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T3 and T5008


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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. 

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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.

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