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Level 1

Why all numbers from T3 form sum up and come as additional income in my tax return?

We are low income family and we have an investment account for 10 years in TD bank in order to collect money for down payment. We received both T3 and T5008 forms for 2018 year.

1. T5008 shows Capital Gains/Losses $20.

2. T3 shows total of $7,200 (gains + dividends) and appears in our tax return as income and makes us owning to CRA $2500. But the statement for Jan 01, 2018 to Dec 31, 2018 shows that our investment account went down by $8,500. When we spoke with our account financial planner, he said that if we were to overdraw all funds from our investment account on Dec 31, 2018, we would loose $8,500 in reality. So, how come T3 adds as income of $7,200?

3. Our financial planner says that $7,200 was not our actual income, but it was a "result of money movements, buys and sells" only. 

The question is:"Can we claim $8,500 from the official statement (According to CRA, it's possible to claim only $3,000 a year) as losses in order to balance and lower our owning amount?
1 Best answer

Accepted Solutions
Level 2

Why all numbers from T3 form sum up and come as additional income in my tax return?

Too bad. Your FP is telling you this. The T3 shows income you obtained from your investment, comprising elements of both dividends and Capital gains. Each are taxed differently, owing to their different 'characteristics'. 

Dividends are favourably treated and you receive a tax credit for eligible amounts.

Capital gains are taxable as follows. 50% of the gain is treated as income and taxed at your marginal rate.

As a result, you owe tax.

View solution in original post

4 Replies
Level 2

Why all numbers from T3 form sum up and come as additional income in my tax return?

Too bad. Your FP is telling you this. The T3 shows income you obtained from your investment, comprising elements of both dividends and Capital gains. Each are taxed differently, owing to their different 'characteristics'. 

Dividends are favourably treated and you receive a tax credit for eligible amounts.

Capital gains are taxable as follows. 50% of the gain is treated as income and taxed at your marginal rate.

As a result, you owe tax.

View solution in original post

Level 1

Why all numbers from T3 form sum up and come as additional income in my tax return?

Thank you.
The point is not what FP says, but what is real. The real is that on December 31, 2018 our account was down by $8,500 which is reflected in official account statement. So, how come that we owe $2,500 taxes while in reality we lost $8,500 by the end of 2018?
P.S. It's clearly stated in the statement - "negative" $8,500..... Which is LOSSES. Why T3 reflects only gains from buying and selling stocks/shares but doesn't mention any losses?

It looks to us that we'd have to manually enter our losses. CRA says that Capital losses have to be applied against Capital gains. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-re...

https://turbotax.intuit.ca/tips/claiming-a-net-capital-loss-6248
Level 2

Why all numbers from T3 form sum up and come as additional income in my tax return?

You're missing the point. Your T3 does not reflect any profit or loss based on value of your unit, whether this is purely notional, or actual. Actual meaning, you do sell units or sticks.

Your T3 only shows your income breakdown for the payout from your investment, be it interest, dividends or capital gains. Have another chat with your FP.
Level 1

Why all numbers from T3 form sum up and come as additional income in my tax return?

Thank you.
In short word, you mean that T3 reflects everything needed for CRA and we don't enter anything else manually from the final 2018 account statement.
2018 year was absolutely abnormal and we can not understand why we own such a large tax just for having an investment account without any profit? The whole point of owning just for a fact of having investment account doesn't make sense to us being low income family.