Table of Contents
- 📦 Investment Reporting Packages: Advisors vs. Self-Directed Investors (Beginner Tax Guide)
- 📊 Understanding Investment Reports from Advisors & Banks (Beginner Guide)
- 📈 Handling ACB for Self-Directed Investors: What To Do When Records Are Missing
📦 Investment Reporting Packages: Advisors vs. Self-Directed Investors (Beginner Tax Guide)
When preparing tax returns for clients with investments 💼, the reporting requirements can vary dramatically depending on how they invest. Understanding the difference between advisor-managed portfolios and self-directed investing accounts is crucial for accurate tax filing — and for billing your time properly.
This guide breaks down everything a new tax preparer needs to know ✅.
🧠 Why Investment Reporting Matters
Non-registered investments (outside RRSPs, TFSAs, etc.) generate taxable events such as:
- 💰 Interest income
- 📈 Capital gains
- 💵 Dividends
- 🌍 Foreign income
These must be correctly reported using slips and forms such as:
| Form | Purpose |
|---|---|
| T3 | Income from trusts / mutual funds |
| T5 | Interest & dividends |
| T5008 | Securities transactions |
| Schedule 3 | Capital gains/losses |
| T1135 | Foreign income & assets reporting (if required) |
🧑💼 Clients With Investment Advisors
Clients working with wealth managers / advisors often receive a complete investment tax package 📂 — typically early March.
What’s Included
| Document | Purpose |
|---|---|
| Summary of T-slips | Shows total investment income |
| Dividend & interest reports | Supports T5 reporting |
| Realized gain/loss report | ACB & capital gains for Schedule 3 |
| Foreign reporting summary | Helps complete T1135 if needed |
✅ Huge time saver for tax preparers
✅ ACB usually calculated for you
✅ Advisors can answer questions or resend data
Tip: Don’t hesitate to request a missing gain/loss report — clients paying advisor fees are entitled to it.
👏 These clients are generally easier, faster, and safer to process.
👤 Self-Directed Investors (DIY Traders)
These are investors who:
- Trade through discount brokerage platforms
- Buy stocks, ETFs, mutual funds independently
- Do not have an advisor preparing reports
What they usually receive:
| Provided | Details |
|---|---|
| ✅ T-slips | Annual income totals |
| ⚠️ T5008 slips | Sale transactions only — usually NO ACB |
| ❌ Gain/loss report | Not usually supplied |
| ❌ ACB tracking | Client responsibility |
This means you may need to calculate capital gains manually, often using:
- Transaction history
- Trade confirmations
- Brokerage statements
⏰ Requires more work
💬 Requires asking client questions
📂 Requires organizing raw data into Schedule 3
Pro Tip: Self-directed trading = higher workload ➜ charge accordingly
⚠️ Key Warning
ACB reporting errors are common in DIY investing.
- Clients think brokerage provides ACB — not always true
- One trade could have multiple purchase dates & prices
- Reinvested dividends adjust ACB
- Missing ACB = incorrect gain/loss
📎 Always confirm ACB source before filing.
✨ Workflow Checklist
| Step | Action |
|---|---|
| 1️⃣ Identify investor type | Advisor vs self-directed |
| 2️⃣ Request tax package or brokerage statements | Ask early |
| 3️⃣ Confirm ACB source | Advisor report? Client? Calculated? |
| 4️⃣ Verify T-slips match totals | Cross-check income |
| 5️⃣ Prepare Schedule 3 | Use gain/loss data |
| 6️⃣ Determine if T1135 applies | Foreign asset threshold |
💡 Pricing Tip
Because work varies:
✔️ Investors with advisors → standard pricing
✔️ Self-directed traders → extra fee for ACB + Schedule 3 prep
Let clients know upfront 💬
Example:
“Because your trades require manual ACB review and capital gains calculation, there is an additional schedule preparation fee.”
📘 Knowledge Box
Registered accounts (RRSPs, TFSAs)
No capital gains/loss reporting ✅
No ACB tracking ❌
Only non-registered accounts require these tax steps.
