Pro Tip: Never invest with Robo stocks in a non-registered account

[66bookssss]

Apparently every single time they do a trade, it counts as a taxable event. If there's 50 trades in that year, even though I did absolutely nothing except invest with them... I have to record and document all 50 trades. If you have a tiny amount, e.g. $5,000. Is it really worth 5 hours of my time to document 100s of lines for the $250 in taxable gains??

I'm talking Wealthsimple, wealthbar, etc

Edit: From my example, notice how some of the lines have missing cost basis? I am forced to investigate every single trade they did this year.

Imgur

Edit2: Sounds easy right? Just plug in the numbers to figure out cost basis? Well this is what I am working with:

https://i.imgur.com/jRG4lko.png

 

[cbole]

@66bookssss That’s why you buy XEQT/XGRO/XBAL (depending on your risk profile) and forget about it. You don’t have to worry about capital gains, the fund rebalances itself.

Edit: as others have pointed out, I meant to say you don’t have to worry about capitial gains when the fund rebalances allocations.

 

[donat]

@cbole One level deeper, I plan to buy HXT this year in my non-reg which tracks the TSX 60 but does not make any distributions like dividends. That way the entire thing is a taxable gain and only once I decide to sell. I’ll still need to track my ACB, but it’s way easier

 

[nigel74]

@donat The fact they never pay dividends is that you don’t need to wait for the T3 to do your taxes. It’s quite late in deadline.

All my non registered is now horizons etf and it’s nothing but great for me.

 

[deangelo]

@cbole You absolutely need to record capital gains on those in a non registered. It's simpler, yes, but you need worry and track ACB.

 

[cbole]

@deangelo Right, that’s if you sell the underlying fund. For example, if you hold XGRO, you won’t need to claim any capital gains/losses when the blackrock rebalances the bond/equity allocation.

 

[resjudicata]

@cbole So all those forms sent to my CRA account could be ignored if I were investing in a non-registered until selling?

I would imagine I could calculate capital gains based on what I bought it and sold the ETF for, but I had 6 or so forms from just holding ICLN and VEQT. It makes me wonder why they would even send them

 

[cbole]

@resjudicata I think you might be misunderstanding what I’m talking about. I’m talking about this from investopedia:

Because ETFs are by-and-large considered "pass-through" investment vehicles, ETFs typically do not expose their shareholders to capital gains. However, although rare, ETFs can generate capital gains that are transferred to shareholders on occasion due to one-time large transactions or unforeseen circumstances.

For example, an ETF may incur a capital gain if it needs to drastically rebalance its portfolio due to substantial changes in the underlying benchmark

 

[tumrub]

@deangelo Only when you sell, which for most of us is 20-50 years away. It's not an annual event, unlike the robo advisors rebalancing mechanism.

 

[madisonshpprd]

@deangelo Why only say "non-registered account"? Wouldn't the same issues be there for an RRSP? I'd think that only the TFSA is safe for Robo stock trading without incurring tax penalties, and even that can't be done too often according to CRA.

 

[deangelo]

@madisonshpprd You are confusing day trading regulations with capital gains and ACB tracking.

 

[madisonshpprd]

@deangelo Never mind that last half of my last sentence. I'm saying that if you had Robo stock trading going on in your RRSP account, won't you similarly be liable for taxes, like you would for your non-registered account? It seems to me that only TFSA avoids all tax penalties of any kind.

 

[deangelo]

@madisonshpprd Why would you be liable for taxes? It's actually the opposite in some cases.

The TFSA is subject to the foreign witholding tax due to the tax treaty not recognizing it on a TFSA (but does on an RRSP) However, this tax has nothing to do with capital gains or ACB.

You are taxed on withdrawals from an RRSP but this is cash, not a security. You would sell the security before withdrawing cash from the RRSP, and most importantly, doing so doesn't trigger any capital gains.

 

[musicman5509]

@deangelo I'm a newbie starting today with robo investing and wondering does it avoid the hassle mentioned by the OP as long as the auto-investments are inside rrsp and tfsa?

 

[deangelo]

@musicman5509 If you have them inside of registered accounts there are no capital gains payable or ACB to compute. You're fine.

 

[musicman5509]

@deangelo Thank you

 

[coolant]

@66bookssss This is pretty normal, use https://www.adjustedcostbase.ca/

 

[66bookssss]

@coolant | recurrence4 minutes ago

| This is pretty normal, use https://www.adjustedcostbase.ca/

That sounds easy for you to say but here is what I am working with:

https://i.imgur.com/jRG4lko.png

 

[resjudicata]

@66bookssss Can you export to CSV?

 

[coolant]

@66bookssss I had thousands of these one year

186 is under an hour’s work once you get the swing of things.