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How to report T5008 as Income (and not capital gain/loss)


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I I have two investment accounts — one at TD Direct Investing and the other at Wealthsimple. The TD account has been in use for over 10 years which has been used for long term investments and I use T5008 slips that I get from TD as capital gain/loss.

I opened the Wealthsimple account in March 2021 for ‘frequent trading’. I sold and bought the same share frequently, sometimes on the same day. I have received T5008 summary from Wealthsimple with about 35 transactions and total gain of about $670. 

I understand that I need to report this as income and not capital gain.

My question is:

1. How do I enter this information in Ufile online?
2. How do I enter any expenses (other than commissions, e.g. Internet and interest) to carry on these transactions.

It is possible that I might stop doing frequent trading this year, so please suggest so that what I enter in 2021 return does not make filing future returns complicated.

Thanks for your help.
 

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Hi @Tax14,

We have modified the T5008 slip information entry to make it more compliant when downloading data.

In addition, it should be noted that the document that your broker sends you is a summary of the original T5008 slip. Also, this document gives information about all your transactions while the T5008 slip is for one transaction. You must pay close attention or ask your financial advisor for more information.

It should be noted that you can only report one transaction based on the "Type code of securities".

To enter your gains (or losses), please follow these steps:

1. On the "Left-side menu on the Interview tab", select the heading "Interest, investment income and carrying charges".

2. On the right-hand page, click on the plus sign icon "+" located to the right of the line "T5008 - Statement of securities transactions".

3. On the page titled "T5008 - Statement of securities transactions" you need to enter more information depending on the type of transactions you have made.

4. On the line "Recipient type", you must choose from the drop-down menu the option that suits you.

5. If you made the transaction in foreign currency, in the "Foreign currency" lines in the drop-down menu, choose the currency type. Usually on the T5008 slip, the amount is in Canadian dollars, but it may be in foreign currency if the transaction is in foreign currency.

6. On the "Date of settlement (dd-mm-yyyy)" line, you must enter the date by indicating the day, the month and the year when you received the settlement of the security.

7. On the line "Type code of securities" in the drop-down menu, you must choose the appropriate transaction type.

8. On the line "Cost or book value", enter the value at the time of acquisition of the property.

9. On the line "Proceeds of disposition or settlement amount", enter the value received at the sale of the property.

10. On the line "Outlays and expenses related to the transaction", enter the amount paid to your advisor.

It is very important to make the appropriate choice. If your T5008 slip reports both types of income, investments and capital gains, you will need to enter two T5008 slips, one for the investment and the other for the capital gain, and divide the amount in two according to the transactions you have made.

Thank you,

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Thanks for explaining how to enter data in T5008. I believe that I understand it. 
My question is that, while entering data in a T5008 slip, if I want report the gain as income (and not capital gain), how do I do that, as whatever I enter in T5008, it all ends up as capital gain in Schedule 3. 

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Hi Denis, 

I use the security code PTI, as provided on the T5008. 
It is being included as capital gains on line 12700.

Is there any other option or way to move it Investment income (so that it is 100% taxable) instead of 50% taxable?

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@Denis  

I have accounts with 2 brokers, and I am retired.  One broker we have a day trading account, and I want to enter this as a business.  Where do I do this under UFILE?  I did try this under T5008 but found it didn't credit me for my loss, plus I'm a day trader under your explanation above.

The other account is a TFSA, with frequent trading similar to Day Trading, do I need to enter these trades also?

TD supplies a summary sheet of my trades, grouped by ticker.  Can I enter my trades by ticker? Or must I enter the individual trades?  Is there a way to download this info, from TD Direct, and  IBKR?

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21 hours ago, Tax14 said:

Hi Denis, 

I use the security code PTI, as provided on the T5008. 
It is being included as capital gains on line 12700.

Is there any other option or way to move it Investment income (so that it is 100% taxable) instead of 50% taxable?

Hi @Tax14,

I meant the security type as you can choose Stripped bonds or Treasury bills to have investment income at line 121000.

