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Where Taxpayers and Advisers Meet

Understanding my Transactions Summary/Details: Canadian Broker

mike_302
Posts: 17
Joined: Sun May 06, 2018 10:18 am

Understanding my Transactions Summary/Details: Canadian Broker

Postby mike_302 » Wed May 16, 2018 11:43 pm

Hello helpful people,

I am working on understand the transaction listing that I can download for my Canadian brokerage account (XLSX file includes dividends paid in, dividend re-investments, withholding tax payments, etc.); and I am comparing against a transaction summary that was provided by my brokerage, which shows detailed information about each distribution event (how much is Return of Capital, how much is Foreign Income, Foreign Tax paid, etc.). I've made screen clippings of the two sources of information, for a handful of transactions, and I am hoping someone is brave enough to look and try to explain in a way I can get the numbers myself. I cannot rely on the broker's schedule of transactions, because they won't provide me one for the first few months in 2018.

The transactions are simply related to some standard Vanguard ETFs.

Is anyone on here able to provide some assistance? Or else could someone advise where I might go / who I might contact to build my understanding?
PDF with my commentary is available here: https://www.dropbox.com/s/yb9e6w03kcywze9/transactions%20of%20interest.pdf?dl=0

Note: my net worth isn't high enough to pay for the one tax specialist (if they even exist) who can deal with calculating the various numbers for the HMRC based on Canadian fund information. I am intent on learning for myself.

Thanks all

pawncob
Posts: 4137
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Understanding my Transactions Summary/Details: Canadian Broker

Postby pawncob » Thu May 17, 2018 11:59 am

Not actually sure what you're asking. Divs and Tax Credits are clearly shown, and that's all you need.
With a pinch of salt take what I say, but don't exceed your RDA

mike_302
Posts: 17
Joined: Sun May 06, 2018 10:18 am

Re: Understanding my Transactions Summary/Details: Canadian Broker

Postby mike_302 » Thu May 17, 2018 9:03 pm

You mean the divs and tax withheld shown in the clippings from the xls? Or are you referring to the info from the document the brokerage provided as a summary?

I previously thought the info from the xls was simply all I needed, but then I saw the additional info in the summary sheet and then it wasn't clear to me what I do to provide to the HMRC.

mike_302
Posts: 17
Joined: Sun May 06, 2018 10:18 am

Re: Understanding my Transactions Summary/Details: Canadian Broker

Postby mike_302 » Thu May 31, 2018 11:27 pm

Hi again,

I've had some success on a Canadian forum, getting a handle of the different components of a regular Vanguard distribution to my Canadian brokerage. I'm hoping someone on this UK side can now help me sort out which HMRC "boxes" (so to speak) to fill these components into, in my self-assessment return. The distribution works like this, for one of their ETFs on the Toronto Stock Exchange, which isn't a bond portfolio:

(1) Vanguard reports a Foreign Income value associated with my shares; say $115.07.
(2) Vanguard reports that 15.9% of that Foreign Income is taken as Foreign Tax; $18.32 (in reality, it's 15% withholding tax by a third country because it's either a US or FTSE fund tracker; and the additional 0.9% comes from various fund fees / exchange fees, but they report it as Foreign Tax).
We are not at $96.75.
Canadian Vanguard ETFs have unique distributions associated with them, items (3) and (4); I don't think the UK has the same, but I'm certain the HMRC wants it's cut anyways:
(3) They sometimes add to the $96.75, "Return of Capital", often just a fraction of a cent, and from what I understand, it acts to change the average cost basis of my position in the fund; in my case, say $0.11, bringing us to $96.86, which is the amount deposited into my account finally.
NOTE: the $96.86 is effectively referred to as the cash distribution by Vanguard
(4) There is also a "Capital Gain" reported by the fund, in my case, say $23.41. On my Canadian non-resident tax form, the Capital Gain number is reported as "Estate and Trust Income". I don't actually see this amount go into my account; it's just reported annually and associated to my tax obligation.
(5) The Canadian government withdraws a 15% non-resident withholding tax from the $96.86; in my case, $14.52.

My thoughts are that I will report $115.07 as Foreign Dividend Income;
I will report $18.32 + $14.52 ($32.84) as foreign tax paid -- effectively 28%;
I will report $23.41 as ????? Capital Gains??? Is there a Foreign Estate and Trust Income input???
And the Return of Capital will only affect my Adjusted Cost Basis, as it does in the Canadian tax system.

Obviously I would convert all these numbers to GBP when I input them to HMRC.

pawncob
Posts: 4137
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Understanding my Transactions Summary/Details: Canadian Broker

Postby pawncob » Fri Jun 01, 2018 7:45 pm

Your suggested reporting seems OK, but unless you have exceeded the threshold, no CGT needs to be reported.
With a pinch of salt take what I say, but don't exceed your RDA

mike_302
Posts: 17
Joined: Sun May 06, 2018 10:18 am

Re: Understanding my Transactions Summary/Details: Canadian Broker

Postby mike_302 » Sun Jun 03, 2018 10:03 pm

Super! thanks for your insight.

I just want to dive into that Foreign Income value a little bit more, to make sure I'm not over-reporting income and tax paid.

The Foreign Income value I want to report is before the two levels of withholding tax described here: https://www.vanguardcanada.ca/documents/impact-of-withholding-taxes.pdf. The two withholding taxes are:
  • 1. Tax assessed on dividends, interest or capital gains that are distributed from the underlying securities
    (including shares of other funds or ETFs) to the U.S.-listed (underlying) fund, and
    2. Tax assessed on dividends, interest or capital gains that are distributed
    from the U.S.-listed fund to the Canada-listed fund
Although the article is written for Canadian residents, I believe it applies to non-residents too -- I believe the only difference is that non-residents see a third layer of withholding tax: a 15% withholding tax taken from the amount deposited to the account.

The article includes two tables describing whether the withholding taxes will even apply based on the type of account holding the funds (taxable, or tax-wrapped); and describing the Canadian resident's ability to count the withholding tax as a credit in their tax filing.

I have already calculated for the ETFs I hold, and I know that 15% is being withheld on all the ETFs I hold which are based on an international market. Some of the ETFs are in taxable accounts and see an additional withholding tax of 15% on the amount that's deposited to my account; and a few are in a tax-wrapper account (Canadian equivalent to an ISA) so they don't see a second 15% withholding tax.

Am I really reporting the full pre-tax values as my Foreign Income, and both of the 15% withholding taxes that arise?


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