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Watch you money grow in a TFSA

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We bought shares of BCE Inc. for our grandchildren and ourselves in DRIP accounts and have had them for years. Is there a simple way to calculate the adjusted cost base (ACB) per share when we sell, rather than having to calculate the four dividends per year for approximately 10 years for each account?

Calculating the ACB for stocks in a dividend reinvestment plan takes a bit of time, but if you keep all of your records (strongly recommended), it should be relatively painless. The first step is to determine your total cost, which is represented by the sum of a) your initial investment; b) any subsequent optional investments and; c) the total value of dividends reinvested since you joined the DRIP. To calculate your per-share ACB, you would simply divide the total dollar value invested by the number of shares you own. When you sell your shares, you would use the ACB per share to calculate your capital gain. Remember, if you sell only a portion of your shares, the per-share ACB for your remaining share does not change. Need more help? Adjustedcostbase.ca has a handy ACB calculator and a helpful blog post for DRIP users. BCE offers an "ACB Estimator" on its website at bce.ca/ACB/PurchaseBCE.

Is there any way to recover the U.S. withholding tax on stocks held in a tax-free savings account?No. Tax-free savings accounts (TFSAs) aren't actually "tax-free" when it comes to the dividends of U.S. companies. A withholding tax of 15 per cent is applied to U.S. dividends, but you cannot recover this money or use it as a foreign tax credit on your Canadian tax return. If you hold U.S. stocks in an account that is specifically for retirement purposes – such as a registered retirement savings plan, registered retirement income fund or locked-in retirement account – withholding tax on U.S. dividends is waived under the Canada-U.S. tax treaty.

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I have a stock in my direct-investing portfolio with RBC which is being delisted. How do I obtain paperwork to support my capital loss claim on my income tax return as I never sold it?

Even if you have not sold the shares, you can claim a capital loss in certain situations, such as if the company went bankrupt or if it is insolvent and subject to a "winding-up order." I wrote about these scenarios in more detail in a previous column. You should also contact your broker and ask if it can provide a way to dispose of the shares. Your broker may ask you to fill out a "deed of gift" form that transfers the shares to the broker at a value of zero.

Is the amount of dividends received in an exchange-traded fund included in the performance report? Or are dividends an additional amount over and above the posted return?

When exchange-traded funds and mutual funds post performance data, the numbers are total returns that include both price changes and dividends. Further, the total return assumes that dividends were immediately reinvested in additional units of the fund. If you do not reinvest your dividends, your actual return may differ from the posted return of the fund. Also note that posted returns are before tax, which varies depending on the individual's circumstances.

I have seen a number of questions regarding TFSA withdrawals, but none has addressed the scenario where the account balance exceeds the maximum contribution limit. If I withdraw $80,000 from my TFSA, for example, can I recontribute the full amount the following year or would I be limited to $57,500?

Whatever amount you withdraw is added to your contribution room as of Jan. 1 of the following year. So, assuming you have made the maximum annual contribution each year from 2009 through 2018 ($57,500 cumulatively), if you withdraw $80,000 now, you would be able to recontribute $80,000 next year – plus whatever additional contribution room is available in 2019. (The annual limit – currently $5,500 – is indexed to inflation and rounded to the nearest $500.) Any unused contribution room from previous years would also count toward your total contribution room.

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