Family planning

RAINFOREST modified

Janice and Tom sleep together. They live together. They’ve got a mortgage. Even a kid. And a golden doodle. But when it comes to money, they just don’t trust each other.

“This is the way we started out,” she says, talking about their marriage six years ago, “and that’s the way we’re comfortable.” That’s code for, ‘I’m not going to answer to him about my spending.’ Tom’s the same. “We never argue about anything,” he says, “except money. Whatever. Not worth it.”

So they have two savings and chequing accounts each (RBC, CIBC), and a joint account they both contribute to for household expenses, the mortgage and bags of Iams chunks. She makes $105,000 as a health & safety consultant, and he’s a chef, at half the wage. She has a matched RRSP at work, while Tom has no pension. Only in the last year – after a mat leave and digesting the mortgage – have they started to save some money. In separate bank accounts, making 1%.

Janice and Tom are the kind of clients bankers love. They’re Joe Owe’s idea of perfect taxpayers. Because they won’t share money (the way they share fluids) these thirtysomethings pay way more in bank fees and taxes than they need to. It’s amazing how many couples are in similar circumstances. We sure seem to have an unhealthy relationship with money. More precious than love.

Well, this post is not about matrimonial intimacy, on which I am a renown expert, but income-splitting. By treating a marriage or common law relationship as an economic union, there are a mess of advantages – especially if you’re like these guys, with a big disparity between incomes.

Here are a few ways you can make romance work harder.

Open a joint investment account. Don’t accumulate secret piles of money in dead-end bank accounts, but pool it with your spouse and invest it jointly. This way you can get more momentum in a larger portfolio, plus be reassured that if something happened to your spouse the funds would pass to you without a legal barrier (not necessarily so with a bank account). Plus, the money this account makes can be split between you – a savings when one person is in a lower tax bracket. In fact many couples attribute all of the gains to the less-taxed person.

Open a spousal. This kind of RRSP is custom-made for Janice and Tom. She can contribute to a plan in his name, to her own limit. She gets to deduct all of the money from her substantial taxable income, while he gets ownership of it after a three-year seasoning period. Tom can then remove it at his lower rate, or run away with the doodle and open his own food truck.

Don’t share the expenses. That’s just dumb. The person making the most money in a relationship should pay the entire costs of running the household, including the mortgage. That way all of the income of the less-paid spouse can be used for investment purposes – because the proceeds will be taxed at a lower rate, building family wealth faster.

Invest the kid’s loot. The Child Tax Benefit cheques are not intended for silly things like day care or Huggies. Instead, open an in-trust investment account and stick that money into things your child will really enjoy, like ETFs and REITs. That way the proceeds are taxed in your child’s hands, not yours, since attribution rules do not apply.

Then hire him. If you have a business – incorporated or sole proprietorship – you can give your kid a job, pay him or her a wage, and deduct that from the taxable income of your enterprise. Just ensure that the work being done is ‘reasonable’ in the eyes of the CRA for someone of that age and skill level, which probably means Junior will not be your marketing consultant.

Then fund his TFSA. Once your child is 18, then you can stick cash into his tax-free savings account, and invest the money in capitals gains-producing assets. In fact, Janice should also do this for Tom, as should every spouse who is in a higher-income situation. There is no attribution of investment gains back to the donor, and all of the growth is completely free of tax.

Well, this is just a taste of things you can do to split income within a family and pay w-a-y less tax. Of course, you can also loan money for investment purposes to family members at the ridiculously low rate of 1% and have no profits attributed back to you. If you’re an old fart you can split pension income with your squeeze. Or your CPP. You can loan money to relatives to start a business, without interest, and maybe turn it into an allowable loss.

It’s a long list. But it all starts with trust. Share that first.

174 comments ↓

#1 Happy Renting on 09.17.14 at 6:03 pm

Great post! It’s nothing you haven’t said before, but a great kick in the butt for couples like us who are only doing some of the above, and have been meaning (for months and months) to get organized and do the rest of it.

#2 Casual Observer on 09.17.14 at 6:06 pm

It looks like Canada isn’t the only country that has to deal with HAM.

Why Chinese money is flooding American markets

“Chinese buyers spend more than twice the market average. The Chinese spend an average of $590,826 per property, while the average price in the U.S. market overall is $247,417,” Henry said.

