Investment Q&A

Q: Are there any tax disadvantages to adding XSP or ZSP to a non-registered account?

Q: Hi

Can I sell AEM for tax loss in my cash account and buy XMA on the same day?

It is noted that AEM is 4.74%.of XMA.

Would this allow me the tax loss?

Any other suggestions you have are most welcome.

Thank you

Mike

Q: I am trying to understand the impact of a 75% Capital Gains inclusion rate. Today with a 50% inclusion rate, assuming a 50% personal tax rate, you keep 75% of any taxable gain. With a 75% inclusion rate you would keep 62.5%, or 16.7% less. Is my math correct?

In a 75% inclusion rate, can 75% of the loss be used against gains? ie. a $100 gain would be offset by $100 loss meaning no tax would be due just as it is today?

If this is true, you may be best to lock in gains and save 16.7% if its a holding you plan on selling in the next year or two anyways. You can always buy it back immediately after locking in the gain. 16,7% seems significant

On the LOSS side, it seems more black and white. Today you can claim 50% of the loss and if there is a change to 75% inclusion rate, you can claim 75% of the loss next year. If there is no change to the inclusion rate a 50% loss claimed this year or next year is marginally better to claim now but if the inclusion rate changes from 50% to 75% it will be worth 50% more next year. It seems to me you are better off waiting until next year to claim any losses.

Is this a valid analysis or am I missing something.

Many Thanks
Scott

Q: Just to be clear. If I journal a company from my CDN to US account, then the dividends are still subject to the Canadian dividend tax credit, even though they are paid in US funds.

The internet says: "
Since U.S. dividends are not paid from Canadian corporations, U.S. dividends do not qualify for the preferential Canadian dividend tax treatment. Foreign dividends, including U.S. dividends, are subject to tax at your marginal tax rate like interest income."

Q: Hi 5i Team - I have shares of ECN in both my non-registered and TFSA accounts. Could you tell me if the special dividend of $7.50 will be treated by Revenue Canada as a regular dividend by a Canadian corporation. If so then there will be a percentage added to the amount of dividend for total income purposes which could affect my marginal tax rate. Is it better then to move the non-registered shares into my TFSA (in spite of the dividend tax credit) which will trigger a capital gains of 50% of the profit. Thanks as always for the great service!

Q: Hello Peter,

Have you been able to assess the probability of the US and Canada raising capital gains inclusion rate to 75%? If so, what is the impact to dividend and growth stocks?

If this does look imminent what would be the strategy to address a potential 10%-15% decline for Non-registered, RRSP, and TFSA accounts? We are almost retired and do not have 10-15 years of investment time for the effect of this change to balance out.


Cheers,
Jerry and Debbie

Q: With the NDP tail wagging the dog again and the possibility that capital gains taxes could well move from 50% to 75% what general changes do you recommend for those of us with a significant amount of appreciated stocks in our unregistered portfolios?

Q: What is the "Exchangeco" company? Does it makes sense to take the option of exchangeco shares?

From the circular:

Eligible Canadian shareholders will be able to elect to receive shares of Exchangeco (“Exchangeable Shares”) in lieu of the Penn Shares to which they would otherwise be entitled. Each whole Exchangeable Share will be exchangeable for one whole Penn Share, subject to adjustment.

Q: Hi,
The recent questions on paying income tax on capital gains now, in case the inclusion rate rises, mention a 30 day buyback period. I thought this 30 day wait before repurchase was applicable to capital losses only. If I sell shares and realise a capital gain, I don't have to wait 30 days to buy the same shares back. Is this correct?
Thanks

Q: One of the many great skills I've picked up as a member here is tax-loss harvesting. Recently, I saw a question that piqued my interest in the notion of "harvesting" outstanding capital gains to apply capital losses against in a pro-active manner.

To date, I've simply been carrying by my capital losses forward happy in the fact that when I do need to realize a capital gain, they will be there to help me out. Now I'm wondering if there may be value in getting a little crafty with selling stocks that are up and re-purchasing in 30 days to "tax harvest"? Without putting too much thought into it, the only advantage I can see in doing this would be dodging capital gain inclusion rate increases that may arise moving forward. Are there other reasons this may be a profitable tactic?


Thank you!

Q: Hello, do the Nuvei Corporation shares NVEI.TO count toward the $100k limit before we need to fill out a T.1135 at tax filing time? Thanks,

Q: Hello, do the CDRs from CIBC count toward the $100k limit before we need to fill out a T.1135 at tax filing time? Thanks,

Q: Greetings:
I know because it has been mentioned countless times that you are not tax experts, but perhaps you can help. When does a section 85 form need to be filed and when not? In the case of IPL, PWF, Uranium participation by Sprott Uranium Trust it is necessary, but not with score media and Penn. Perhaps it depends if it is a merger or acquisition, and what determines this. Perhaps the rules have changed in the last months. Thanks for your help.
BEN.

Q: Hi, I need to harvest realized gain of approx. $15000. I plan to repurchase the above funds after 30 days. Are there any that you would not sell at this point?
Or after the 3rd quarter results?
Thank you for your excellent service.

Q: I recently asked a question about recommended ETF holdings in my RRSP for coverage of the US market. You had suggested converting my holdings to USD and purchase VOO direct on the US market rather than the CAD ETFs I currently hold. This would eliminate withholding taxes.
How much of a drag on performance would these withholding taxes represent?

Q: Federal Election
Jagmeet Singh has proposed a 75% Capital Gains tax.

If Trudeau gets back with a minority government, (proped-up by Singh) does this change seem likely? If so, what action do you recommend investors take?

Q: Canadian Vs U.S. Banks.

Are the banks in both countries taxed differently, if so, please explain.

Q: Regarding purchases made on US exchanges….

a) If I purchase Canadian companies in my margin account on the NYSE in US dollars, will the dividends also be paid in US currency? What will the withholding measures be on those dividends?
b) If I purchase European companies on US exchanges, what will the withholding measures be on those European dividends? (Germany, France)

Q: I hold the US portion of my portfolio in my RRSP. It represents roughly 20% of my total investment. I do not need to convert to RRIF for another 5 years and at that time will be taking the minimum required.
I currently hold ZQQ; ZPAY; ZDY; ZWH; ZSP.
I am thinking of switching my holdings to the following in roughly equal amounts: ZPAY; VUN; ZSP; ZNQ; XSU.
The objective is to get better coverage of the total US market through XSU and VUN. Maintain coverage of S&P 500 through ZSP. For Tech switching to non hedged via ZNQ. ZPAY will still provide good income with perhaps some downside protection through its options strategy.
Your thoughts and recommendations of alternatives.
The rest of my portfolio in my Non-Registered account and TFSA follow a mixture of your 3 portfolios which by the way have provide me with a return of 12 - 15% in the past 6 plus years.

Q: Hi
Before I posted this question, I went through CMS archives and searched the questions bank here as well. As I didn't get any "hits" I thought of asking you folks.

I was recently told that establishing a Joint Partner Trust is a good way to go if one

a. wants to avoid probate fee even for the primary residence
b. to shelter probate and other fees for assets held in a private corporation
c. transfer wealth to future generations with certain amount of protection.
d. Arguably the best way to go forward if one's adult kids are in the US (through a Dynasty Trust)
Any thoughts about JPT? Especially for professionals who own a private holding company/corporation. If you think JPT is not the way to go, what would you suggest?

An article is begging to be written in CMS!
Many thanks.
Mano.