2017 ETF re-invested distributions

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2017 ETF re-invested distributions

Post by IdOp »

This thread is about re-invested (non-cash, "phantom") distributions, typically capital gains, for ETFs this year. Both estimated and final values can be posted/linked and discussed. Two I have seen so far:
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Re: 2017 ETF re-invested distributions

Post by AltaRed »

Adding BlackRock here. Final numbers not likely to be issued until the last week of the year.

BlackRock estimates
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Re: 2017 ETF re-invested distributions

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Re: 2017 ETF re-invested distributions

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Re: 2017 ETF re-invested distributions

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Re: 2017 ETF re-invested distributions

Post by SkaSka »

So for iShares XIC, shareholders at December 28, 2017 get paid $0.10675 in dividends on January 4, 2018.

It also says that $0.29188 is reinvested.

As someone who has never held XIC at a point where a portion of the distribution amount is reinvested, what does this mean?
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Re: 2017 ETF re-invested distributions

Post by AltaRed »

What you get paid in dividends... that is the regular distribution that you get in cash, or re-invested in new units and for which you would adjust the ACB if you are on DRIP.

The $0.29188 is the phantom re-invested distribution that simply adds to your ACB without changing the number of units.

They are separate entities just like the Atlantic Ocean is different than the Pacific Ocean.
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Re: 2017 ETF re-invested distributions

Post by IdOp »

The thing is, though, even for the phantom distributions they give a "payable date" of Jan 4, 2018 (in the case of iShares). It's a good question, I don't really know what this means. ISTR that at the brokers the distributions are reported with this date attached. But at the end of the day you're getting paid nothing on this date (or any other), and you take on the tax liability on the ex-date. Perhaps they would say you're getting paid but it's immediately reinvested. I don't like to look at it that way. Personally, I ignore the pay date and have never needed it.
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Re: 2017 ETF re-invested distributions

Post by CROCKD »

Here is an article by John Heinzl G&M on ETF reinvested distributions.
Haunted by phantom ETF distributions
The key point is that in taxable accounts the amount of the reinvested distribution must be added to the ACB.
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Re: 2017 ETF re-invested distributions

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Thanks everyone for the reminder to add this "reinvested distribution" amount into my ACB for XIC, which is being held in taxable accounts - would have never thought to add it to the ACB otherwise!

A question that comes to mind: since this reinvested distribution got distributed on January 4, 2018, would this amount be used to adjust the cost basis of your XIC shares not for this year's tax return (2017), but next year's tax return (2018)? As in, the ACB for the 2017 tax return would be whatever amounts were added/subtracted from January 1, 2017 to December 31, 2017?
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Re: 2017 ETF re-invested distributions

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SkaSka wrote: 05 Jan 2018 19:08A question that comes to mind: since this reinvested distribution got distributed on January 4, 2018, would this amount be used to adjust the cost basis of your XIC shares not for this year's tax return (2017), but next year's tax return (2018)? As in, the ACB for the 2017 tax return would be whatever amounts were added/subtracted from January 1, 2017 to December 31, 2017?
While I'm not a tax expert, I look at it this way. As of the ex-date you have the c.g. tax liability. Adding the same amount to the cost base compensates you for this when you sell the shares, because your capital gain on sale will be lower. Thus, it seems inescapable to me that the cost base must be increased on the ex-distribution date also. For, if you instead waited to Jan 4 to add it to the cost base, but sold the shares before then (but after the ex-date) you would have too low a cost base to get your due compensation. So also for this purpose the payable date appears to be meaningless.
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Re: 2017 ETF re-invested distributions

Post by AltaRed »

Agree with this rationale too (up the ACB on the ex-distribution date)...which is typically the last business day in the year anyway (though Vanguard and BMO seem to have picked Dec 28 as the ex-dividend date).

In practice, since I don't trade ETFs, I just always book it in my records on the last business date of the year (Dec 29 this year).
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Re: 2017 ETF re-invested distributions

Post by Koogie »

AltaRed wrote: 06 Jan 2018 00:13 In practice, since I don't trade ETFs, I just always book it in my records on the last business date of the year (Dec 29 this year).
If you never plan on selling, does it really matter when you book it ? Some of us are procrastination prone..ahem.. and only do these adjustments maybe once every couple of years...
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Re: 2017 ETF re-invested distributions

Post by AltaRed »

What I meant was I am not an active trader of ETFs to worry about what specific day in December to book. Obviously, I will be selling off bits of ETFs over time, and the correct ACB will be required at that time.

Making the ACB adjustments when they are published is the best time to do it...before one forgets. Hence Dec 31 for re-invested distributions for me. This year, there is only one, XEF, to make an ACB adjustment on for me.
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Re: 2017 ETF re-invested distributions

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SkaSka wrote: 05 Jan 2018 19:08 A question that comes to mind: since this reinvested distribution got distributed on January 4, 2018, would this amount be used to adjust the cost basis of your XIC shares not for this year's tax return (2017), but next year's tax return (2018)? As in, the ACB for the 2017 tax return would be whatever amounts were added/subtracted from January 1, 2017 to December 31, 2017?
IMPORTANT NOTE: XIC is organized as a Trust, not a corporation. Year end distributions from trusts are taxable to the unit holder on the last day of the Trust's taxation year. XIC, like most mutual fund trusts or ETF trusts, has a year end in December. So XIC's distributions (cash and phantom) will be recorded on your T3 slip for the 2017 tax year.
This article https://www.taxtips.ca/personaltax/inve ... t/etfs.htm has a section at the bottom describing Reinvested Distributions from Canadian ETFs.
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Re: 2017 ETF re-invested distributions

Post by SkaSka »

Thanks to everyone for the insightful and super helpful feedback!