The president of the U.S. China Real Estate Association, Bill Seto, said there is a fear that the Chinese are pricing the middle class and even some wealthy Americans out of certain markets, especially when it comes to housing.

“They don’t like to haggle. Reputation is very important; they like to pay high prices so they could outbid the other competitor, and that’s the way it is.”

http://www.cnbc.com/id/102001876

#3 Mark on 09.17.14 at 6:06 pm

“Then fund his TFSA. Once your child is 18, then you can stick $31,000 (or more) into his tax-free savings account, and invest the money in capitals gains-producing assets”

Are you sure that an 18-year-old is entitled to TFSA limits cumulative from the start of the program? Or just from the time that they’re 18-years-old onwards (ie: a recently turned 18-year-old would just have a $5500 limit)?

#4 Funny that on 09.17.14 at 6:07 pm

Re spousal RRSP’s.
I have a question?
Lets say I currently have $70,000 in my own RRSP’s and my spouse puts $20,000 into a spousal RRSP.
And also lets say I decide that in 2015 I will take $10,000 from my own RRSP. Will spouse have to declare that 10g’s as income even though I did not take the money from the spousal RRSP?????

#5 Funny that on 09.17.14 at 6:09 pm

Very useful post tonight Garth, much better than misery week.
BTW what is a oilygarthy

#6 Mark on 09.17.14 at 6:11 pm

Shaun, “We tax interest, dividends and capital gains year after year for the same reason we tax income from working every year. The government needs to money. It’s fair to tax ALL sources of income.”

Is it really fair that capital gains are taxed? After all, just because the price of, for instance, a house, a lump of gold, or a company went up, does not translate to additional income in the hands of the owner.

In fact, in the case of the gold, the income of gold never goes up. So capital gains tax on such is purely confiscatory (more so than owning gold itself!).

#7 LH on 09.17.14 at 6:14 pm

Financial compatibility (attitudes towards savings rates etc) is one of the pillars to a happy marriage! Both my wife and I are adherents saving more than 90% of our net income. There can be utility to having separate accounts, however. Ignorance over the smaller items can be bliss.

LH

#8 bdy sktrn on 09.17.14 at 6:17 pm

can’t imagine not sharing $$$

it would feel like we were not partners

had joint accts as soon as engaged, save 2x fees.

#9 Firestorm on 09.17.14 at 6:17 pm

“But it all starts with trust. Share that first.”

Thanks for putting that in.
I lived common law for years, but exited last year. Over the years I never combined finances – didn’t have, or perhaps I should say, didn’t give the trust. I likely made a much cleaner exit, than had there been combined accounts.

All the points made in the post are good — but firstly be sure the relationship is right!
In your gut, you have to know its right. If you have any doubt, keep the paperwork separate and suck it up that you may not be optimizing your investment. Its better than losing half a house or nest egg!

#10 Liquid on 09.17.14 at 6:18 pm

This is some of the best relationship advice I’ve ever read :) More couples should educate themselves about income splitting and trust accounts. I would totally show this post to my wife, if I had one (o_O)

#11 Kelly on 09.17.14 at 6:18 pm

Lots of trust here – but my spouse is a US citizen. I believe that changes things. Am I wrong?

#12 Robbie on 09.17.14 at 6:18 pm

Sad state of affairs when you share a bed, a life, children but not money. Perhaps if we used gold and silver and there were no banks…hiding the metal under the bed would result in mandatory sharing, wouldn’t it? Yet another reason to be a “gold bug”. :)

#13 Mike T. on 09.17.14 at 6:20 pm

I am not old, but older than most of my classmates. I asked some of them the other day if they remembered when banks paid the customers for having an account not the other ways around.

They did not.

So this post does not surprise me.

#14 Hawk on 09.17.14 at 6:25 pm

Janice and Tom may be to blame for their relationship, but the greater blame lies with legislators, judges, politicians and people who design the system.

Couples mistrust each other because of legislation whereby if they split, the wealthier (or with higher income) person is forced to subsidize the other for the rest of their life. And common sense is not used to determine who contributed what to the marriage and achieve a division based on rationality and objectivity. So its easier just to keep all finances separate. It would appear that if this is working for Janice and Tom then they are atleast people of integrity and do not desire what belongs to the other.

