Enter slips, reconcile to the GL, carry to T2 schedules

Enable the worksheet

From Worksheets, check Investment income reconciliation. This worksheet is never suggested automatically from the TB (the presence of investment income cannot be detected reliably). Enable it as soon as a client holds investments.

Slips tab: add a slip and fill it in box by box

At the top of the Slips tab, choose the type, then click Add slip. Five types:

T5 / RL-3 T3 / RL-16 T5008 Other / untraced Amounts not on a slip

Enter the issuer (e.g. “Canoe”, “Fidelity”, “BMO Nesbitt Burns”) and the reference (account number). Then fill in each box as it appears on the client's paper or PDF slip.

For T5008 slips (dispositions), entry works differently: Date (14), Code (15), Quantity (16), Security (17), Cost / ACB (20), Proceeds (21), and the gain is calculated automatically. Click Add disposition to enter several securities on the same slip.

Amounts not on a slip: amounts paid in connection with investments that appear on no slip. Take them from the broker's annual statement and enter the amount paid, as a positive number, in the box for its nature (margin interest, advisory / management fees, custody and administration fees, securities borrowing fees, other expenses). Use the description and the source to document where the amount comes from. Examples:

• Margin interest: a margin brokerage account (e.g. Interactive Brokers) charges interest on money borrowed to buy securities. The annual statement shows it; the T5 only shows income received.
• Advisory or management fees: a fee-based account (e.g. Series F funds at Investia) pays advisory fees, plus GST and QST, by redeeming units. No slip reports them.
• Other: custody or account administration fees, securities borrowing fees for short sales.

These expenses do not go on Schedule 7: they are expenses deducted in the income statement (for example GIFI 8710, Interest and bank charges). The Tax tab shows them on an off-schedule line, “expenses not on a slip, deducted in the income statement”. They are subtracted from the expected income per books in the reconciliation, and the Journal entry tab debits them to the expense account you choose.

Summary tab: read the totals

The summary automatically groups amounts by issuer and by income type:

Eligible dividends Ordinary dividends Interest Capital gain Other income Capital gains dividends Foreign income Foreign tax ACB adjustment

It's a control view: do the amounts look like what the client reported last year? A missing slip stands out right away.

Tax tab: carry to the T2 schedules

Ledger automatically allocates income to the right T2 schedules according to its type:

• Schedule 3: Dividends received.
• Schedule 6: Capital gains (losses).
• Schedule 7 (Canadian): Canadian investment income.
• Schedule 7 (foreign): Foreign investment income.
• Schedule 21: Foreign tax credit.
• Off-schedule: ACB adjustment (goes on no schedule, it adjusts the cost base).

This is the table you copy into the T2, without having to reclassify the income by hand.

Cost reconciliation tab: track the ACB

One row per investment account in the general ledger. Ledger starts from the opening balance on the trial balance, applies interest received (+), financial fees (−) and adjustments (±), then compares the result to the cost per statement from the firm.

The reconciliation is done at cost. In the Cost per statement column, enter the cost the broker shows on its statement (often “book value” or “book cost”), never the market value. Cost only moves with actual transactions: deposits and withdrawals, income received, realized gains and losses, fees. Unrealized appreciation does not enter into it.

The variance should tend toward 0. If it persists, look for an ACB adjustment (return of capital, distribution not reported as income) to add in the slips.

A Help · ACB adjustment (box 42) link (on the Tax tab, next to the carry to the T2 schedules) opens the full tax reminder: T3 box 42 (RL-16 box M) is a return of capital, never income. It is not added back to the year's capital gain: it reduces the ACB (paragraph 53(2)(h) ITA) and the effect comes at disposition, on Schedule 6. The only exception: an ACB that becomes negative creates an immediate deemed capital gain (subsection 40(3) ITA). The dialog also covers reinvested distributions (box 21, which increase the ACB) and points to CRA guides T4037 and T4013.

General-ledger reconciliation (in the Tax tab)

In the Tax tab, below the carry to the schedules, in the General-ledger reconciliation section: choose your investment income accounts from the TB (interest, dividends received, gains…). Ledger starts from the gross income on the slips, subtracts the foreign tax withheld at source (the broker pays the income net of this withholding) and the expenses not on a slip, then compares this expected income to the adjusted balance of the chosen accounts and shows the variance. If the foreign tax or the expenses are booked to separate expense accounts, add those accounts too. Foreign tax is never added to income: T5 box 15 (T3 box 25) is already a gross amount. If you are at 0, your entry is consistent with what the client's TB shows. If not, there is a missing entry on the TB side or a slip to add.

The two checks complement each other: the general-ledger reconciliation checks the income statement accounts, and the cost reconciliation checks the investment account on the balance sheet. If the client adjusts the investment to market value every month, the gain account contains unrealized appreciation, which the slips do not show: the variance will not close until the books are brought back to cost.

Journal entry tab: adjusting entry

Ledger groups the slips into 2 income accounts (credit):

• Investment income: interest, dividends received, other income, foreign income (gross).
• Capital gain (loss): capital gain or loss + capital gains dividends; credited for a gain, debited for a loss.

Foreign tax withheld is debited to a separate account: an expense account, or the income account itself if you present net income.

Choose a contra account (debit) to balance the entry (typically the investment account, or a cash account if cash was received). It receives the net amount: income + gain − foreign tax. The ACB adjustment is excluded from the entry: it changes the cost of the investment, not income.

Two entry types, chosen at the top of the tab:

• Full entry from slips: adds the slip amounts to the books. Use it when the client has not yet recorded anything for their investments.
• Adjust the variance to the books: when the client has already recorded their investments (for example by adjusting the investment each month to the statement value), Ledger brings each affected account exactly to the slip amount and only posts the variance. The Accounts affected table shows, for each account, the current balance, the debit or credit, and the balance after the entry. The contra account receives the variance. Choose accounts used only for investments: their entire balance is replaced by the slip amount.

If an affected account already has a balance, Ledger suggests the variance mode by default and, in full mode, warns that the entry would count the result twice. An Add to reconciliation link adds the entry's accounts to the general-ledger reconciliation, so that its variance drops to 0 after the entry.

Fiscal year that does not end on December 31: slips cover the calendar year, not the fiscal year. The entry would push the difference between the two into the contra account: if that account is the investment, it would no longer be at cost. Ledger then shows a warning. In that case, keep the slips for tax (Tax tab, with the difference explained on Schedule 1) and bring the investment back to cost with a manual entry, based on the cost per statement (Cost reconciliation tab).

Click Submit to adjustments. The default description is “Investment income, slips (via worksheet)”, or “Investment income, books brought to slip amounts” in variance mode.