Every Canadian investor who sells a security in a taxable account receives a T5008 slip — Statement of Securities Transactions. Tax season often brings a rude surprise: the numbers on the T5008, particularly Box 20, do not match what you expected to report as your capital gain. Here is why, and what you are actually supposed to use instead.
What the T5008 slip contains
The T5008 has two numbers that matter for capital gains:
- Box 20 — Proceeds of disposition: What you received when you sold.
- Box 21 — Cost or book value: What the broker recorded as your cost.
Box 20 (proceeds) is usually reliable — it reflects what actually appeared in your brokerage account. Box 21 is where the problems start.
Why Box 21 is not your adjusted cost base
CRA’s own T5008 guide states clearly that Box 21 represents the cost or book value “as reported by the payer” and that it “may not be the same as the adjusted cost base for tax purposes.”
Brokers report their internal book value — the cost they recorded within that one brokerage account. This number will differ from your legal adjusted cost base in several common situations:
1. You hold the same security at multiple brokerages
Canadian tax law pools ACB across all taxable accounts for the same tax owner. Your broker cannot know what you hold at another institution. Its book value reflects only its own purchases. The correct ACB pool is larger — and the ACB per share is different.
2. ETF distributions were never applied
Return of capital (ROC) distributions from ETFs reduce your adjusted cost base each year. These adjustments appear on your T3 or T5 slips, not in your brokerage account transactions. Most brokers do not apply ROC to their book value automatically. The longer you hold an ETF that pays ROC, the larger the gap between broker book value and true ACB.
3. You transferred a position between brokerages
When you transfer shares from one brokerage to another, the receiving broker sometimes resets book value to market value at the time of transfer. Your legal ACB carries the original purchase cost forward — the transfer does not create a new cost base.
4. DRIP shares were recorded at the wrong cost
Some brokers record DRIP shares at zero cost or at market value inconsistently. Your ACB should include the fair market value of each DRIP share on the date of reinvestment.
What CRA actually expects
When you file a Schedule 3 (Capital Gains and Losses), you report:
- Proceeds of disposition from T5008 Box 20 (or your own records if Box 20 is blank)
- Your adjusted cost base — which you must calculate yourself, or have a tool calculate for you
- Outlays and expenses (commissions, etc.)
CRA does not accept “my broker said so” as a substitute for maintaining your own ACB records. The onus is on the taxpayer.
How to reconcile the T5008 with your real ACB
The reconciliation process:
- Start with T5008 Box 20 (proceeds) — this is usually correct.
- Calculate your pooled adjusted cost base using the complete transaction history from all taxable accounts.
- Compare Box 21 to your calculated ACB per share. The difference is your reconciliation gap.
- Identify the cause: missing ETF adjustments, pooled holdings from another brokerage, transfer cost carry-forward errors, or DRIP inconsistencies.
- Report the correct ACB on Schedule 3, not the broker’s Box 21 figure.
Common causes of a lower broker Box 21 than real ACB (meaning the broker overstates your gain):
- ROC was not applied to the broker book value but was applied to your real ACB.
- Purchases at another brokerage increased the pooled ACB per share.
Common causes of a higher broker Box 21 than real ACB (meaning the broker understates your gain):
- DRIP shares were recorded at wrong cost.
- Transfer was treated as a fresh purchase at market value instead of original cost.
The filing risk of using Box 21 uncritically
If you use Box 21 from the T5008 as your ACB and it happens to overstate your real cost, you underreport capital gains. CRA can reassess. If Box 21 understates your real cost, you overpay — which is legal but expensive and unnecessary.
The correct approach is to maintain your own ACB records throughout the year, reconcile them against the T5008 at year-end, and use your calculated ACB on Schedule 3.
A worked reconciliation example
Suppose you hold 256 shares of a Canadian equity ETF after accounting for all adjustments:
- 2019: 200 shares purchased at $22.00 = $4,400
- 2021: 50 additional shares at $26.00 = $1,300
- 2021: 6 DRIP shares at $24.00 = $144 (reinvestment cost added to ACB)
- 2022: Return-of-capital adjustment: −$60 (from T3 Box 42, $0.30/unit × 200 shares at year-end 2022)
Your correct ACB:
- Total cost: $4,400 + $1,300 + $144 − $60 = $5,784
- ACB per share: $5,784 ÷ 256 = $22.59
Broker’s T5008 on a 100-share sale at $33.00:
- Box 20 (broker book value): $2,400 (based on their internal lot tracking, averaging only purchases they processed)
- Box 21 (proceeds): $3,300 (correct)
- Gain per T5008: $900
Correct calculation:
- ACB of 100 shares at $22.59: $2,259
- Proceeds: $3,300
- Correct capital gain: $1,041
The broker’s figure overstated the gain by $141 on this transaction. For larger positions held over a decade with consistent ROC payments and DRIP reinvestment, the cumulative discrepancy is often thousands of dollars.
The documentation you need to support your own ACB
CRA does not require you to file your ACB records with your return, but you must be able to produce them on request. For a capital gains claim to be defensible, keep:
- Original purchase confirmations (date, number of shares, price, commission)
- Transfer confirmations showing original cost carried forward (not transfer-date market value)
- DRIP reinvestment records at the exact reinvestment price on each date
- Annual T3 slips showing Box 42 return-of-capital amounts
- ETF issuer distribution breakdown documents for any year with ROC or phantom income
- A calculation showing each adjustment applied and the resulting per-share ACB
CRA audits of capital gains can reach back six years from the filing year. For ACB, the supporting records may need to go back much further — to the original purchase date of a long-held position. Maintaining these records continuously from first purchase is significantly easier than reconstructing them later.
When the T5008 figure can be trusted
Box 20 can serve as a useful cross-check — though rarely as a replacement for your own ACB calculation — when you purchased the security entirely at this brokerage, made no transfers in from other institutions, hold it at no other taxable brokerage, and the fund has paid no return-of-capital or phantom income distributions. In those narrow circumstances, the broker’s book value should match your correct ACB per share.
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