#15 Mr. Frugal on 09.17.14 at 6:25 pm

I wonder if Janice would be more interested in sharing if she was the one making $50K and Tom was making $100K. Seems kind of selfish to me. Just sayin’.

#16 Shawn on 09.17.14 at 6:28 pm

Saving Taxes… and Negative Taxes

Some excellent ideas.

I like the spousal RRSP

Open a spousal. This kind of RRSP is custom-made for Janice and Tom. She can contribute to a plan in his name, to her own limit. She gets to deduct all of the money from her substantial taxable income, while he gets ownership of it after a three-year seasoning period. Tom can then remove it at his lower rate

*******************************************
I know you love RRSPs the best and this one is especially good. If Janice contributes $10k to a spousal and gets back a $4k refund then the net cost to her is $6k, in effect the government contributes the other $4k that sits in the spousal RRSP.

If, decades later the RRSP has grown to $100k under Garth’s management and Tom takes the money out at a 30% tax rate, paying $30k in taxes, this should be thought of as follows:

The $6k net cost to Janice has grown completely and entirely tax free to $60k.

The governments share of the RRSP, $4k, has grown to $40k and now they only want $30k in taxes.

The net effect is that there is NEGATIVE tax on this RRSP.

That’s the math of it.

#17 Spock on 09.17.14 at 6:31 pm

>>> Then fund his TFSA. Once your child is 18, then you can stick cash into his tax-free savings account <<<

The kid can only invest $5,500 that year and going forward. No contributions for the year before the kid turned 18.

Legally, CRA does not allow parents to fund the kids TFSA (only the spouses) – of course can always give a gift in cash and kid invests the same through kids bank account.

#18 Cato the Elder on 09.17.14 at 6:31 pm

Does it ever bother anyone that this is so complicated? It’s almost like they do it on purpose…

#19 Spock on 09.17.14 at 6:32 pm

# 4

The $10,000 will be taxable as your income since it was withdrawn from your own RRSP.

#20 Shawn on 09.17.14 at 6:33 pm

Perhaps I should have opened a spousal RRSP for my spouse.

But unfortunately her RRSP with about $68 contributed has grown to $680k at her age 54 and is likely to be close to $2 million at age 70 and so this (along with her DB pension) will put her into a high tax bracket and so we will both be in a high tax bracket and probably have all our old age pension clawed back. It’s an awful situation is it not?

#21 Shawn on 09.17.14 at 6:42 pm

Capial Gains Tax no fair?

Mark asks:

Is it really fair that capital gains are taxed? After all, just because the price of, for instance, a house, a lump of gold, or a company went up, does not translate to additional income in the hands of the owner.

*************************************

It’s only of course realized capital gains that are taxed. Really it should just be the gain over and above inflation.

Anyhow life is never fair, get used to it.

Even more unfair are myriad tax breaks for the rich.

#22 Casual Observer on 09.17.14 at 6:43 pm

#4 Funny that on 09.17.14 at 6:07 pm
Re spousal RRSP’s.

Here’s how TD Direct Investing deals with it. Other brokerages are probably similar.

http://www.tdwaterhouse.ca/products-services/investing/td-direct-investing/accounts/self-directed-rsp-rif/index.jsp#spousal-plan-info

“Withdrawals from a spousal plan are taxable in the hands of the contributing spouse or partner, to the extent that the contributions were made by the spousal contributor in the current year, and in the two (2) calendar years preceding the year of withdrawal.

TD Direct Investing follows the industry standard with respect to administering withdrawals from spousal plans, and attributes all withdrawals to the spousal plan, regardless of who made the contribution.

If the withdrawal qualifies for attribution to the annuitant under the 3-year hold rule, it is the responsibility of the client to prove to Canada Revenue Agency that the spouse or partner contributor did not make the contribution.”

#23 Freedom First on 09.17.14 at 6:44 pm

Marriage-living together-Kids. No way with the laws today. High failure rate. Extreme high risk for me and loss of all my rights and my freedoms. I put myself first. Live and let live. We all have the right to choose how we live our lives. I am honest about it and lie to no one. I won’t judge you if you disagree and I don’t care what you think about how I live my life. Same as you, you choose for yourself, and so do I. Do I help others? Society? Yes, absolutely. By my choice and by my rules. As always, enjoying life. Freedom First.

