I have 200 shares of Vanguard Growth ETF Portfolio in my RRSP. Earlier this year, my account showed an entry labelled “TXPDDV” for $56.47 and one labelled “DRIP” for minus-$56.47, so I did not receive a dividend at all. I read somewhere that minus-$56.47 is used to reduce the adjusted cost base of the shares held. Is that correct? And if so, how is it adding value to the shares?
No. In fact, the opposite is true: Although exchange-traded fund distributions in the form of return of capital can reduce your adjusted cost base, the distribution here would actually raise it if you held your ETF in a taxable account.
The account type is the key. Cost base adjustments are completely irrelevant for you because you hold your ETF in a registered account. But what exactly is going on?
For the less semiotically informed, TXPDDV is the TD Direct Investing code for “distribution,” and…
