Filing Your Return -> Stocks, Bonds etc. -> Investing Tax Issues, Tax Treatment of Investments
Tax Issues re Investing, and Tax Treatment of Different Types of Investments
Are Your Gains and Losses Capital or income?
Trade date and settlement date
Reporting foreign transaction amounts on your tax return
Tax Treatment Of Income From Different Investments
This information is regarding investments which are held outside of RRSPs or other registered accounts - i.e., in non-registered accounts.
If you have purchased an investment in a non-registered account, it is your responsibility to keep records which will allow you to calculate the adjusted cost base (ACB) of that investment, in Canadian dollars. If you have non-registered investments held in US$, it's very important to keep accurate records of the date the investments were purchased, and the exchange rate on that date, to calculate your Canadian dollar ACB. Your brokerage statements will show you the US$ ACB of your investments, but will not show you the Cdn$ ACB.
If you have disposed of an investment held in a non-registered account, it is your responsibility to record that disposal on your income tax return for the year in which it was sold, in Canadian dollars.
In Kind Transfers Not On Your T5008
Your brokerage will issue a T5008 and a trading summary showing your purchases and sales of investments in your non-registered account, to help you prepare Schedule 3 of your tax return. For some reason, in kind transfers may not be shown on these documents (although for 2020 it looks like some brokerages are including this information). You are still required to report these disposals on Schedule 3 if they are in kind transfers to your registered accounts, or to someone else's account.
Most sales of investments will be shown on a T5008 Statement of Securities Transactions and on the Trading Summary which will be received from your brokerage. However, some disposals may not be shown on the T5008, including in kind transfers to another account. These deemed dispositions still must be reported as dispositions.
If you use a professional tax preparer, it is your responsibility to provide them with all the information required to properly record disposals and their ACB.
Tax Tip: Even if a sale is not included on the T5008 or trading summary, it is the taxpayer's responsibility to ensure that the sale is recorded on Schedule 3 of their tax return. Using a professional tax preparer? It is still the taxpayer's responsibility!!!
Investment Types And Tax Treatment
- Interest-paying bonds- Non-interest paying bonds (strip bonds)
Treasury bills (T-bills)
Shares in corporations - Canadian and foreign
Call and put options - timing of proceeds received for tax purposes
Income trusts, including Real Estate Investment Trusts (REITs) - how to calculate adjusted cost base and capital gains
Mutual funds - how to calculate adjusted cost base and capital gains
Exchange-traded funds (ETFs) - how to calculate adjusted cost base and capital gains
Futures contracts, commodity futures
Term deposits, guaranteed income certificates
Warrants and rights to acquire additional shares
TaxTips.ca Resources
Superficial losses and other disallowed losses
Transfer capital losses to a spouse
Which investments should be held in an RRSP/RRIF, TFSA, or non-registered account?
Which investments should be held inside vs outside the RRSP?
Recommended stocks (ETFs) for inside or outside of your RRSP or TFSA
Investment income tax rates - Try to earn your investment income (outside of RRSPs) at the lowest tax rate possible.
Canada Revenue Agency (CRA) Resources
IT-479R Transactions in Securities, and the associated Special Release IT479SR (both Archived)
Line 12100 - Interest and other investment income (before 2019, line 12100 was line 121)
Revised: July 22, 2021