#24 Andrew on 09.17.14 at 6:45 pm

Hi Garth,

Will you address today’s surprising comments from the Fed that they will choose to keep the same low interest rates for a while?

You just commented earlier this week about how Fed will likely raise them soon, guess that isn’t happening. What will this mean for Canada interest rates?

The Fed statement is no big surprise. Rates will still begin to rise next year and continue into 2017. Don’t get too excited. — Garth

#25 Son of Ponzi on 09.17.14 at 6:55 pm

#18 Cato the Elder on 09.17.14 at 6:31 pm
Does it ever bother anyone that this is so complicated? It’s almost like they do it on purpose…
——————-
I know, but I believe women are born that way.

#26 A Yank in BC on 09.17.14 at 6:59 pm

Garth,

Perhaps a missive someday on the relative merits of simply adopting a flat tax on earned income? Sure would make things a bunch easier on everyone, instead of having to play all these ridiculous tax-sheltering games.

Simple, yes. Progressive, no. A gift to the rich, so Shawn would love it. — Garth

#27 Cross-Eyed Border Guard on 09.17.14 at 7:02 pm

#11 Yes you are right some things are either not accessible to US citizens in Canada or require onerous paperwork. TFSAs are not respected as retirement plans but RSPs are all right (someone else explain please). Mutual funds in Canada may be considered pooled investments, a problem. Investing in single stocks and bonds is OK. You lose the preferred tax treatment for dividends. And the list goes on and on. Consult a cross-border tax advisor/attorney and also read up; there are Internet resources and books aimed at people who pay taxes in both countries. Good luck!

#28 Kenchie on 09.17.14 at 7:06 pm

#115 Mark on 09.17.14 at 3:55 am

“Of course they won’t. That’s why Canada’s manufacturing sector is toast over the medium term unless it can somehow take advantage of proprietary ingenuity which may exist in certain sectors, or a very low cost of capital compared to that of the chronic importers/weakening currency nations.

Eventually Canada will run big trade deficits as the result of a high CAD$, much like the US has done the same over the past few decades. And the CAD$ will weaken from such an elevated level during a subsequent leg of the cycle. $1.5 would be overshoot, much like $0.63 was overshoot to the downside for the CAD$.”

So if Canada’s manufacturing can’t possibly be significantly more efficient than US manufacturing, combined with a decreasing reliance on importing Canadian O&G, what (realistic) force will push the CAD up so high?

Nothing. Canada is not the United States of America. Don’t think that we can replicate their economy over “decades”.

Even when the potential for an overshoot is considered, the majority of the hedge funds doing this trade are US-based, so they are likely to look for opportunities to short the CAD when overvalued. But hedge funds alone don’t move currencies.

PS: the CAD was weak in the 90s and early 2000s for several reasons including lower productivity levels, fiscal consolidation and oil in the 20s. So it’s not technically an “overshoot”.

http://www.wtrg.com/oil_graphs/oilprice1947.gif

#29 Swm on 09.17.14 at 7:06 pm

What about attribution laws with the joint account idea?

#30 Joel on 09.17.14 at 7:14 pm

@Kelly #11

Yes it makes a big difference if your partner is a US citizen. If your combined savings at any point in the year exceed $10,000 it needs to be declared to the IRS. Registered accounts and TFSAs are considered as trusts by the IRS and subject to tax. Best to open accounts in your name only and unless you want to deal with the IRS, no TFSAs, RRSPs etc. for your hubby.

#31 Kenchie on 09.17.14 at 7:14 pm

#117 I’m stupid on 09.17.14 at 6:15 am
“You want to feed kids… Send lower income families money so they can feed their kids. It’s cheaper to just give lower income families $200 a month per kid for food than it is to pay a bunch of managers, cooks, drivers, etc to feed them.”

Or a Basic Income? I agree on the condition that gov’t services get cut to offset the cost.

