Investment Q&A

Q: Please help...we are getting conflicting advice. My son-in-law's sister passed away over a year ago. She was a single parent, leaving a very young daughter as the only heir. There was, fortunately, a work-related life insurance policy in the amount of $200k and an informal trust was set up. My son-in-law is the trustee and received a T3 in the amount of approx. $6k for 2021.

My belief is because the source of the funds came from an insurance company, the attribution rules do not apply in this case. From a recent article by a Tax and Estate Planner: "Income not subject to attribution and capital gains paid or payable to a beneficiary are taxed in the beneficiary's hands at the beneficiary's graduated tax rates". Does this mean that the amounts specified on the T3 form should be filed under the daughter's name and she would be responsible for paying any tax owing? I believe that roughly $13k of income is tax-free, so in this case there should theoretially be zero tax owing. Am I corrrect that a T3 return needs to be submitted (versus just kept on file) and am I correct in my conclusion that no income tax is owing?

Thanks for your help...much appreciated...Steve

Q: Hi,
This is totally a random question based on the "rumours" ? "Fake news" on the Twitter space!! Nevertheless as a semi-retiree this causes a great deal of concern. Hence this question.

I believe the Federal Govt is considering eliminating Dividend tax credit and consider this dividend earnings as earned interest! Have you heard anything about this? This will take down the Banks/Utilities and Telcos,Pipelines, no?
Another blow to the retirees IF IT IS TRUE! Work till you die and pay the taxes!!

Q: J's comment on March 30, about the small ADR fee charged, is interesting and I wonder if he would elaborate, e.g. how does he determine the fee, does it apply to all ADRs, etc. (This topic may be suited to the forums, if J could be redirected.)

Q: I own both MAWER New Canada-MAW107 (since 2004!!) and Mawer Global Smallcap-MAW150 (since 2011) in a taxable account. Both funds declared very large capital gain distributions in 2021, much more then I experienced in the last years.. Are the capital gains really from 2021 -not the best year for MAW150 ?

I’m probably dead wrong but is it possible that after many years of good performance (let’s say 10 years), the mutual funds are required to distribute some capital gains, so that investors do not cling to them forever, and make CRA happy ?

Thank you.

Q: Hello 5i Team

I need to trim back my holdings of TD Bank and potentially purchase shares in Bank of Montreal.

If I sell TD Bank on Thursday April 07, please confirm that I will receive the dividend as April 07 is the ex-dividend date.

As the Federal Budget is scheduled for release after close of the markets on April 07, would it be reasonable to assume if an increase in the Capital Gains exclusion rate was implemented it would be effective April 08 or at a later date?

I tried to research the previous increases in the Capital Gains exclusion rates, however it last occurred in 1987 and most government press releases are not digitized from that era.

Thanks

Q: Hi 5i.
Thanks for your continuing great service.

I am trying to find a way to hold US stocks without being subject to US Estate Tax or the need for T1135 tracking.

Are CDRs on US stocks subject to US Estate Tax?

Are CDRs on US stocks subject to T1135 reporting?

Are there other vehicles, besides selected Canadian- company-managed ETFs, that enable ownership of US stocks without exposure to US Estate Tax or T1135 exposure?

Which Canadian companies managing US stock EFTs are not subject to these issues?

Are the Canadian branches of US companies that manage US stock EFTs deemed by CRA to be US or Canadian?

Any additional comments or suggestions that you may have on these topics would be greatly appreciated.

Please deduct as many question credits as appropriate.

Many thanks !

Q: Another note about U.K. ADRs We have held AZN for many years, as mentioned earlier there is no withholding tax, however there is a small ADR fee charged. We record it as an accounting fee to CRA and so far there has been no disagreement.

Q: DIVIDENDS IN THE US TAX FREE SAVINGS ACCOUNT, DO YOU HAVE TO PAY THE US .15% NON-RESIDENT CHARGE ON US STOCKS DIVIDENDS? THANK YOU, HERBIE

Q: I have a taxation question.If I borrow $10k to buy a dividend paying stock, and subsequently sell the sock at $9k to buy a more promising stock,can I still claim the interest on the 10k loan?

