27 Reasons to Count your ACB: by Eileen Reppenhagen, CGA
1. Proof or Validation of what you own includes accounting for transactions to show proof of continuity of ownership. I’ll bet your grandpa counted ACB with a manual card system for recording trades in Identical Properties, to calculate average cost base, way back before computers.
2. Validation of cash and transfers for Proceeds of Crime/Money Laundering Police / attribution tracking for ensuring that the right person is reporting the income and that the income is from a legitimate source
3. Calculation of capital gains and losses for tax purposes
4. Adjustment of cost for superficial losses to bump future cost to reduce tax
5. Verification of RSP claims to ensure all claims captured
6. Verification of withdrawals from RSP/RRIF and tax withheld at source
7. Instant tax planning if the market changes dramatically
8. Tax consequences for RSP swaps/loss denial/capital gains
9. Tax planning to reduce tax on capital gains by selling to trigger losses
10. Planning to get back tax you already paid by triggering losses to carry back
11. Plan for retirement/demise/divorce/ Not so active/Not so alive/Not so together scenarios – Plan for what to hold and what to sell
12. Plan to reduce cost of demise to preserve capital for spouse/family
13. Assessment of value of financial advisors advice
14. Warnings about calculation verification on statements by investment companies
15. What happens when you can’t remember what you own? Dementia has set in or you are having memory problems. How will you communicate about your holdings if that is a sudden event?
16. Verify T-slips? Are they right? Are they ever wrong?
17. Verification of expenses, margin interest, flow thru’s, write down of ACB to nil
18. Cost of lawyers doing accounting because accounting not done while alive to assist executor reduces value of estate, adds to stress for those left behind
19. Cost of pre-1971 ownership documentation
20. Elections in 1994 documentation, CGE Pool eliminated after 10 years – did you add back your unused cost? If you held mutual funds, did you elect to reduce the gains pool each year from 1994 to 2004, and then adjust the ACB to record the remainder of the pool as an increase in ACB? When you sold, did you remember to use those figures to calculate reduced gains?
21. Comprehensive Income calculations required for reviewed or audited financial statements for corporations, trusts, non-profits – all unrealized gain/loss net of tax
22. RRSP over contribution assessment for contributions not claimed, reconciled claims between your investments and your tax returns?
23. Tax auditors requests to verify source of funds for attribution of income back to source
24. Responsibility to Public Trustee when acting as a trustee for a trust, managing finances for a senior or person with a disability
25. Are you the Executor? How will you report to the beneficiaries in an orderly fashion? Are you aware that the Charitable Foundation that was left a % of the estate is entitled to financial statements and will check your work?
26. Are you the accountant expected to account and be concerned about the source of the funds invested? After all, CRA ‘civil penalties’ require due diligence…wilful disregard isn’t going to work
27. Are you the investors whose shares were delisted? Have you elected under S.50 (1) on your delisted shares and claimed the loss carry back to obtain a refund for tax paid on capital gains in the last three years?
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