RE:RE:Calculating Your "Cost" on Commons and Warrants the main confusion is related to handling of the warrant.
the wording are:
Each Husky CommonShareholder will receive, in respect of each Husky Common Share, 0.7845 of a Cenovus Common Share and 0.0651 of a Cenovus Warrant (the “Consideration”). Each whole Cenovus Warrant will entitle the holder thereof to acquire one Cenovus Common Share upon payment in full of the exercise price of $6.54 per Cenovus Common Share at any time up to 60 months following completion of the Arrangement.
I'm not a accoutant, so this is for group discussion.
I think if one sell the CVE warrant in 2020 for cash, then the cap. gain is the sell price minus the cost base. In my case, my cost base is ~3.5. Even though i've said in previous post the warrant seem free, but if my broker attach a cost base, i would use that as cost base to reduce my cap gain, i doubt CRA would argue against that.
If you exercise the warrant in 2020 for more CVE shares, CRA surely want their pound of tax flesh and may recognize cap. gain of $6.54/CVE share saving as a gain. However, it create a messy situation because your broker account will add in the converted CVE shares and a NEW lower cost base. From then on, you get confused on which cost base of original shares and which cost base was the converted shares so you don't get taxed twice on the converted shares. So the cleanest way is sell the warrant and use the fund to buy whatever whenever whomever shares you want. Just eat the extra trading fees and you'll save alot of headache.
I have learned my lesson the hard way. I exercised some in the money option to buy the shares of a company. I kept the shares and the shares went down. CRA still want me to pay for the cap. gain during the time of exercising my option. I wish i had just cash out my options, pay the damn tax, pause and think how when and whom i invest the money into. Cash give you flexibility and time, warrant don't give you flexibility or much time. If you play call/put options, you would appreciate the risk vs reward vs time element. Your cve warrant is just a call option on cve share at 6.54.
Husky4000 wrote: Here what happened in my account:
i'm using fictitious number of shares, but keeping the proportions, so nobody knows how much I own exactly.
So, for 102 000 shares of HSE that I owned
They put a 'trade' tag on 98 282 HSE shares and gave me 80 018 CVE under the 'trade' tag
Then, they put a 'disech' code for 3718 HSE shares
They gave me 6640 CVE warrants under the same 'disech' code.
Go figure