It’s May! As you slip the surly bonds of the Canada Revenue Agency, confused and bleary-eyed, take a moment to enjoy the outside world and not think about income taxes for a moment.
Granted, I write this from Vancouver, where trees are singing and birds are swaying, and a helpful TurboTax employee found additional deductions when I filed. Apologies to readers who are still digging their way out of snowbanks and tax receipts.
Following my bemoaning of the T5008 Statement of Securities Transactions slip a few weeks ago, a reader wrote in with what I expect is the season’s final question on the topic (please). It did little to increase my love for these forms.
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I meet my minimum mandatory RRIF withdrawal by transfers-in-kind of shares from my RRIF into my TFSA. Since these are deemed dispositions, I am liable for income tax on the value of the RRIF withdrawals. Every year, my broker issues a T5008 and I never know what to do with it. Why are these T5008s issued?
You make a good point. Your deemed dispositions will show up on your T4RIF slip, the Statement of Income from a Registered Retirement Income Fund. You don’t want to be in a position of counting your income twice by inputting the number from a T5008. And in any case, capital gains shouldn’t be relevant in your situation.
Matthew Learning, an advice-only planner at Mountainview Financial Planning in Vancouver, said the T5008 is likely an automatic reporting procedure by your brokerage.
If I were you, I wouldn’t do much with my slip except to make sure my income isn’t being double-counted, and keep it for my records. If you’re concerned, it rarely hurts to consult with a professional.
Opinion: What to know when your broker’s numbers don’t match yours
I have had an RRSP with National Bank for about eight years. I run it myself and it contains nothing but exchange-traded funds. I have never paid any commissions or ancillary fees. How do they make money on my account? I think it may have something to do with stock lending, but I’m mystified.
They might not! If you take a look at National Bank’s 2025 annual report, you’ll see that a full 59 per cent of the wealth management segment’s $3.24-billion in revenues – up from $2.79-billion a year earlier – came from fee-based services.
The next biggest chunk of revenue, at 29 per cent, came from net interest income. If they’re making any money from the account you describe, this is likely where that’s happening, as the brokerage earns interest on any cash balances. Transaction-based and other revenues – which is where any commissions would come in – accounted for 12 per cent.
Without getting into the weeds of stock lending, my guess is this isn’t relevant to your specific situation. Unless you’ve specifically opted into a stock-lending program or have securities in margin accounts, National Bank isn’t making money by lending out your ETFs.
I asked National Bank public affairs spokesman Alexandre Guay about your situation and he noted the above revenue sources, as well as income from administration fees and foreign exchange transactions. But he suggested that when it comes down to it, National Bank doesn’t mind if some of its accounts don’t make money.
“Since National Bank Direct Brokerage is a subsidiary of National Bank, self-directed investment accounts with no fees can be considered as a means to attract new clients for National Bank as well, where there are other revenue sources,” he said.
One final note: You didn’t mention which exchange-traded funds you own, but National Bank would naturally be quite happy for you to buy its in-house ETFs. That’s an easy way to turn a loss-leading direct brokerage account into a fee-income booster.
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In the annual management reports of fund performance, several Vanguard ETFs attribute returns lagging benchmarks in part to “other miscellaneous factors.” Where can an investor find out what these are, and why doesn’t Vanguard pro-actively provide that information for all its funds?
It’s typical for exchange-traded funds to show some degree of tracking difference from their benchmark because of factors including fees, trading costs, index turnover, fair value pricing and portfolio management, said Sal D’Angelo, head of product at Vanguard Canada.
For the most part, these differences are minimal and Vanguard doesn’t break them out separately. Mr. D’Angelo said when those differences are more pronounced, the company will offer explanations for the underlying drivers.
In most cases, the “miscellaneous factors” are driven by the compounding effect of management fees during periods of strong equity market performance, but they may also reflect index rebalancing and routine cash flow management, he said.
E-mail your questions to agalbraith@globeandmail.com. I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.