Investment Q&A

Q: Peter's comments about RRSPs and RIFs are from an individual taxpayers prospective. If we look at the design and take a country wide perspective it is much different. If we assume the money put into an RRSP and the tax refund earns a return of x% and we can assume the money goes in a Y% tax rate and is taken out of the RRSP/RIF at a Z% tax rate, the end result is that the money is the RRSP/RIF is totally tax FREE as the tax is balanced by the earnings on the tax refund. It does not matter what X, Y and Z are. Note that this is looking at the country as a whole. Some will earn more X and some less but the average of the whole country will be X and the average tax rates will be Y and Z and some will chose to spend their tax refund but eventually the money will end up with someone who invests it. So the entire RRSP program is essentially tax free money for the economy over the programs' life. I've done the numbers back and forth and it always turns out the same way. So if you save the tax refund, invest it, pay tax on it, it will eventually pay the tax on your RRSP withdrawals, "on average".

Q: Hi 5i,
I've just read Thomas's question regarding taxation on RRIF's. He has absolutely identified a serious issue affecting taxpayers and estate planning, which I see often in dealing with estates through my work.
The tax deferment we receive by contributing to RRSP's pays the government off in spades when the day comes that the resulting RRIF (or the RRSP if no RRIF has yet been created) is taxed.
If a spouse dies and his/her spouse is beneficiary of the deceased's RRSP or RRIF there are no tax consequences - a spousal rollover applies, and taxes continue to be deferred. However, when the surviving spouse (legal or common law) dies, the entirety of the RRIF in that person's hands is taxed as income of that deceased person in their year of death. I have seen many cases where the RRIF of a surviving spouse is made up of both his /hers and that of the deceased spouse and is worth in excess of $5M. That is a whole lot of income for an estate to pay tax on at one time. (Because investments held in a RRIF are considered income at the time of death they are not taxed based on capital gain, which would result in less tax being owed - their value at death is deemed to be income.)
I don't believe there is any way around this costly trap except to control taxes while living by taking considerable money out of a large RRIF every year and paying tax on it in affordable chunks. Other than that, surviving children are going to bear the brunt of the tax liability when the estate of their last to die parent pays income tax on whatever is left in the RRIF at the time of death.
If any of your readers have other strategies for reducing tax on large RRIF's I'd sure like to hear them.
Peter

Q: Tax related question. Considering that now, settlement date is one day, stocks sold on July 30 will still be eligible for tax loss if the end date (for tax purpose) is July 31, yes?

Thanks

Q: Regarding the question from Thomas about taxation of registered assets, it is possible to get authorization from the CRA to waive withholding taxes if the proceeds will be given to charity. You can submit a T1213 form along with a letter detailing your intention. The letter needs to include who your registered account is with, who you will donate the funds to, and assurance that this donation will not push you beyond the annual limit of 75% of income. You then provide the authorization received from the CRA to the RRSP issuer and they don't need to withhold taxes. I have done this the last 2 years from my RRSP, and know that many others have as well.

Q: I want to warn the world of the CRA's plan to tax people "to death" . We were all seduced into avoiding taxation through contributing to our RRSP. Now at retirement it has grown into a substantial tax liability.

My RIFF just keeps on growing every year .
I can't even give my RIFF to charity without it being taxed as income. "Gambling" on high risk Ai stocks has resulted in massive gains with a higher taxable drawdown .

Is there anything people can do ? It's like being in a taxi going the wrong way through a very long tunnel .

Q: If I sell a US stock at a loss, do I need to wait 30 days before buying the related CDR?

Q: Are US stocks and their CDRs unrelated for Canadian tax purposes?

Q: What are the chances that US dividend income will be taxed in RRSPs, going forward?

Q: The recent big and beautiful bill passed in the US planned to increase dividend taxes for Canadians. Is that still in place?

Q: Is there an equivalent for TMF, if sold for tax loss purpose?
Thanks

Q: This is a tax related question. If i have a loss on a company and sell a cover call on it and gets taken away, can i still claim the tax loss on the stock?

Thanks

Q: Thank you for the upgrades. They are very helpful and user friendly.

Could I have your opinion of Newmarket NEU?
More upside or downside from here?
Any insight that you can provide on its fundamentals please.
Which type of investor would this stock be best suited for?

Thank you once again
Jeremy

Q: WHICH ACCOUNT SHOULD VIU BE HELD IN?
Thanks.

Q: WHICH ACCOUNT SHOULD ZWG BE HELD IN?

THANKS.

Q: If I sell a stock in an unregistered acct. at a loss, do I still have to include it in my tax's or can I just forget about it, and not bother entering it as a tax loss.

If I move a stock which is at loss from my unregistered account to my TFSA do I still have to enter that stock in my tax's for that year.

Thank you.

Q: Hi, Now that Agent Orange (Trump) has passed the new bill, what do you see being the impact on dividends from US companies? Would payments from HTA be affected?
I currently enjoy some healthy dividends from holdings within an rrsp, how might these be affected? Thanks for your insight, as usual!

Q: Good morning

I sold BCE for tax loss selling on May 16th and it settled on May 20th. Just curious if I wanted to buy it back when can I do so?

Thanks
Jimmy

Q: What are your thoughts on BBAI. Is it buy or hold

If you have a $750k portfolio and want to add stocks under 5 and would you use percentage or dollar value of total portfolio.

Thanks for the great service

Q: If I exchange 100% of my Parkland shares for shares in the newly forming Sunoco corp. what sort of capital gains liability would be triggered? Parkland shares were originally purchased for $21 ?
Thanks,
Philip

Q: I looked up this stock after your recommendation, I noticed it's way down from it's high of $366 down to $36 now, do you think it has potential for big upside? What are the risks for this stock?