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Reinvested Dividends are Reported as Dividend Income

Lynnn

When I make a Category Summary Report and view it with the "Details of all Categories" option selected. Reinvest Dividends are included with the "Dividend Income" category. Reinvested Dividends should not be included with "Dividends" income as it is Unrealized Income

When I go to edit the report to exclude the "Reinvest Dividend" category from the report there is no "Reinvest Dividend" category option to uncheck.

When Reinvest Dividend is chosen as the TYPE of transaction in the investment account register is doesn't effect the cash balance, the problem only shows up when you generate a Category Summary Report.

I am sure anybody who has an Investment account that they track both Dividends & Reinvested Dividends in will have the same problem if they generate a Category Summary Report.

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Comments

Lynnn

I'm sorry I forgot to mention in my post that I'm from Canada. Reinvested Dividends are not reported to the CRA until the investment is actually sold. If the Reinvest Dividend is reported to the CRA as income and also reported as income when the investment is sold wouldn't that be double taxed?

Tom Young

The dividend reinvested becomes a new lot of shares with the basis equal to the dividend dollars. Only if the price of the stock increases from the price used for the reinvestment and you then sell the shares, you're taxed on the difference between the price received and the original price paid, just like any other purchase of stock. There's no "double taxation" going on here.

Lynnn

Thanks to RickO and to Tom Young.

Your explanations cleared this up for me.

Gilles9

I am in Canada as weel and I think that re-invested dividends are included in my yearly T5 for tax purposes, and since it does buy shares, the value of the shares is at the day the dividends are reinvested and any further plus value ( or losses ) are then considered as Capital Gain or loss, as per the adjusted cost base of the shares

CRA: Dividends are taxable to you whether you receive the dividend in cash or reinvest it in additional shares

Lynnn

Does that work the same for Mutual Funds that have reinvested Dividends?

Gilles9

Does that work the same for Mutual Funds that have reinvested Dividends?

I think so, however they may not include it on T5, check the CRA ( Canadian Revenu Agency ) web site, if I recall correctly they mention mutual funds and stocks, if not on your T5 then they say that you need to declare the amount (dividends received without a tax slip);

Honestky quite a nightmare the Canadian Tax system, maybe the IRS alsobu this I do not know

Lynnn

The IRS & CRA treat reinvested Dividends pretty much the same.

Gilles9 Explained it very well.

I would like to thank everybody for their contributions to this I think I have it figured out now. I appreciate it.