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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hi.

Im borrowing funds for investing purposes.Since this is my first time doing this, I want to ask your advice if I use in non registered acct or my TFSA.I know I can get a tax credit for interest payment of the loan but with TFsa everything is tax free except theres no tax credit for my loan.Jist dont exactly known the calculafion.Im in 40% marginal tax bracket.

Appreciate your help. Thanks.
Read Answer Asked by sunday on May 08, 2017
Q: Hi 5i

I am looking for investments that distribute primarily through Return of Capital, such that the cost base can be ground down to a point where it may make a lot of sense to donate the shares to charity, shelter the entire gain while having extracted most of my cost base. I imagine that most of these things will be in the REIT space, but I am open to anything.

Thanks,

David
Read Answer Asked by David on May 01, 2017
Q: These are some stocks in my Margin Account that don't pay a dividend . In my RSP, I have BCE , ABT , BPF.UN , and REITS and royalty trusts that pay great dividends .I have a fortune sitting in my RSP that keeps on growing due to dividends but I am 67 years old with a pretty low income . I am thinking that I be rotating these names and increasing my dividend income rather than increasing my RRIF liability in a few years ? I would really appreciate your advice - Thankyou for helping me have such "problems" .
Read Answer Asked by Thomas on May 01, 2017
Q: Dear 5i, I've read some good questions lately on REITs and return of capital, dividends, business income, and the adjusted cost base for these securities.
I just wanted to follow up and ask if my understanding of the different tax treatments is correct.
1. RRSP: all monies paid to the RRSP is basically exempt and no need to keep track of ROC, dividends, etc.
2. TFSA same as RRSP
3. Cash Account, monies paid to the account must be kept track of and the ACB will be reduced each time ROC is paid back to the investor.
Please confirm this means over a very long period of time the ACB could be reduced to zero or even negative? Is the ROC, Box 42 on a T3, the only amount I have to keep track of?
and another question, on BYD.UN, Why is BYD.UN allowed to operate under .UN status and in your opinion will they eventually be required to convert to a Corp.?

Read Answer Asked by Keith on May 01, 2017
Q: Do all four of these have dividends that are taxed differently and therefore shouldn't be in a non-registered? Does this apply to a TFSA as well, as foreign income I believe is taxed in a TFSA?

Where should I hold each of these? in an RRSP, TFSA or non-registered?
Read Answer Asked by Carla on April 25, 2017
Q: Good Morning. Further to questions and answers re dividend tax credits and the recent article in the Financial Post, how does income from pensions affect the tax credits? Is pension income considered different from income from a job? I could (and should) experiment in a tax program but wondered if you had a quick answer while the topic is current.

Thanks,
Cathy
Read Answer Asked by Catherine on April 21, 2017
Q: Hi 5i,
A question related to my flow-through partnership units: I purchased in 2016. Some weeks after purchase, the partnership units were listed in my self-directed account, showing an associated value with a footnote indicating that these are not securities that trade on a daily basis. Initially the listed value was around 23 percent below my actual cost of purchase, which I took as mainly an indication of all the fees and management expenses taken out up front. Since then, the account listed unit price has been adjusted every so often (maybe every couple of weeks or monthly). Gradually the unit price has climbed to where the holding is now a couple of percent in the black (relative to my actual cost). My understanding is that I can’t sell the holding until the partnership units roll over into mutual fund units next year sometime. So my question is: in the meantime, what is that partnership unit price showing in my brokerage account based on? Is it actually something like a present market value estimate (just as though it were possible to market the units currently)? If so, are such estimates normally pretty reliable (so that the account listed value from immediately before the roll-over translates reasonably accurately into the value of the resulting mutual fund units – barring some perfectly timed market collapse of course)? Or is it more of an exercise in fiction? Thanks for any help with my understanding on this!
Read Answer Asked by Lance on April 21, 2017
Q: Hi,
I remain somewhat confused about which account it's best to hold Dividend paying stocks in. I've noticed some responses where you indicate it's best to hold the dividend payers in non registered accounts and higher growth stocks (capital gainers) in a registered TFSA or RRSP account.
For whatever reason, I assumed the opposite as I thought receiving dividends was more along the lines of receiving income (i.e.- cash) so it would be best to put these into your registered accounts to lower the tax bill.
So, in my situation, as I receive approx 60k in annual pension income- am I better to put the dividend payers into the registered or non registered accounts to keep the tax bill as low as possible.
Thank you.
Read Answer Asked by Alan on April 21, 2017
Q: Hello all -

Regarding Hector's T1135 question a couple of days ago, he mentions that he has American stocks with a value of 120K with Canadian Broker.

First I will say I am not an expert on this subject.
It's my understanding though that he would only need to fill out the form if the total actual "cost" (converted to CAD, each at date of purchase) exceeded 100K. Is this not correct?

Secondly, this 100K (again, total cost in CAD) applies to accounts outside RRSP's and TFSA's. So in other words, if his total cost was under 100K outside his registered accounts, yet amounts inside either or both his registered accounts exceeded 100K, he would still not be required to fill out this form. Those amounts are not affected.

Is my understanding (hopefully) correct on this?

Thanks.

Jim
Read Answer Asked by James on April 21, 2017
Q: Regarding Hector's question on T1135 filing on 120K of USD holding.

Just a reminder to be careful when considering "value", the 100K filing requirement is not based on current market value but the cost amount or ACB, it includes cash and only applies to non-registered account, the amount is based on an individual basis, i.e. value in joint account has to be calculated separately.
Read Answer Asked by Steve on April 19, 2017
Q: I have USA stocks with a value of 120K with Canadian Broker.
Do I need to fill out Form T1135 and if yes which box do you think it applies to me.

As per simplified reporting method
I need to check boxes that apply to me
Funds Held outside Canada
Shares of non-resident corporation (other than foreign affiliates)
Indebtedness owed by non-resident
Interest in non-resident trusts.

Thanks for your help.
Read Answer Asked by Hector on April 19, 2017
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