Auto-fill My Return

Income tax policy, rules, problems, strategy and software. Property and consumption taxes too.
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Arby
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Re: Auto-fill My Return

Post by Arby »

SoninlawofGus wrote:One somewhat gray area is the way T5008 forms are handled by both CRA and me. In my case, the T5008 forms I received from TD are simply print outs showing the transactions -- the sale of stocks. CRA shows that information with box numbers. However, box 20, which is my ACB (or book value), was left blank by CRA for all of the T5008s. I completed this information from my own records.

While I think this is okay, it is a little unsettling to be completing a box number that doesn't exist. Regardless, because CRA has half of the information in this format, I went ahead and completed it. Historically, I did not indicate capital gains in this way. I always used the more freeform capital gains form.
I don't think the T5008 is the right way to input your capital gain/loss. You should be using Schedule 3 to input capital gain/loss.

I think the T5008 should only be used if you are considered a trader, in which case the T5008 gain/loss will be shown as income on your tax return. Check your return to see if Ufile included the T5008 transaction as income rather than as a capital gain.
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Re: Auto-fill My Return

Post by AltaRed »

Regarding the T5008, if you check the CRA FAQ/Q&A on Auto-fill, they specifically say the user must populate the 'cost', or ACB, side of the T5008 because CRA (and the financial institution) cannot be certain of ACB. That is reasonable since there may have been multiple buys, multiple commissions and/or same security in multiple accounts where only the owner of those assets can aggregate and determine the ACB.

There should be a caveat on the T5008 in MyAccount that says 'do not use for auto-fill of cap gains'. I agree wiith Arby because the Auto-Fill ends up on Schedule 4 rather than Schedule 3 where it should be for investors (as compared to traders).
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DavidR
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Re: Auto-fill My Return

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AltaRed wrote:There should be a caveat on the T5008 in MyAccount that says 'do not use for auto-fill of cap gains'. I agree wiith Arby because the Auto-Fill ends up on Schedule 4 rather than Schedule 3 where it should be for investors (as compared to traders).
My understanding of T5008 is that it is used by Financial Institutions to report dispositions of both "bearer debt obligations" (ie. discount instruments like T-Bills, where the difference between cost and maturity amount is interest income) and "shares and other securities" (ie. capital gains/losses). The professional tax software that we use lets the user select the Transaction type for each slip - debt or shares, and the software then posts to either Sched 4 or Sched 3.
> In practice, I think the FI's mostly use this form for capital gains, so it is a shame that most tax software appears to 'default' to "bearer debt" instead of "shares".
> Traders, I think, would be best to report on a T2125 Stmt of Business activities.
> Agree that you need to be careful when auto-filling this info!

Edited to correct typo - (Sched 3 not 6)
Last edited by DavidR on 04 Apr 2016 18:24, edited 1 time in total.
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Re: Auto-fill My Return

Post by SoninlawofGus »

Arby wrote:I don't think the T5008 is the right way to input your capital gain/loss. You should be using Schedule 3 to input capital gain/loss.

I think the T5008 should only be used if you are considered a trader, in which case the T5008 gain/loss will be shown as income on your tax return. Check your return to see if Ufile included the T5008 transaction as income rather than as a capital gain.
AltaRed wrote: There should be a caveat on the T5008 in MyAccount that says 'do not use for auto-fill of cap gains'. I agree wiith Arby because the Auto-Fill ends up on Schedule 4 rather than Schedule 3 where it should be for investors (as compared to traders).
Interesting. For TurboTax, the software allows me to specify "Investment" vs "Capital Gains" for T5008 info, with a note saying not to put the capital gains elsewhere if I have already indicated them on the TurboTax T5008 page.

In my case, all of my entries appear on the Schedule 3 Supplemental Statement, under the T5008 heading, and not Schedule 4.
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Re: Auto-fill My Return

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Maybe a dumb question, but assuming I use this feature is there any reason to look around for the paper slips and attach them to my return? Other than making work for union employees, of course?
I don't intend to offend anyone, that part is just a bonus.

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Re: Auto-fill My Return

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kumquat wrote:Maybe a dumb question, but assuming I use this feature is there any reason to look around for the paper slips and attach them to my return? Other than making work for union employees, of course?
If the rules are that tax slips are still supposed to accompany* paper returns, then attach them. Auto-fill does not change any of that. FWIW, CRA has been getting tax slip data from financial institutions since forever.....everyone should know that.