I will be adding it to our 2017 ACB.

I don't plan on selling XIC for a very, very, very long time - it's a few thousand every few months for decades kind of position. I am lazy and don't want to do more ACB calculations than absolutely necessary, which is a deterrance to any cowboy antics in the 2 taxable joint investment accounts :lol:
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Re: 2017 ETF re-invested distributions

Post by AltaRed »

Just remember there are two types of 're-invested distributions'. One is the phantom one we are talking about in this thread....which does not increase share count, but does add to ACB.

The other type is from DRIP programs where X funds are used to purchase Y additional shares on a recurring basis each year (monthly, quarterly, semi-annually as the case may be). Those should be booked at the time they are re-invested in case you decide to sell some shares during the year between distributions.... but for buy and hold investors that don't see in any given year, simply doing the ACB adjustment at year end is also good enough.

Some people swear by https://www.adjustedcostbase.ca/ as a tool to record your ACBs. It likely is a good tool for those not otherwise inclined to be disciplined or interested enough to keep records 'current'.
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Re: 2017 ETF re-invested distributions

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Re: 2017 ETF re-invested distributions

Post by IdOp »

Two of my 2017 Vanguard re-invested CG distributions have now been reported at TDDI.

One of them, VRE, agrees exactly with Vanguard.

The other, VCE, disagrees slightly with Vanugard. It should be $ 0.224378 per unit, but shows up as 0.225049, about 30 basis points more. Not terribly significant as an amount, but strange. Has anyone else noticed something like this?
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Re: 2017 ETF re-invested distributions

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IdOp wrote: 08 Mar 2018 12:47 Two of my 2017 Vanguard re-invested CG distributions have now been reported at TDDI.

One of them, VRE, agrees exactly with Vanguard.

The other, VCE, disagrees slightly with Vanugard. It should be $ 0.224378 per unit, but shows up as 0.225049, about 30 basis points more. Not terribly significant as an amount, but strange. Has anyone else noticed something like this?
Remember to use the number of units you owned before the ex-dividend date.
I believe there was a regular distribution before the phantom one; you don't get the phantom on the units you might have reinvested from the regular one.
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Re: 2017 ETF re-invested distributions

Post by Eclectic12 »

SkaSka wrote: 05 Jan 2018 19:08Thanks everyone for the reminder to add this "reinvested distribution" amount into my ACB for XIC, which is being held in taxable accounts - would have never thought to add it to the ACB otherwise!
Unfortunately ... a lot of people, myself included - don't find out about it until well after the fact.
SkaSka wrote: 05 Jan 2018 19:08 ... A question that comes to mind: since this reinvested distribution got distributed on January 4, 2018, would this amount be used to adjust the cost basis of your XIC shares not for this year's tax return (2017), but next year's tax return (2018)? As in, the ACB for the 2017 tax return would be whatever amounts were added/subtracted from January 1, 2017 to December 31, 2017?
If you didn't sell any units, when the ACB is adjusted does not matter ... just that it is adjusted to the correct value when a sale happens. Where one misses it, the gov't likes it as one is inflating the CG beyond what it really is.

A taxtips article as well as the T3 forms that my broker gave me when I had XIC in a taxable account indicate that at times, the dist date won't matter.
Keep in mind that a distribution that you received in January of 2018 may be included in the T3 income for 2017, because it was recorded by the ETF in December.
From the Reinvested Distributions from Canadian ETFs section of https://www.taxtips.ca/personaltax/inve ... t/etfs.htm


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Re: 2017 ETF re-invested distributions

Post by IdOp »

adrian2 wrote: 08 Mar 2018 13:46Remember to use the number of units you owned before the ex-dividend date.
I believe there was a regular distribution before the phantom one; you don't get the phantom on the units you might have reinvested from the regular one.
A good point in general, but in my case I'm not re-investing regular distributions in this ETF. Also, if that had been the mistake, then the TDDI-reported phantom would have been smaller than I was mistakenly expecting. In reality, it's larger.
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Re: 2017 ETF re-invested distributions

Post by Norbert Schlenker »

Starting my personal 2017 tax work today, without a T3 in hand for a holding of XIC, I went looking for a distribution breakdown at ishares. $0.29188 per unit of capital gains reinvested. That's pretty mean, given that the total price change for the year was only $1.50.

Meanwhile, XIU had reinvested capital gains of zero. Lot of turnover in the mid/small-cap portion of XIC???
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Re: 2017 ETF re-invested distributions

Post by Arby »

The Blackrock website provides a historical breakdown of their ETF distributions, including phantom distributions. It's not easy to find. Here is how to get there:
Enter the symbol of the ETF > Click on the heading "Performance"
Scroll down to "Distributions" > Click on "View Full Chart" > Click on heading "Recent" > Click on heading "Table"

Attached is a screen shot example for XIN.
XIN.jpg
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