Investment Q&A

Q: Regarding your previous answer to someone regarding holding US dollars in TFSA. I have been thinking of selling US options in the TSFA, in order to get tax free US dollars. I have done very well in CSU and need to trim it back and have been thinking that I would try selling US options on the returns. Do you see any probelems with that strategy?
thanks

Q: I notice that you sometimes suggest/recommend that subscribers or their young dependents purchase U.S. $ denominated stocks in their TFSAs. I would love to but I don't. The reason -- taxes. Both in the short term and with age ( I am almost 80) am learning the hard way the implications of the T-1135 and the joy of U.S. estate taxes. If I had the chance for a do over, I would put as much of my U.S. equity holdings in my RRSP as possible and later convert to a RIF. Start using the TFSA for a some Canadian dividend grower. Publish if you wish. Thanks for all you do. Bill

Q: Scanning the news and reading your blog post, I can't find any mention of the "foreshadowed" change to tax rates for capital gains and/or dividends. Did I miss something?

Q: Followup to recent Q. on BEP.UN. Distributions can be taken in US or C$, default is US, so if held in a C$ account broker will convert at their exchange rate. To receive in C$ you must instruct broker you want this option, I estimate it's worth at least 1% of the distributions received, not much, but better in my pocket than broker's.

Details at bottom of page here:

https://www.brookfieldrenewable.com/content/investor_relations/distributions-30413.html

Q: For companies with US dollar distributions (such as BEP.un and TRI), is it better to hold them in registered or non-registered accounts?

I am under the impression that companies with distributions in US dollars are better held in registered accounts, to avoid the US withholding tax. At the same time, dividends from Canadian companies are taxed preferentially if kept in non-registered accounts.

What should I do with BEP.un and TRI?

Thanks for this tremendous website and service!

Q: I have a 4% weight in CM in a portfolio heavily weighted to financials. I have already crystallized some capital gains this year and was planning on waiting till next year to sell my remaining position in CM, proceeds to liquidate an investment loan. I have heard that the upcoming budget may change the tax hit to capital gains from 50% to 100% which would speed up my plans to sell prior to the budget announcement.
Based on your connections do you think it likely that the Liberals will make this change?
What is the date of the Budget announcement?
CM go s ex-dividend on March 23 so when can I sell and still get the next dividend payment? i.e. Is ownership for dividend purposes based on the selling or settling date? If settling date than could I sell on March 18 which would settle on March 23?

Q: Could you speculate on the Canadian budget, in particular on the possibility of an increase in the capital gains inclusion rate? I do appreciate very much the service you provide. Thank you.

Q: My wife will have no income for 2yrs and then a pension of about 30k after that. What is the max she can withdraw from an rsp for those 2yrs while paying minimum tax. In money saver I read that 10k withdrawn for no tax but what would be an optimum amount be. Looking to take out as much as possible during this time. Thank you all for such a great service. Chris

Q: Hi Peter, Ryan and team,
You've clearly built quite a firm with a solid following, and equally clearly, you have an informed and knowledgeable clientele as well. I just read Fraser's advice on the issue I broached about HP's split into two last November, and CRA's foot-dragging on the matter.

Just a quick note to say thank you to you guys, and also to other members, and particularly Fraser!
Cheers,
Warren

Q: On February 25 Warren asked you a question about the tax treatment of the stock dividend which set up HPE as a spinoff from HPQ. I am not a tax expert but I have established that HP applied to CRA on November 1 for this transaction to be tax-free under S86.1 and it looks to me as though CRA have not yet ruled. Their website (search "foreign spinoffs") is silent on HP and their most recent approval relates to a transaction which took place around August. Absence of ruling would explain why the stock dividend would be included on the T5. No doubt CRA would take the position that one should file including the stock dividend as income and then re-file an amended return if and when they approve HP's application, but it may be worth waiting until nearer the deadline to see if CRA approves the application which would allow the stock dividend to be excluded (though the book values of both HPE and HPQ would then change). Hope this helps and hope somebody else can add more.

Q: A recent answer pointed out that tax losses can be carried forward indefinitely. If tax losses are carried forward from a previous year, they do not reduce income until after the OAP clawback has been calculated. If you have stocks that have become worthless, don't write them off until you have some capital gains to offset them, in the same year.

Q: My wife has a loss carry-forward in her non-registered account. I'm thinking that with only one place for the $5,500 investment this year it would be better to work on reducing the loss carry-forward than contributing to her TFSA. Once the loss carry-forward has been eliminated contribute to her TFSA.

Is my thinking correct?

Thanks
Ron

Q: In general what are the tax implications of investing in US markets.
Thank You

Q: Hello 5i, Can I get your analysis on Richards. One thing I noticed going thru the financials is that the distribution is a return of capital and not a dividend. Could you clarify that as well and the implications on my investment as I understood it to be them simply returning my money as opposed to getting a dividend from profits. Thanks

Q: What stocks would be classified as foreign investments to be reported on T1135 form even though listed on Canadian exchanges? I am referring to stocks covered by 5i or frequently mentioned in the q&a section.I believe you have stated CXI, PHM and TCN fall in this camp. Might I assume BPY.UN any others? Is this information available from other sources? Thanks as always.

Q: Good Morning
I realize that in order to claim a capital loss you have to wait for 30 days before repurchasing the security.Can you still claim a capital loss if you purchase a call option of the said security after you sold it ?
Thanks

Q: Re Ralph's question: since there is no change in beneficial ownership, there should not be a tax consequence. Henry

Q: If I own CXI in my non-reg account and TFSA account (both are at a loss) and I sell it in my non-reg to take advantage of a tax loss, does the fact that I still own it in my TFSA make it a superficial loss? I will not be buying it back in the non-reg.

Q: hi Peter
I am looking at some re balancing my portfolios - wanted your opinion on how I should set up my 3 accounts. I use a Registered account - non registered account and a TFSA account. I invest in Growth stocks - Dividend stocks and I also invest in some smaller cap aggressive growth stocks as well. I still have apx 35yrs before withdrawing from my rrsp account. I have been using my rrsp account for Large Cap Dividend stocks but not sure that's the best way to go? any advice is appreciated

Q: If holding for the long term, does it make more sense (taxes) to have these stocks in a RSP instead of a cash account?