* If I was CRA, I'd make plain vanilla T1 paper returns even more onerous. In this day and age of even freebie tax software, there is no reason to file a paper return. [I do recognize there are situations where the tax return is an anomaly and thus a paper return is required, e.g. a deceased taxpayer]
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Re: Auto-fill My Return

Post by IdOp »

AltaRed wrote:In this day and age of even freebie tax software, there is no reason to file a paper return.
Personally, I disagree with this. I know of no open source CRA certified tax sofware. The open source model is far from perfect, but it's the only one I'd choose to support. Also, if you use a web-based product, you have to trust them to keep your data secure in perpetuity. Canada Post? You have to trust them for a few days every year. So there's a trade-off there, but it's not a slam dunk to me.
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Re: Auto-fill My Return

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IdOp wrote:Also, if you use a web-based product, you have to trust them to keep your data secure in perpetuity. Canada Post? You have to trust them for a few days every year.
With Simple Tax you can delete your account and all of your data at any time. So you only have to trust them for a few hours. That is, if they really delete all of your data. :wink:
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Re: Auto-fill My Return

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AltaRed wrote:
kumquat wrote:Maybe a dumb question, but assuming I use this feature is there any reason to look around for the paper slips and attach them to my return? Other than making work for union employees, of course?
If the rules are that tax slips are still supposed to accompany* paper returns, then attach them. Auto-fill does not change any of that. FWIW, CRA has been getting tax slip data from financial institutions since forever.....everyone should know that.
Auto-fill is just a convenience for what has been going on for years, i.e. that copies of T-slip info has been sent by FIs to CRA. It's a first attempt to minimize transcription errors by taxpayers who use software to file and to flag T-slips that the taxpayer may have missed. (Peoples' addresses change, FIs make errors, CPC misdelivers, etc.) There has been no change in tax rules and taxpayers' obligation to report income, etc. as a result of Auto-fill. As always, if you have interest, etc. income for which no T-slip was issued, i.e. that doesn't show up in Auto-fill, you're still obligated to report it.

Same with T5008 and ACB info. The taxpayer has always been responsible for maintaining ACBs. Normally CRA doesn't challenge ACBs, but if/when they do it's the taxpayers—not the broker's—onus to substantiate them.
If I was CRA, I'd make plain vanilla T1 paper returns even more onerous. In this day and age of even freebie tax software, there is no reason to file a paper return. [I do recognize there are situations where the tax return is an anomaly and thus a paper return is required, e.g. a deceased taxpayer]
There are still many people who don't have computers at home and/or don't have Internet access at home. The same sort of thing applies to direct deposits; there are people who don't have bank accounts. There are many reasons for these situations that are way beyond the scope of this thread.
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AltaRed
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Re: Auto-fill My Return

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Bylo Selhi wrote:There are still many people who don't have computers at home and/or don't have Internet access at home. The same sort of thing applies to direct deposits; there are people who don't have bank accounts. There are many reasons for these situations that are way beyond the scope of this thread.
Fair enough. My comment was mostly tongue-in-cheek for now. Still, we are probably less than 20 years away from the generation that doesn't know computers falls off the edge of the earth. IOW, few people under 70 don't have a smartphone or tablet now, perhaps the working poor excepted and for them, there are all sorts of free community service support available to do tax returns...and likely the only reason to file is to claim benefits. IIRC, CRA now says about 2/3rds of returns are electronically filed and that will continue to grow.

I am not sure I understand IdOp's point. StudioTax and SimpleTax are CRA certified Netfile software that costs nothing to use, and StudioTax at least, is fully resident on one's PC. I used it this year for one of my deceased mother's tax returns...since I ran over the 4 returns available in UFile. StudioTax is pretty straightforward.


Added: Personally, I only know of one person (now circa 80 yrs old) who does not have Internet access or a computer. Anecdotally, when I was Pres of our annuitant social club of about 600 members (2008-2012), we used to write and send out a bi-monthly newsletter. Average age of our anuitants was about 75. By the time I left we were down to less than 100 postal mailings (the number dropping each year). The rest went out by email.
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Re: Auto-fill My Return

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AltaRed wrote:
* If I was CRA, I'd make plain vanilla T1 paper returns even more onerous. In this day and age of even freebie tax software, there is no reason to file a paper return. [I do recognize there are situations where the tax return is an anomaly and thus a paper return is required, e.g. a deceased taxpayer]
CRA has all kinds of silly things that prevent one from using NETFILE. Ms. kumquat owns a rental property. It is farm land. She is not allowed to NETFILE because her rental property doesn't have a street address.
I don't intend to offend anyone, that part is just a bonus.

