Every Canadian investor who sells a security in a taxable account receives a T5008 slip — Statement of Securities Transactions. Tax season often brings a rude surprise: the numbers on the T5008, particularly Box 20, do not match what you expected to report as your capital gain. Here is why, and what you are actually supposed to use instead.
What the T5008 slip contains
The T5008 has two numbers that matter for capital gains:
- Box 20 — Cost or book value: What the broker recorded as your cost.
- Box 21 — Proceeds of disposition: What you received when you sold.
Box 21 (proceeds) is usually reliable — it reflects what actually appeared in your brokerage account. Box 20 is where the problems start.
Why Box 20 is not your adjusted cost base
CRA’s own T5008 guide states clearly that Box 20 represents the cost or book value reported by the payer and that this amount may or may not reflect the investor’s adjusted cost base for tax purposes.
Brokers report their internal book value — the cost they recorded within that one brokerage account. This number will differ from your legal adjusted cost base in several common situations:
1. You hold the same security at multiple brokerages
Canadian tax law pools ACB across all taxable accounts for the same tax owner. Your broker cannot know what you hold at another institution. Its book value reflects only its own purchases. The correct ACB pool is larger — and the ACB per share is different.
2. ETF distributions were never applied
Return of capital (ROC) distributions from ETFs reduce your adjusted cost base each year. These adjustments appear on your T3 or T5 slips, not in your brokerage account transactions. Most brokers do not apply ROC to their book value automatically. The longer you hold an ETF that pays ROC, the larger the gap between broker book value and true ACB.
3. You transferred a position between brokerages
When you transfer shares from one brokerage to another, the receiving broker sometimes resets book value to market value at the time of transfer. Your legal ACB carries the original purchase cost forward — the transfer does not create a new cost base.
4. DRIP shares were recorded at the wrong cost
Some brokers record DRIP shares at zero cost or at market value inconsistently. Your ACB should include the fair market value of each DRIP share on the date of reinvestment.
What CRA actually expects
When you file a Schedule 3 (Capital Gains and Losses), you report:
- Proceeds of disposition from T5008 Box 21 (or your own records if Box 21 is blank)
- Your adjusted cost base — which you must calculate yourself, or have a tool calculate for you
- Outlays and expenses (commissions, etc.)
CRA does not accept “my broker said so” as a substitute for maintaining your own ACB records. The onus is on the taxpayer.
How to reconcile the T5008 with your real ACB
The reconciliation process:
- Start with T5008 Box 21 (proceeds) — this is usually correct.
- Calculate your pooled adjusted cost base using the complete transaction history from all taxable accounts.
- Compare Box 20 to your calculated ACB for the shares sold. The difference is your reconciliation gap.
- Identify the cause: missing ETF adjustments, pooled holdings from another brokerage, transfer cost carry-forward errors, or DRIP inconsistencies.
- Report the correct ACB on Schedule 3, not the broker’s Box 20 figure.
Common causes of a lower broker Box 20 than real ACB (meaning the broker overstates your gain):
- ROC was not applied to the broker book value but was applied to your real ACB.
- Purchases at another brokerage increased the pooled ACB per share.
Common causes of a higher broker Box 20 than real ACB (meaning the broker understates your gain):
- DRIP shares were recorded at wrong cost.
- Transfer was treated as a fresh purchase at market value instead of original cost.
The filing risk of using Box 20 uncritically
If you use Box 20 from the T5008 as your ACB and it happens to overstate your real cost, you underreport capital gains. CRA can reassess. If Box 20 understates your real cost, you overpay — which is legal but expensive and unnecessary.
The correct approach is to maintain your own ACB records throughout the year, reconcile them against the T5008 at year-end, and use your calculated ACB on Schedule 3. The T5008 ACB reconciliation checker can help compare the broker’s Box 20 figure against your own ACB records before you file.