Q: Regarding Ivan's Mar. 28 question about these ADR's: They are all UK domiciled corporations, and the UK has no tax on dividends. Therefore there is no dividend withholding tax, even in a non-registered account. This is one of the reasons I prefer to hold ADR's of UK-headquartered stocks for foreign content - I currently can't make use of the foreign tax credit. (BTI is another one.)

Q: Do you know what the cost basis of the spin out of TOI from CSU last year . Thanks

Q: Hi 5i Team, and with income tax season upon us, if a mutual fund company chooses at their convenience to consolidate their (Dividend) Fund A into their (Dividend) Fund B going forward, does it create a reportable taxable capital gain for the holders of Fund A? In this case, the statements show Fund A as a "redemption" (for the fund that is being closed at their convenience) and Fund B as a "purchase" (for the larger fund that is going forward), on the identical trade date (i.e., there is no order date and no later settlement date, but the redemption and purchase occur on the same calendar date as in a substitution of fund products). In this case Fund Company A was acquired by Fund Company B, and presumably the funds overlapped, and the mutual fund company chose to consolidate the two overlapping funds into one larger fund going forward . Since this was initiated at the convenience of the mutual fund company and with no action initiated on the part of the taxpayer, and essentially the product that the taxpayer is holding is unchanged (i.e, Dividend Fund A replaced with Dividend Fund B from the same mutual fund company), would this be a reportable capital gain, or otherwise the taxpayer within their right to choose not to report in the year 2021 taxation year and retain the ACB of Fund A and declare the capital gain when Fund B is sold? It does appear on the T5008 form issued by the brokerage. Thanks to all your Team from an appreciative member.

Q: Good morning I have a TFSA tax question you might know the answer. If you are fully maxed out with no contribution room could you sell covered calls for stocks you own on the US side and not get a penalty for the premiums collected? I was thinking these would be view like a dividend but am I wrong?

Q: Good Morning.
With regards to ZIM shipping, I have read that they have a 25% holding policy. This stock is in my LIF account. Will Israël our non taxable account to distribute the full dividend amount to me? Thank you.

Q: Hi Peter and 5i,
This is always a misunderstood stock as far as the breakdown of the components of the distribution. For 2021 - $1.37 of the total $1.53 was eligible dividends. There was no ROC.
Post if you think it is informative.



Record date
Payment date
Full Year

Per Unit Distribution US$ 1.21500

Cdn$/Unit

Per Unit Distribution 1.52422

Box 113 Return of Capital

Box 135 Foreign dividend and interest income 0.10316
Box 132 Actual amount of eligible dividends 1.37120
Box 128 Interest from Cdn sources -
Box 030 Total capital gains (losses) 0.09904
Box 210 Carrying charges (0.04452)

Total taxable income and capital gains 1.52888

Thanks for your excellent service and always valuable input.

Q: Can you help by providing the average exchange rate acceptable by CRA for 2021 tax year when converting US$ to C$ for Canadian tax returns. I have looked but cannot find it on the CRA website.

John.

Q: With reference to Paul's question on 16 Mar,

If prior to selling the stock, you arrange through the broker to transfer the stock to the Charity . This is called a "donation in KIND". Not all charities accept smaller transfers of less than $5000.00.

This is relatively easy using a form from the Brokerage or the Charity.

At tax time you must complete formT1170 in order to pay NO TAX.

Ron

Q: 5i
Assuming that a stock is held only in a registered account does the 30 day rule apply since 100% of the withdrawals from a registered account are taxable and no benefit (ie. cap gain or loss) would exist.
Thanks

Q: I sold several stocks in a non-registered account because of decent gains from buying early in the covid plunge. I believe these gains separate from dividends will be taxed as income, is that correct? If so, I'm thinking of giving some to charity to avoid paying taxes while helping a charity and I believe also being able to claim the donation.
I've never done this before, so is it complicated to do with online brokerages (I'm with BMO Investorline)?

thanks for any advice regarding this!

Paul

Q: Peter and Co, I have enjoyed the tax benefit of donating stocks to registered charities, thus avoiding the capital gains tax. Often I will repurchase the stock after it has been sold by the charity or its agent. If I donate a stock from my cash account and immediately purchase in m y TFSA, am I correct in assuming that the adjusted cost base of the donated stock or the portion of the stock remaining in the cash account is not impacted? This question has been posed to me so I am looking for some assurance.
With appreciation,
Ed