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1 hour ago, alared said:

Hi Denis,  

I see on my CRA account that TD submits individual T5008 slips for each trade.  Can we import them into our Ufile form?

Hi @alared,

You can use the Auto-Fill My Return (AFR) service to download your information:

https://www.ufile.ca/get-started/auto-fill-my-return

You can communicate with CRA to determinate if your income is an investment, capital gain or a business.

Business income T2125 are entered within the self-employment business income section and page.

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On 3/3/2022 at 3:52 PM, Denis K said:

Hi @Tax14,

I meant the security type as you can choose Stripped bonds or Treasury bills to have investment income at line 121000.

Hi Denis,

I used Bond as option for the security type code. However, it is still being included in Schedule 3 (and being charged 50% taxable) on line 12700. The only difference it made is that the item gets moved from item “3. Publicity traded shares, mutual .. “ to “5. Bonds, depreciable property…” 

I believe that as long as it is being entered as T5008, it will be treated as 50% capital gain.

Perhaps, you do a test return at your end and let us know if there is a work around.

Thanks 

 

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  • 2 weeks later...
On 3/3/2022 at 4:05 PM, Denis K said:

Hi @alared,

You can use the Auto-Fill My Return (AFR) service to download your information:

https://www.ufile.ca/get-started/auto-fill-my-return

You can communicate with CRA to determinate if your income is an investment, capital gain or a business.

Business income T2125 are entered within the self-employment business income section and page.

@Denis KI tried the auto fill.  It failed upon several attempts, where the CRA download caused Ufile to crash.  I was running my 2020 return on Win 7 (2 persons but not filed as yet), which may be the problem.  If I re-install Ufile 2020 on Windows 10, will there be an issue, or must I repurchase 2020 Ufile?

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1 hour ago, alared said:

@Denis KI tried the auto fill.  It failed upon several attempts, where the CRA download caused Ufile to crash.  I was running my 2020 return on Win 7 (2 persons but not filed as yet), which may be the problem.  If I re-install Ufile 2020 on Windows 10, will there be an issue, or must I repurchase 2020 Ufile?

@Denis K  I was able to re-install Ufile on my Windows 10 computer.  Seemed to be running fine, went to CRA for auto-fill.  I was able to select download, and use my Ufile partner to login.  However it crashed after selecting download, after about 1 min. such that I am unable to make auto-fill selections or proceed further.  No error messages, nothing further, Ufile simply closes.  Upon re-start it asks if I want to recover the last session, however I can see no new data has been added to my recent file.

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@Denis KUpdate, 
On the CRA site, it claims that up to 500 trade slips (T5008) are available to auto fill.  I tested autofill with my wifes tax return, it worked fine in Ufile.  Mind still crashes Ufile,  I have approx. 492 trades I need to enter.    Another option would be to include a .csv file supplied from my direct broker.  I can not locate how to do this using Ufile.

Update Mar 21.

I contacted CRA today, they said that the crashing is a software problem and should be addressed by technical at UFILE.   I tend to agree as my wifes download from CRA worked fine in Ufile.

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4 hours ago, alared said:

Hi, @TaxSmith  How do you enter a summary of trades?  What details are required?  I have just short of 500 trades, all in US securities. for the tax year 2020, likely more for 2021.  Filing 2020 first.

Hi @alared, 

To enter summary, leave the security description and quantity empty, and enter the Total Adjusted Book Cost and Total Proceeds of Disposition in box 20 and 21 respectively in a T5008. Basically, you are entering ‘summary’ in a T5008 form. Your financial institution should have provided you with total adjusted book cost and total proceeds of dispositions values (Wealthsimple has provided me with these values for mu 70 or so trades)

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  • 1 month later...

I have one T5008 for stock investments "SHS".

My one document has many different types of "identification of securities" with different "acquisition dates". I didn't get separate T5008 forms for each security, so I'm confused what to put for the "date of settlement" (box 13). 

Do I need to log each security separately even though they're all on one T5008?

