD$2,000.

    Net effect is again zero, did I miss something, I would expect when I borrowed fund and the rate goes down, I would pay less (in Canadian).

  11. AdjustedCostBase.ca

    Jason,

    That’s correct. Through the ownership of the US shares, you’re long on the share price as well as US dollars. By borrowing US dollars, you’re short US dollars, so the long and the short position cancel each other out. You’re essentially hedging your exposure to US dollars, so that the gain or loss depends only on the price movement of the shares.

  12. Ken E

    From my broker i received a T5008 statement that lists each security i sold only once, with box 21 filed (but not box 20). And a T5008/Trading Summary which lists each Buy and Sell and provides Quantity of Securities, Price and Proceeds of Disposition or Settlement Amount.
    I have calculated my ACB but am still very confused about how to complete my tax return!

    I’m using Simple Tax which is why i’m posting on this thread.
    If i follow your recommendation, does that mean i don’t need to use the T5008 section of Simple Tax, and only use the Capital Gains section? (Forgive me for being dense, because there is something in Simple Tax that says something along those lines, but I don’t see how this works at all, and for the life of me i’m going mental.)

    I thought to dabble with a few trades on $1000 – managed to loose most of it betting on a recovery on the price of oil, and now my tax return says i need to pay over $4000 in taxes based on these T5008’s It makes no sense, and i just can’t afford too!!

  13. Dan

    Hello,

    In your response to K Rafih (Feb 17, 2015) you mentioned that it is feasible to combine multiple dispositions of the same security into a single entry. Is this also true if some of those dispositions are disallowed losses per the superficial loss rule and the security in question has been fully sold and not been repurchased in the following 30-day period?

    Example: At the start of the year 100 shares of XYZ are held worth $10/share (ACB = $1,000). Halfway through the year, XYZ drops to $5/share and 50 shares are sold. The $250 loss is disallowed because in the following week ABC rises to $8/share and 100 shares are bought (new ACB = $1550, shares = 150). A couple of months later XYZ goes out of business, share value plummets to $0.01 and all 150 shares are sold. For the sake of simplicity, let’s suppose there were no brokerage fees. What values should be entered in the Proceeds and ACB fields? I see two possibilities:

    #1: Proceeds = $1.50, ACB = $1,550, Loss = $1,548.50
    #2: Proceeds = $251.50, ACB = $1,800, Loss = $1,548.50

    Obviously #1 and #2 yield the same loss result, but #2 seems more representative of what happened throughout the year, whereas #1 only reflects the very last transaction which by the way is quite disproportionate (potential red flag for the CRA auditors?). Are both ways of reporting capital losses correct or should #2 be avoided since a disallowed loss was involved in the calculations?

    Thanks in advance.

  14. AdjustedCostBase.ca

    Dan,

    The CRA isn’t clear on whether superficial loss transactions should be listed on Schedule 3. I would tend to lean towards not including them, as the form isn’t really designed to properly accommodate superficial loss sales.

    So in your example, I would list the following on Schedule 3:

    Proceeds: $1.50, ACB: $1,550.00, Loss: $1,548.50

    When including sales involving superficial losses in our Annual Capital Gains PDF Reports the ACB adjusted such that it equals the proceeds of disposition. In your example, the first sale involving the superficial loss would be listed as follows:

    Proceeds: $250.00, ACB: $250.00, Gain/Loss: $0.00

    Combining these two would yield the same answer as you indicated for possibility #2 above.

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