The BCE Takeover: Calculating your Capital Gain & Loss Charlottetown PE
The BCE Takeover: Calculating your Capital Gain & Loss
By John Waters, C.A., CFP, TEP
Manager, Tax Planning, BMO Nesbitt Burns
(NC)-As a BCE investor, you're going to want to know ahead of time what you're in for when the buy-out by the Ontario Teachers Pension Plan is complete. When the time comes to determine the taxes you owe on the cash buy-out of your shares, you'll want to make sure you calculate your capital gains and losses accurately.
According to Canada Revenue Agency guidelines, to calculate your capital gain or loss in the BCE transaction, you will need three pieces of information:
• The proceeds of disposition, i.e. what you received for your shares
• The adjusted cost base (ACB), i.e. what you paid for your shares
• The expenses incurred to sell your shares
Your capital gain or loss is calculated by subtracting the total of your shares' ACB and any expenses incurred from the proceeds of the disposition. A capital gain occurs when your share proceeds exceed the total of its ACB plus expenses. A capital loss occurs when your share proceeds are less than the combined ACB plus expenses.*
For example, Joe, a retired BCE employee, collected shares through the company's purchase plan throughout his career. By the time the takeover deal is complete, Joe will have received $17,100 for his 400 shares of BCE, less a commission of $250. Based on the weighted average of his BCE purchases throughout his career, his tax ACB of the shares is $10,850. Accordingly, Joe's capital gain is calculated as $6,000 - that is his proceeds ($17,100) less his ACB ($10,850) and the commission expenses ($250). However, because only one half of the capital gain is taxable, Joe completes his tax return and reports $3,000 as his taxable capital gain.
Calculating your personal ACB and taxable capital gain can be complicated, particularly if you have owned your BCE shares for a long period of time or have acquired the shares in multiple transactions. Due to the complex nature of these calculations, the information provided here is simply a guideline, but your local BMO Nesbitt Burns Investment Advisors can help you through this process. In conjunction with your tax advisor, your investment advisor can help determine the best way to manage the sale of your BCE shares and determine an appropriate investment strategy going forward.