• Portfolio Construction + Management

Book Value Blunders

Even the big bank discount brokerages mess up sometimes, and RBC Direct Investing’s Summary of Security Dispositions is a perfect example.  Each year, DIY investors unknowingly rely on this summary while preparing their tax returns.  The report is filled with plenty of disclaimers, indemnifying RBC of any errors or omissions contained within.  Fair enough – in some cases, RBC would not have all of the information necessary to accurately track their clients’ book values.  In the case of US-dollar securities, however, it’s as if they couldn’t even be bothered to try.

A former client of our DIY Investor Service (and an RBC Direct Investing client) faxed me a summary of their security dispositions for 2014 (I’ve included the details in the chart below).  It would appear that the client has a $10,238.62 capital gain that they must claim on their 2014 tax return.  After closer inspection, it became apparent that the amounts on the report were quoted in US dollars (which were unacceptable for tax purposes).


Summary of Security Dispositions 2014 (US dollars)

January 29, 2014  -325 shares


30,754.11 20,515.49 10,238.62

Source:  RBC Direct Investing


Now comes the fun part.  The DIY investor would need to compile all of the past transactions for VTI and convert the amounts to Canadian dollars in order to calculate their true capital gain or loss.  Let’s get started…

Don’t judge a book value by its cover

On January 29, 2014, the investor sold 325 shares of VTI for $30,754.11 US dollars.  Using the Bank of Canada noon exchange rate on the settlement date of 0.8946, we can make the adjustment to $34,377.50 Canadian dollars ($30,754.11 ÷ 0.8946).

On October 26, 2011, the investor purchased 2,130 shares of VTI for $134,455.34 US dollars.  Using the same method as above, we adjust the US dollar purchase amount to $135,813.47 Canadian dollars ($134,455.34 ÷ 0.9900).  This gives us a book value per share of $63.76219 Canadian dollars ($135,813.47 ÷ 2,130 shares).  If we multiply this value by the 325 shares that were sold in 2014, we end up with a book value for the transaction of $20,722.71 Canadian dollars ($63.76219 × 325 shares).


Transactions for VTI

October 26, 2011 +2,130 134,455.34 0.9900 135,813.47
January 29, 2014 -325 30,754.11 0.8946 34,377.50

Sources:  Bank of Canada, RBC Direct Investing


After the adjustment, the Canadian dollar proceeds from the sale and book value of the shares sold were $34,377.50 and $20,722.71 respectively.  This resulted in a capital gain of $13,654.79 Canadian dollars.  Without accounting for the adjustment, the investor would have understated their realized capital gain to the Canada Revenue Agency by $3,416.17 Canadian dollars ($13,654.79 – $10,238.62).


Summary of Security Dispositions 2014 (Canadian dollars)

January 29, 2014 -325 shares


34,377.50 20,722.71 13,654.79

Sources:  Bank of Canada, RBC Direct Investing


I certainly prefer not to jump to conclusions, but I think it’s safe to say that most DIY investors are not making these currency adjustments.  If this is the case, RBC Direct Investing needs to up its game and start helping their clients stay out of trouble with the CRA.

By |2017-01-17T18:01:33+00:00March 21st, 2015|Categories: Portfolio Construction and Management|Tags: |7 Comments


  1. Jim D October 10, 2015 at 7:21 am - Reply

    Is there an online portfolio tracker that can do this?? I’ve been looking but can’t find one. Given the number of DIY investors in Canada with USD holdings there must be an easier way to track Gains/losses, realized or unrealized, with the option of showing either USD or CAD. Globelnvestor can’t do it, TD DI can’t do it. Without relying on excel, is there anything else??

  2. Jim R March 25, 2015 at 4:35 pm - Reply

    The IRS accepts the first-in-first-out rule for ACB tracking. That seems *significantly* simpler than average cost as required by the CRA.

    Is there any legitimate reason for the CRA to not allow FIFO?

  3. YIBING March 23, 2015 at 2:07 pm - Reply

    in my case, it is hard to track on each day basis.
    I just use 2011 annual average exchange rate,
    and 2014 annual average exchange rate.
    because I sell and buy little amount and make frequent transaction.
    and dollar cost average. so it will take a bit longer to calculate.
    So I used year average.

    for example:
    if I buy 2011 100 share QQQ
    2012 buy 100 share QQQ
    2013 sell 80 share QQQ and bought 200 share QQQ (so net 120 share)
    2014 buy 200 share QQQ through four times
    so my average cost is


    and when I sell 200 QQQ in 2015
    I will use 200*SellPrice*R2015-200*(Above cost per share)

    I report this to CRA and CRA never questioned me.

  4. Davie215 March 21, 2015 at 12:54 pm - Reply

    While the impact may be great, I do not blame the brokerage for its book value report, as I too want to see the book value expressed in the native currency of the holding.

    As an active user of adjustedcostbase.ca for tracking, I maintain all purchases, sales, and dividend distributions (DRIP shares) in the native currency so that my numbers agree with the brokerage reports, and true gains and losses are not masked by currency fluctuations.

    This unfortunately requires that I edit the database whenever my position is liquidated, and manually adjust every transaction by tracking the exchange rate to match the transaction date. Again, a big effort, but since I’m not a day trader, only the year-end effects for tax gains/losses are necessary.

    Had the brokerage done all of the currency adjustments along the way, I would have had to trust their currency exchange rates and never known if it was done with proper numbers — so a Canadian dollar summary report would be highly suspect — in my books.

    One year, I had a USD account at what’s now Tangerine, and found that they had done all the monthly interest payments to provide a $CAD tax slip. Based on my processing of the monthly interest payments using the correct BoC exchange rates, the T5 slip was NOT in agreement with the actual $USD values.

    Convenient, yes, but accurate, no.

    I’ll take the way that RBC DI does it, and do my own conversion valuation, thank you!

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