Here’s some of the most commonly asked questions.
What is Book Value (also known as Adjusted Cost Base)
At the time of purchase, the book value of an investment is simply its purchase price, or cost. The book value of an account is the combination of all the purchases in the account, which may be made at different times and at different costs. Book value is used to calculate capital gains or losses for tax purposes in non-registered (taxable) accounts.
What is Market Value
The market value of a security is its value (as determined by the capital markets) at a given point in time. Newspapers publish these values as of the close of the previous business day. Market value is used to calculate the performance of individual securities, portfolios or accounts at a given point in time.
What is a dividend?
It’s a portion of the company’s profits (or reserves) that’s paid to investors, typically on a quarterly basis. Not all stocks pay dividends, however. You’ll typically find dividends attached to steady, established companies.
What is the difference between Realized and Unrealized Losses?
An unrealized gain is a profit that exists on paper, resulting from an investment. It is a profitable position that has yet to be sold in return for cash, such as a stock position that has increased in capital gains but still remains open. A gain becomes realized once the position is actually sold to generate the profit.
My statement shows me book value and market value for all of my plans. Are they all subject to capital gains tax when I sell them?
No, only non- registered plans are subject to capital gains tax at the time of sale. Plans like RRSPs, LIRAs, TFSAs and RESPs are sheltered from capital gains tax.