🏁 Final Takeaway
| Investor Type | What You Get | Workload |
|---|---|---|
| With Advisor | Full reporting package 📦 | ✅ Easy |
| Self-Directed | Raw trading data only 📄 | ⛔ Manual ACB work |
Understanding this upfront saves time and prevents filing errors.
As you gain experience, you’ll quickly spot which clients require extra attention — and appropriately bill for the additional work.
📊 Understanding Investment Reports from Advisors & Banks (Beginner Guide)
When your tax client has an investment advisor or bank-managed investment accounts, you will likely receive an Investment Tax Package. This package is a goldmine ✅ — it summarizes all investment income and provides key numbers you need to file investment-related taxes accurately.
As a new tax preparer, knowing how to read these reports saves time ⏱️ and helps avoid costly mistakes ❌.
🧾 What’s Inside an Investment Tax Package?
Most investment firms provide similar information, though formatting can vary. Expect to find:
| Report Section | What It Includes | Why It Matters |
|---|---|---|
| Interest Income Summary | GICs, bonds, savings interest | Used for T5 slip reporting |
| Dividend Income Summary | Canadian & foreign dividends | Used for T5 slip reporting |
| Capital Gains/Loss Report | Sold investments, ACB, proceeds | Used for Schedule 3 filing |
| Foreign Investment Income Report | Foreign dividends & assets | Used for T1135 Foreign Property reporting (if applicable) |
| Account Summary & Advisor Info | Contact and plan details | For clarifications & verification |
💡 Key Tip
You do NOT enter each individual security into the tax return.
✅ You enter totals from slips (T3/T5/Schedule 3)
⛔ You do not disclose individual stock names
📂 Reports You’ll Use Most
📈 Realized Capital Gain/Loss Report
This is the most important document when investments are sold.
It provides:
- Date purchased & sold
- Proceeds of disposition
- Adjusted Cost Base (ACB)
- Gain or loss
👉 These numbers go on Schedule 3 – Capital Gains or Losses.
Pro Tip: Investment advisors already calculate ACB — trust their data unless it appears incorrect.
💵 Interest & Dividend Details
- Interest income from GICs, bonds, cash balances
- Dividends from Canadian & foreign stocks
✅ Totals flow to T5 slips
🔢 You only need summary totals, not each investment
🌍 Foreign Income & T1135
If the client holds foreign assets > $100,000 CAD in cost:
You must complete Form T1135.
Most advisor packages now include:
- Foreign asset summary 🌐
- Foreign income earned 💲
- Highest monthly balance 📌
- Year-end balance 🧾
This makes T1135 filing easy — use the report directly.
🧠 Why These Reports Matter
| Benefit | Impact |
|---|---|
| Saves time on data entry | ✅ Faster tax prep |
| Reduces errors | ✅ Accurate ACB reporting |
| Includes CRA-required foreign data | ✅ Avoid T1135 penalties |
| Easy advisor communication | ✅ Quick corrections if needed |
🛠️ What To Do If Reports Are Missing
Sometimes clients won’t send the package — or advisors forget.
📞 Call the client first
Clients usually get faster replies from advisors.
📧 If needed, contact the advisor directly — many are happy to help.
💬 Advisors often appreciate working with tax preparers — it can lead to referrals.
⚠️ Common Mistakes to Avoid
❌ Entering each investment individually
❌ Guessing ACB instead of using advisor data
❌ Ignoring foreign reporting information
❌ Filing without checking for slips (T3, T5, T5008)
✅ Quick Checklist for New Tax Preparers
| Task | Done |
|---|---|
| Request complete investment tax package 📨 | ☐ |
| Confirm slips: T3, T5, T5008 📄 | ☐ |
| Review capital gain/loss summary 📊 | ☐ |
| Enter totals only — not individual securities ✍️ | ☐ |
| Check foreign reporting requirements 🌍 | ☐ |
| Contact advisor if data unclear 📞 | ☐ |
🧱 Final Takeaway
Investment advisor reports make investment tax filing simple and accurate.
Use the totals. Trust the summary. Confirm missing info.
These reports are a huge time-saver for tax preparers and are essential for clients with investment portfolios.