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Re: Auto-fill My Return

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Okay...okay. I deserve being flogged...
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Re: Auto-fill My Return

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AltaRed wrote:I am not sure I understand IdOp's point. StudioTax and SimpleTax are CRA certified Netfile software that costs nothing to use, and StudioTax at least, is fully resident on one's PC..
I'll try to clarify. So from your description these programs are free to use, and they are CRA certified, meaning that they've tested the programs and found them to send reliable output to CRA given various input.

However, (I assume) Studio Tax is not open source, meaning the source code that the programs are written in by programmers is not available for all to inspect and/or modify. So the programs can only be used as distributed in binary form on the available proprietary platforms like Windows and Mac. So there is no real transparency.

To me the best alternative to paper would be if CRA made a variant of the software they use internally available online. This should be basic (i.e., no frills) but comprehensive, i.e., as much capability as possible provided you know how to use it. This could be part of the MyAccount feature which would give more people a real reason to register for it. With so many people having switched away from paper already, the savings should be able to pay for such an project. Still, I'd hope they don't get rid of paper just to "be modern", but only when there are so few people using it by choice that the costs of human input at CRA become truly prohibitive.
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Re: Auto-fill My Return

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IdOp wrote:However, (I assume) Studio Tax is not open source, meaning the source code that the programs are written in by programmers is not available for all to inspect and/or modify. So the programs can only be used as distributed in binary form on the available proprietary platforms like Windows and Mac. So there is no real transparency.
Okay... I get it. But you really worry about such things? If so, why?

I don't like exclusive proprietary things in general that are held close to the chest, i.e. I much prefer Android over iOS, as I did VHS over Beta. But I hardly lie awake at night over something that gives me multiple options on any given platform.
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Re: Auto-fill My Return

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AltaRed wrote:But you really worry about such things? If so, why?
I do, and maybe I'm too paranoid. Part of it is the potential benefits of transparency in the program itself. Assuming someone is paying attention (which isn't always the case -- look no farther than the Heartbleed vulnerability) at least there is a chance to be aware of anything malicious or unwanted in the program code. Of course there are other potential benefits like ability for people to fix bugs (even if the company is deaf to problems), submit improved features, etc.

But also, these programs are typically distributed as binaries for Windows and Mac, because that is the vast majority of the market. So to use the programs you need to buy and maintain one of those platforms, which themselves are not open source. For someone who doesn't want an closed source application, they won't want a closed source OS even more. Add in the cost, and licensing issues that come with a proprietary software "ecosystem".

That's a brief summary of how I look at it anyway.
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Re: Auto-fill My Return

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For those using this feature or relying on CRA to have a complete list of T slips in MyAccount to file their tax return, be aware that the CRA list may not be complete. I have just done my 2015 taxes and one of my T5s is not listed at MyAccount. A small T4RIF issued by my credit union is listed but not the T5. When asked my credit union said that they filed all the Tslips information with CRA at the same time. CRA have been known to misplace individuals tax information before that I am aware of. My advice is to check that you have been sent all the information you are due by your financial institution and file your taxes accordingly. I suspect that CRA will not be so forgiving that income was not declared even though it occured due to a reliance on their files.
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Re: Auto-fill My Return

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I auto-filled a few days ago and one of my REITs was missing. TDDI included it in one of their T3s over a month ago. So I manually added a T3 for HR.UN and the SimpleTax numbers agreed with my spreadsheet to the penny ... Nearly. There was a 1¢ difference in dividends. And 4¢ less tax due. Saved me manually entering 10 or 11 slips.

It's a little confusing because TDDI consolidates my ETFs and REITs into 3 T3s. CRA has a separate T3 for each security.
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Re: Auto-fill My Return

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If there are still gaps in the CRA data by Apr30th, then it is clear auto-fill is not ready for prime time. Having said that, it still our responsibility to report all income, even for that for which we do not receive a tax slip.
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Re: Auto-fill My Return

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Maybe HR.UN is missing because they are revising their T3. :(
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Re: Auto-fill My Return

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This year, all tax businesses are required to use AFR (auto-fill return) from CRA, and then match/add with the tax slips clients bring in. One does need to be careful wrt Auto-Fill from CRA, especially the T3s and T5008s. The confusions are mostly caused by the issuers of these slips, not by CRA (but the investment type on T5008 might done by CRA on purpose :wink: )

For T3s, the issuers (e.g. TD waterhouse or others) sent customer one per account, but to CRA they often sent one per fund/stock, so CRA could have more T3 slips then you have. If that happens to you, you just need to add them together, double check the total, and not use those from CRA, but the one you received as long as the totals match.