$20,000 might be rich though…

http://www.thestar.com/news/canada/2014/06/29/poverty_activists_push_for_20000_per_person_minimum_income.html

#32 Harbour on 09.17.14 at 7:20 pm

Fed renews zero rate pledge, but hints at steeper rate hike path

http://finance.yahoo.com/news/fed-could-hint-rate-hike-050311412.html

#33 devore on 09.17.14 at 7:21 pm

Then what is the fairness test of such a tax? — Garth

Fairness? What does that have to do with anything. It’s the cost of maintaining a vacation property.

#34 Kenchie on 09.17.14 at 7:28 pm

#131 Debra on 09.17.14 at 9:25 am
“The younger crowd that works with me says interest rates will always be low and it doesn’t cost them anything to borrow so why not.

How long have interest rates been low?

Five years. The kids have a big surprise coming. — Garth”

Precisely. All of my friends bought their places in 2009-10. A couple of them have had to do refinancing (at lower rates), but none of them seem to place much thought into future rates.

Food for thought: I mentioned to my friend (has his place on the market) that he’ll be paying a couple grand in prepayment charge. Dumbass had never even heard of it…

He’s lucky I have been hounding him about not overbuying for their needs for the past half a year or so. Otherwise, his horniness would be ridiculously high.

#35 Eatin' Bonbons on 09.17.14 at 7:30 pm

Question: along the same line of thought….
Can the advisor fees for a joint investment account be deducted only on the tax return of the higher earning spouse? Plus at the same time if the account has any realized cap gains, dividends or interest – can this ‘income’ be applied only to the tax return of the unemployed (or low earnings) spouse?
Thank you!

CRA expects the amounts to be treated equally by each spouse. But, as I wrote, it is common practice for many coupled to have the taxable proceeds declared by the lesser-earner. If you try to have one spouse pay the fees and the other to reap the benefit, you might get to meet a nice auditor.- Garth

#36 TakingResponsibility on 09.17.14 at 7:34 pm

Janice and Tom get Child Tax Benefit Cheques??

I always thought that was something for poor families.
My bad, I guess.

It is universal. — Garth

#37 devore on 09.17.14 at 7:40 pm

We sure seem to have an unhealthy relationship with money. More precious than love.

More precious than common sense. A huge part of the reason to marry, as opposed live common law, is all the tax advantages you gain by joining parts of your incomes. You’re already sharing a house, a car, household items, groceries, utilities, etc, instead of maintaining your separate enclaves, why not banking?

What happens when one of these two loses their job? All the disagreements and arguments about money will come to a head, except now one person is at a disadvantage.

I wonder if this is a result of people coupling up so late, vs historical norms. The later in age, the more set in one is in their ways, and will resent and fight back any encroachment. Apparently, change is hard.

#38 Trojan House on 09.17.14 at 7:40 pm

50% of marriages end in divorce. 100% of people think they can beat those odds.

#39 JuliaS on 09.17.14 at 7:47 pm

Garth, you forgot adding a good divorce lawyer to your investment plan.

I recommend Prickem, Stickem & Burnem. — Garth

#40 Kam on 09.17.14 at 7:49 pm

Tom can then remove it at his lower rate, or run away with the doodle and open his own food truck…………………..or
invest in RESP.

Invest $5k in RESP (withdraw from RRSP after 3 yrs)and earn 20% return ($1K)immediately.

#41 Cici on 09.17.14 at 7:56 pm

I trust that if my boyfriend and I merged all of our income together, every penny would go to Oreos, Doritos, beer, chips and pop (we wouldn’t need to save for retirement because we would die within a 24-month period from artery-clogging heart attacks brought on by high transfatty acid consumption). The rest would go to video games, board games and DVDs (we already have way too many), and I would have to go to work naked once my one pair of jeans and one t-shirt fell apart.

Sigh…not all couples are cut out for income-splitting ;-(

#42 Millennial_Falcon on 09.17.14 at 7:57 pm

#34 Kenchie

Agreed.

Most of my 30ish year old buddies will say: “if rates rise we are screwed”…then follow that sentence immediately with: “but they won’t for a long long time or ever”.

Translation is “I do not intend on paying off this mortgage completely anyways. I will just sit here and say I am building equity while enjoying endless capital gains for about 5ish years before I sell again.”

However, I know Garth says rates will rise. But the naysayers are right when they remind us all that the fed has been saying that for years already, and yet it has not done squat.

