Why does withdrawal from a non-RSP investment account increase my tax payable (T5008)?

[Frankly]

This may be a tax form or bank issue, but if the form (T5008) is correct, I wonder if TurboTax is handling this form correctly.

I have an RBC non-registered (i.e. non-RSP) investment account, and RBC has sent me a T3 to cover Trust Income, which is taxable.

In other words, money invested was previously taxed, and capital gains are taxed annually.

In August I redeemed a block of shares from this account for a real estate down payment.  I now "found" a T5008 form on CRA My Account website that when I enter it into TurboTax, adds the TOTAL amount of the transaction to my income and generates a huge increase of my tax payable.
Why am I being taxed twice for this money?  What is wrong with this picture? Or, what am I doing wrong?

Thanks for any help.
Frank 🙂

[Frankly]

. . . still hoping someone can shed some light on this . . .

RBC has confirmed the fund I withdrew from is an unregistered account, so taxes should ONLY be payable on capital gains.

To add to the detail, ONE of the two T5008 slips has the following info:
13 Foreign currency = CAD
15 Type code of securities = MFT
16 Quantity of securities = 1,167.00
17 Identification of securities = RBC (name of fund)
18 ISIN/CUSIP number (blank)
19 Face amount (blank)
20 Cost or book value (blank)
21 Proceeds of disposition or settlement amount = 25,000.00
22 Type code of securities received on settlement (blank)
23 Quantity of securities received on settlement (blank)
24 Identification of securities received on settlement - Description (blank)
24 Identification of securities received on settlement - CUSIP/ISIN number (blank)
24 Identification of securities received on settlement - CUSIP/ISIN indicator = 9

The second T5008 slip is for the same amount, different fund, and has NO info in box 24.

TurboTax places the total amount ($50,000) on line 121 (Interest Income), thereby increasing my tax payable.

[Frankly]

The more I dig into this, the more I have the feeling that the T5008 submitted by RBC is incomplete, causing the increased tax payable.
Box 20 is for "Cost or Book Value" but is left blank. I believe this box may hold the solution, but I'm not sure if I can simply put an amount in there.

Since I pay income tax annually on capital gains, I can assume that I only owe tax on capital gains of the transacted shares from January 1, 2015 to August 13, the date of redemption.
The amount for Box 20, I believe, should be the value of the transacted shares on January 1, 2015.

Please advise,
Frank

[jt1bates]

Hi Frank. Have you got any further finding an answer? I'm having a very similar problem as you. Like you I sold a mutual fund from my non-registered account and purchased a different one. The T5008 that I found on CRA is like yours. I'm not an expert at all, but I think I need the "Cost or Book Value" as well.

[TurboTaxJeffrey]

This has already been answered...you are going to need to find out the cost, and you will have to ask the institution that issued the t slip.

[claude-villemair]

I don't think Frank's question has been answered.Please reply regarding his suggestion that "Since I pay income tax annually on capital gains, I can assume that I only owe tax on capital gains of the transacted shares from January 1, 2015 to August 13, the date of redemption.
The amount for Box 20, I believe, should be the value of the transacted shares on January 1, 2015."  Thanks!    Claude

[Frankly]

Sorry, I probably should have added whatever I learned since my last entry, as unsatisfactory as it was.  

As I understand it:
1. The annual T3 that I get from the bank related to my investment account covers the capital gains on transactions that the bank completed in the day-to-day management (buying and selling) within the investment fund.  It does NOT cover capital gains on shares that I sell.

2. When I sell all or part of my shares, the bank sends a T5008 for the total transaction amount to the CRA (not to me), but does NOT include the Book Value for the shares transacted in Box 20.  I have no idea why Box 20 isn’t filled in, neither do I have a clue why I don’t get a copy of this T-slip, this is just “the way things are done”.

3. I am expected to report (on my T1) the transaction I made myself, and figure out the details.

4. ALL transactions (internal, hidden-to-me, as well as my own buying and selling) have an impact on the "unit book cost", which is constantly updated and reported on transaction statements and account statements.

5. The “unit book cost” at the time of the transaction is multiplied by the number of shares sold and the result is entered (in Box 20) as Book Value.

That’s basically it.
Frank

[claude-villemair]

Thanks. That seems somewhat clear. Now I have to go to RBC and see why they haven't sent a T 5008 to me the past 3 years and adjust my taxes with CRA

[Frankly]

I happened to run into the T5008 when I explored the T-slips on the CRA website, in MyAccount.

[TurboTaxJeffrey · Accepted solution]

You are indeed going to have to know the cost or book value in order to determine the actual capital gain.  Unfortunately you will need to get this from the issuer of the T3.