T3 and T5008

[Dividendincome]

I sold a mutual fund (in a non-reg account) in 2022.   There was a T3 issued for dividends (that were reinvested into the same fund) in 2021 (and I reported this on my 2021 return).   Do I subtract the amount of those dividends when I show my Gain on the funds I sold in 2022.   Otherwise, I am taxed in both 2021 on the dividends....and 2022...when I show these reinvested dividends as part of the gain. 

[Curmudgeon]

You are being taxed on the capital gain the dividend investment produced, along with the gains achieved by other investments into the fund, not on the dividend itself. The initial investment in the fund itself came from after tax earning. It's not where the investmet funds come from, it's the gains they produce.

[Dividendincome]

Understood.   However the gains (when I disposed in 2022) would have included dividends that were recognized as income in 2021 via the T3

[Curmudgeon]

The reinvested dividends go into the ACB. For example, initial investment of 500 units @ $10/unit = $5,000. Later invest $150 dividends when fund at $15 for 10 additional units. Total investment now $5,150 and hold 510 units. The ACB/unit = 5,150/510 = $10.10/unit. Redeem at $16, capital gain/unit = $16 - $10.10 = $5.90. The initial investment and the dividend are subtracted out in the calculation. Only the gain on them taxed.