For T5008, it could be from 1. sale of the stocks or funds, or 2. HSA money taking out which is treated as mutual fund, say TDW (TDB8150). For the HSA, it is income (not capital gain/loss), but the cost base should the same as the proceed (say for TDB8150, $10 per unit * total units sold), and the issuer should also have issued a separate T5/T3 for any interest earned in that account.

For stocks or mutual funds, you can either
- Use the T5008 (but choose the investment type as Capital Gain/Loss rather than income), and make sure the correct book value is there (note some T5008s do have the correct book value from the issuers. But if the book value is zero in CRA version and you know it is not, then that is normally the issuer's fault that they missed reporting it).
- Or you can just ignore the T5008s, use the schedule 3 to report the capital gain/loss as you did before.

This is the first year I see T5008 for HSAs. We have six from TDW TDB8150, one for each time when we moved money out, even in the same account. It is really a waste, as for HSAs, book value should be the same as the proceed. And make it worse, TDW recorded our HSA book values as zero and sent the T5008s to CRA only (not to us, there is no sign of T5008 slip in our e-statements). :(

For TDB8150, I would really think it is silliness of TDW that they don't fully understand the function of T5008 and didn't put in correct book value (they should know the unit cost = $10 per share) before sending them to CRA.
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Re: Auto-fill My Return

Post by like_to_retire »

freedom_2008 wrote:there is no sign of T5008 slip in our e-statements). :(
The TDW T5008 is called "Trading Summary" in the e-documents.

I generally ignore the Trading Summary and simply transpose my own spreadsheet information onto Schedule 3. I do see where Turbo Tax has a T5008 slip where the information can be entered and then I guess it must populate the schedule 3, but I've never used it. My spreadsheet pretty much looks like the schedule 3 columns with a few extra so I can just copy it manually over to schedule 3. I don't think you need to fill out the T5008 in tax software as long as you enter correctly into schedule 3 (which seems easier).

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Re: Auto-fill My Return

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like_to_retire wrote:
freedom_2008 wrote:there is no sign of T5008 slip in our e-statements). :(
The TDW T5008 is called "Trading Summary" in the e-documents.

I generally ignore the Trading Summary and simply transpose my own spreadsheet information onto Schedule 3. I do see where Turbo Tax has a T5008 slip where the information can be entered and then I guess it must populate the schedule 3, but I've never used it. My spreadsheet pretty much looks like the schedule 3 columns with a few extra so I can just copy it manually over to schedule 3. I don't think you need to fill out the T5008 in tax software as long as you enter correctly into schedule 3 (which seems easier).

ltr
Schedule 3 is easier for real tradings. But my point is that one shouldn't need to do any thing for moving money in or out in a High interest saving account (but treated as mutual fund by the issuers) in schedule 3 or T5008. Waste of time for TDW, us, and CRA.
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Re: Auto-fill My Return

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freedom_2008 wrote:Schedule 3 is easier for real tradings. But my point is that one shouldn't need to do any thing for moving money in or out in a High interest saving account (but treated as mutual fund by the issuers) in schedule 3 or T5008. Waste of time for TDW, us, and CRA.
I never have entered the HISA buy/sells into Schedule 3, no matter how many times it shows on the T5008. Never had it questioned either.
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Re: Auto-fill My Return

Post by like_to_retire »

freedom_2008 wrote:....my point is that one shouldn't need to do any thing for moving money in or out in a High interest saving account
For sure, and as Alta says, there isn't and has never been any need for this. TDW can enter the TDB8150 HISA transactions onto the Trading Summary, but everyone (including CRA) realizes that there's never, ever, ever any capital gain or loss with something that has a fixed $10 price, so it's to be ignored.

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Re: Auto-fill My Return

Post by freedom_2008 »

Alta and ltr, agree with you both. But the TDW reports cost base as ZREO on all our HSA T5008s. I want no issue dealing with CRA, thus I entered all the T5008s with updated cost base (= the proceed).
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