How to adjust cost basis to be the same as my broker

Question

Hi there,

I use Quicken since 1993, with my first computer. Some of my investments go back to that time. Lately, I noticed that in my RRSP account, the cost basis differs when there is a dividend reinvestment. For example, I had a ReinvDiv of 62.96$ that equals 4 new shares. But Quicken adds 29.04$ more to the cost basis than my broker. And it grows every time there is a ReinvDiv. The cost per share is growing also.

I tried to change the Div to Capital gain distribution but it changes nothing.

Anybody has an idea to modify this ? Thanks to bear with me for my English. ;)

Danielle

JosefW · Answer

More specifically here is some information about Reinvested Dividends from that site -

https://www.adjustedcostbase.ca/blog/calculating-adjusted-cost-base-with-reinvested-distributions-dividend-reinvestment-plans-drips/

JosefW · Answer

@Danielle Dallaire

Tracking ACB (Adjusted Cost Base) has always been a thorny issue. Although I can't comment on your specific situation, in my experience brokerages have in the past not done a good job of tracking ACB.

Since you're referring to an RRSP, it's not really necessary to keep track of the ACB of investments. You are only taxed on the amount that is withdrawn and that is at your marginal income tax rate. It is irrelevant to Revenue Canada if you've gained or lost money on your investments or how much you've earned within the RRSP. It maybe you're just interested in keeping accurate track.

Discrepancies can occur for many reasons. Tom Young's questions above are good ones. Here are couple more - Are you downloading these transactions or entering them manually?  Is your dividend paid in Canadian or US dollars? Quicken cannot track different currencies in the same account as many brokerages now do. If you're downloading the transactions this might be an issue, although I'm not aware of any Canadian brokerages that have transaction downloads for Quicken.

In my accounts I have to enter transactions manually and I find that as long as I enter the correct numbers when tracking reinvested dividends or recording changes to an investment like buying or selling additional shares, and recording any Return of Capital portions of distributions, Quicken does a good job in keeping accurate numbers.

Of course in non-registered accounts the ACB becomes crucial, but again I would trust Quicken's numbers if you've been keeping good track of the things I mention above, and unless there is a large discrepancy between Quicken's and the brokerage's numbers.

As your reinvested dividends accumulate over time, this will naturally increase the ACB of your investment, since you're buying more shares with each dividend and adding to the amount invested. If you're reinvesting dividends at a higher cost per share than what you originally bought them for, your cost per share will also rise.

Brokerages don't always have good numbers on long held shares and will sometimes leave Box 20 (which is the Cost Base for the investment) on a T5008 slip blank because they don't have accurate numbers for various reasons. The onus is on the investment holder to ensure these numbers are accurately reported.

For a great site on Adjusted Cost Base -

https://www.adjustedcostbase.ca/

Tom Young · Answer

Where is this $29.04 coming from?  I take it that the broker is sending you ReinvDiv transactions that you're accepting?  When you edit that transaction is the dollar amount $62.96 or $92.00?

This is very odd behavior and typically the ReinvDiv action works fine.   Who is the broker and what is the download method?