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9 hours ago, Tax14 said:

KG3, see my reply dated Match 21 on the same topic above.

I read the entire thread but I'm still very confused.

 

I have 26 transactions. My total is a loss not a gain.

After 4 hours I got to speak with CRA and they said I needed to enter each transaction into the T5008 form in the ufile program. But here I read you can do the totals? 

Is there anything else I need to report in ufile once I enter all 26 transactions?

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8 hours ago, KG3 said:

I read the entire thread but I'm still very confused.

 

I have 26 transactions. My total is a loss not a gain.

After 4 hours I got to speak with CRA and they said I needed to enter each transaction into the T5008 form in the ufile program. But here I read you can do the totals? 

Is there anything else I need to report in ufile once I enter all 26 transactions?

Let me clarify. If you have done 26 transactions on different shares, ETFs, etc., e.g you sold 100 shares of TD, sold 200 shares of BCE, 100 shares of Enbridge, you need to enter them separately in separate T5008. However, if you did multiple buy and sells of the same stock, e.g bought 100 shares of TD on Jan 15, sold 50 shares on Jan 15, sold 50 shares of TD on Jan 15, bought 200 TD on Jan 16, sold 100 TD on Jan 17, sold 100 shares of TD on Jan 17, and so on, you may enter the summary. I hope it makes sense.

 

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On 3/1/2022 at 1:19 PM, Tax14 said:

I I have two investment accounts — one at TD Direct Investing and the other at Wealthsimple. The TD account has been in use for over 10 years which has been used for long term investments and I use T5008 slips that I get from TD as capital gain/loss.

I opened the Wealthsimple account in March 2021 for ‘frequent trading’. I sold and bought the same share frequently, sometimes on the same day. I have received T5008 summary from Wealthsimple with about 35 transactions and total gain of about $670. 

I understand that I need to report this as income and not capital gain.

My question is:

1. How do I enter this information in Ufile online?
2. How do I enter any expenses (other than commissions, e.g. Internet and interest) to carry on these transactions.

It is possible that I might stop doing frequent trading this year, so please suggest so that what I enter in 2021 return does not make filing future returns complicated.

Thanks for your help.
 

Ok to report your gains/losses as business income/loss, you have to select "Self-Employment Business Income" in the "Interview Setup" and then select "T2125 Business Income".  This is the only place to report the gains/losses as business income.  Forget about using the T5008.  It's not the security code, or the security that determines how the transactions are reported on your tax return; it's the form that you choose to report the items in UFile that determines where they go and how they are reported on your tax return.   

Hope this helps.    

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16 hours ago, ufile2022 said:

So if you have hundreds of trades from day trading in the year, you'd have to enter them all one by one? There must be a less tedious way to do this?

No, if there are hundreds of trade from day trading, you may enter ONLY one summary trade. This is my understanding and this is what I have done.

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16 hours ago, ufile2022 said:

So if you have hundreds of trades from day trading in the year, you'd have to enter them all one by one? There must be a less tedious way to do this?

Yup no choice.  That's the only way.  Trudeau wants to see every single one of your transactions on your Schedule 3 or Business Income or whatever you use to report them even though they have already received T5008 from the brokerages that already listed them one by one but he wants to see them again.  Same thing with the Foreign Income Statement, you have to list your foreign currency-denominated transactions, if you have any, again, for the 2nd time, if you have already listed them for Schedule 3 or Business Income.  

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10 hours ago, NeedToFileTaxes said:

Ok to report your gains/losses as business income/loss, you have to select "Self-Employment Business Income" in the "Interview Setup" and then select "T2125 Business Income".  This is the only place to report the gains/losses as business income.  Forget about using the T5008.  It's not the security code, or the security that determines how the transactions are reported on your tax return; it's the form that you choose to report the items in UFile that determines where they go and how they are reported on your tax return.   

Hope this helps.    

The program won't allow electronic filing if you enter a business loss though. Does that mean it has to be filed manually by a printed return?

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