A worked reconciliation example
Suppose you hold 256 shares of a Canadian equity ETF after accounting for all adjustments:
- 2019: 200 shares purchased at $22.00 = $4,400
- 2021: 50 additional shares at $26.00 = $1,300
- 2021: 6 DRIP shares at $24.00 = $144 (reinvestment cost added to ACB)
- 2022: Return-of-capital adjustment: −$60 (from T3 Box 42, $0.30/unit × 200 shares at year-end 2022)
Your correct ACB:
- Total cost: $4,400 + $1,300 + $144 − $60 = $5,784
- ACB per share: $5,784 ÷ 256 = $22.59
Broker’s T5008 on a 100-share sale at $33.00:
- Box 20 (broker book value): $2,400 (based on their internal lot tracking, averaging only purchases they processed)
- Box 21 (proceeds): $3,300 (correct)
- Gain per T5008: $900
Correct calculation:
- ACB of 100 shares at $22.59: $2,259
- Proceeds: $3,300
- Correct capital gain: $1,041
The broker’s figure understated the gain by $141 on this transaction. For larger positions held over a decade with consistent ROC payments and DRIP reinvestment, the cumulative discrepancy is often thousands of dollars.
The documentation you need to support your own ACB
CRA does not require you to file your ACB records with your return, but you must be able to produce them on request. For a capital gains claim to be defensible, keep:
- Original purchase confirmations (date, number of shares, price, commission)
- Transfer confirmations showing original cost carried forward (not transfer-date market value)
- DRIP reinvestment records at the exact reinvestment price on each date
- Annual T3 slips showing Box 42 return-of-capital amounts
- ETF issuer distribution breakdown documents for any year with ROC or phantom income
- A calculation showing each adjustment applied and the resulting per-share ACB
CRA audits of capital gains can reach back six years from the filing year. For ACB, the supporting records may need to go back much further — to the original purchase date of a long-held position. Maintaining these records continuously from first purchase is significantly easier than reconstructing them later.
How to calculate the correct ACB when Box 20 is wrong
When T5008 Box 20 does not match your records — or when you know it can’t be trusted — here is the calculation sequence:
Step 1 — Establish a complete transaction history. Pull every buy, sell, DRIP, transfer, and distribution adjustment for the security, across all taxable accounts, from first purchase. Your broker’s transaction history is the starting point; supplement it with annual T3 Box 42 amounts for ROC and ETF provider distribution breakdowns for phantom income.
Step 2 — Pool across accounts. If you hold or have ever held the same security at more than one taxable brokerage, combine all transactions into a single chronological list before calculating ACB. Sort by date, not by account.
Step 3 — Apply the weighted average formula in order. For each purchase and DRIP: new ACB total = prior ACB total + (shares × price + commission). For each ROC adjustment: new ACB total = prior ACB total − (units held × ROC per unit). For each phantom income: new ACB total = prior ACB total + (units held × phantom income per unit).
Step 4 — Calculate the capital gain using your ACB, not Box 20. The formula is: Proceeds (Box 21) − (ACB per share × shares sold) − selling commission = capital gain. Enter this figure on Schedule 3, not the calculation implied by Box 20.
Step 5 — Document the discrepancy. Keep your calculation with the supporting records. If Box 20 is significantly different from your ACB, note why (e.g., “held same security at Questrade from 2019–2021, pooled ACB includes those shares”). CRA may not ask, but if they do, the explanation should be immediate.
For a step-by-step example using the weighted average formula, see How to Calculate Adjusted Cost Base in Canada. The T5008 ACB reconciliation checker can help you enter Box 20 and your own ACB side by side to see the impact on your reported gain before you file.
When the T5008 figure can be trusted
Box 20 can serve as a useful cross-check — though rarely as a replacement for your own ACB calculation — when you purchased the security entirely at this brokerage, made no transfers in from other institutions, hold it at no other taxable brokerage, and the fund has paid no return-of-capital or phantom income distributions. In those narrow circumstances, the broker’s book value should match your correct ACB per share.
For the full product workflow, see T5008 Reconciliation and Reports. For a related investor-facing walkthrough, read Can you trust your broker’s adjusted cost base?. For the distinction between Box 20 and Box 21 on the slip itself — and what each field is actually reporting — see T5008 Box 20 vs Box 21.
This article is for general educational purposes only and is not tax, legal, or financial advice. Adjusted cost base calculations depend on your complete transaction history and personal circumstances. Consult a qualified tax professional for advice specific to your situation.
myCostBase reconciles your T5008 figures against the ledger automatically — start free →