📈 Handling ACB for Self-Directed Investors: What To Do When Records Are Missing
Self-directed investors love managing their own portfolios — but for tax preparers, this can create a challenge. Unlike clients with full-service advisors, DIY investors often do not receive a polished tax package that includes Adjusted Cost Base (ACB) details.
As a tax professional, your job is to report accurate capital gains & losses — even when the client doesn’t have the numbers neatly organized.
This guide explains how to handle missing ACB information step-by-step ✅, without putting yourself at risk.
📌 What Is ACB (Adjusted Cost Base)?
ACB = Original cost of an investment + additional acquisition costs (commissions, reinvested distributions, etc.)
ACB is required to calculate:
Capital Gain/Loss = Proceeds of Sale – ACB
If ACB is wrong ➜ capital gains will be wrong.
🎯 The Challenge with DIY Investors
Self-directed traders may:
- ❌ Not track ACB
- ❌ Only rely on trading confirmations or monthly statements
- ❌ Sell shares purchased in prior years (records missing)
- ❌ Forget reinvested dividends (DRIPs)
- ❌ Guess their purchase price
📂 Many broker trade summaries show sale proceeds only — not ACB
Especially when shares were purchased in a prior year.
✅ Step-By-Step Process to Determine ACB When It’s Missing
1️⃣ Ask the Client First
Request purchase details directly:
📥 Ask for:
- Trade confirmations
- Brokerage transaction history
- Personal spreadsheets
If client knows their cost — get them to give you the number.
💡 You are compiling information — you are NOT auditing it.
2️⃣ If Client Doesn’t Know: Ask Clarifying Questions
Examples:
- “Did you make money or lose money on this sale?”
- “Approximately when did you buy these shares?”
- “Do you recall the rough purchase price?”
Have the client write it down or email it to you
→ This protects you ✅
3️⃣ Perform Basic Market Research (Your Due Diligence)
When the client gives a date/year range, you can:
🔎 Look up historical stock prices
💻 Use finance websites (e.g., quote history tools)
📊 Take an average of price range if exact day is unknown
Example approach:
- Bought in May 2018
- Look up price May 1 & May 31
- Average to estimate ACB
🎯 Goal: Reasonable estimate, documented effort
4️⃣ Validate With Client
Before filing:
🗣️ Tell the client:
“Here is the ACB I calculated based on available information. Does this look reasonable and accurate to you?”
✅ Get confirmation
📝 Save email or written approval for your records
5️⃣ If Still Uncertain — Client Must Decide
If they ask “What should I claim?”
🚫 Never decide for them
✅ Push responsibility back
Phrase to use:
“You purchased and sold the investment — you must provide the correct number. I cannot choose a gain or loss figure for you.”
This protects you professionally.
🛑 Never Do This
❌ Pick an ACB yourself without client input
❌ Suggest a gain/loss amount
❌ File based on a random guess
❌ Let clients say “just put something”
⚠️ Your role = report information, not invent it
💼 Professional Backup Plan — T1 Adjustment
If the real numbers come later:
✨ File a T1 Adjustment
📎 Update Schedule 3
✅ CRA updates record
This is common — no need to stress or delay filing.
📘 Notes Box
📎 Always document client-provided numbers
If CRA questions later, you need proof the client supplied the data — and you acted responsibly.
⭐ Pro Tips For New Tax Preparers
| Tip | Why It Matters |
|---|---|
| Get written confirmation of ACB ✅ | Protects you legally & ethically |
| Use transaction histories 📂 | Most accurate if available |
| Ask for timeline & research market ⏳ | Helps validate estimates |
| Never “suggest” a gain/loss ❌ | Avoid liability |
| Amend later if needed ✨ | Tax practice reality |
🧠 Example Script to Clients
✅ Use this when they don’t know their numbers:
“To correctly report your capital gain or loss, I need your original purchase information. If you cannot locate it, please estimate based on your best knowledge and send it to me by email so I can record it.”
🎯 Final Takeaway
Self-directed investors = imperfect info ✅
Your goal = reasonable calculation + client confirmation
You don’t guess — the client provides numbers
When missing, assist through research & reasoning — then verify with client.
This approach keeps you professional, compliant, and trusted. ✔️
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