One guy I know just bought a one bedroom condo in Richmond hill for 260k with the sole intent on renting it out. When I told him rates will probably rise, he explained that he is locked in for 5 years and with rents at current levels, a sizable portion of the mortgage will be paid off by that time anyways.

Bottom line is people are not really buying the rate hike fear mongering. After 5 years of it, people are now numb.

Some do not think rate hikes will be drastic once they hit either.

MF

#43 Cici on 09.17.14 at 7:58 pm

#39 JulieS

If that’s the best and only way you can build wealth, then I feel REALLY sorry for you. But, I feel more sorry for your ex, God help him.

#44 Kenchie on 09.17.14 at 8:00 pm

From Yesterday

#137 Kevin on 09.17.14 at 10:25 am

“And when the the time comes to refinance that mortgage at 8%, if they really cannot come up with that extra $500/month, then they can just reamortize it back to 25 years.”

Bit presumptuous. Leaving the unrealistic 8% aside, there is no guarantee that a bank will, as your phrase “can just reamortize” implies, automatically allow you to do this without adding new equity if their maximum borrowing amount is below the mortgage value.

#45 Nemesis on 09.17.14 at 8:00 pm

#RedIngle’s… #FamilyPlanningAdvice… #Or,CautionaryTalesForMen… #OfCigareets&Whuskey… #&WildWildWomen.

http://youtu.be/hqk3osxS4wQ

#46 Retired Boomer - WI on 09.17.14 at 8:03 pm

Great Column today Garth-

Anything a couple can due today to reduce taxes and BUILD WEALTH for tomorrow is more than good, it is GREAT!!

Yesterday’s discussion about tax rates: income, short term, or long term capital gains, dividends etc. I am all for harmonizing these rates, and thereby lowering the highest, and raising the lowest.

Should their be some incentive to save? Absolutely!! Perhaps a ‘no tax’ on the first 10 grand – 25 grand of long term, dividend or interest income per year as an incentive for all? Thoughts?

Then the same rates apply across the board.

#47 WhiteKat on 09.17.14 at 8:04 pm

@ Kelly #11 re: ” Lots of trust here – but my spouse is a US citizen. I believe that changes things. Am I wrong?”

Yes Kelly, that changes things – A LOT!

‘US person’ is a broad term. You are a ‘US person’ if: you were born on US soil (even if you left the next day and your parents are both Canadian); you are a naturalized US citizen; one or more of your parents are American citizens (even if you were born outside USA); you hold a greencard or have not formally given it up (ooops); are a snowbird who overstays in USA (the rules for figuring this out are getting more complicated and border tracking systems are becoming more sophisticated).

If you have joint accounts with your ‘US person’ spouse, they are reportable to the IRS under the FATCA IGA (Foreign Account Tax Compliance Act – Intergovernmental Agreement) that the Canadian government recently implemented into law under threat of economic sanction by the USA. This means that if your spouse’s aggregate account balance (including your joint accounts) is greater than 50K, his bank will pass on his/your banking details(balances, deposits, withdrawals, etc) to the CRA which in turn will pass it on to the IRS.

IRS will then check to see if your spouse has been reporting his/your bank accounts on annual ‘Foreign Bank Account Reports’ (FBAR) to the Financial Crimes Enforcement Network(FINCEN). He is required to report to FINCEN every year for EVERY account if his(including your joint accounts) aggregate balance hits 10K at anytime during the year.

IRS will compare the information, sent from your bank via CRA, to the FBARs he is (or is not) filing. If there is any discrepancy, he/you will be subject to extremely draconian penalties (50% of the value of his/your accounts for each year of non reporting up to 6 years, i.e 300% of the value of the account).

Note: most registered accounts have been excluded from FATCA reporting, but are required to be reported annually on FBARs.

In addition to annual FBARS, your spouse should be filing annual US tax forms for his Canadian earned income and many other forms for non-US investment accounts. He must file special forms for RRSPs, RESPs, TFSA’s, and RDSPs. Note that RESPs, TFSA’s and RDSPs are considered ‘foreign trusts’ and the grants, and income are taxable by the USA.

Whatever you do, don’t invest in Canadian mutual funds in any accounts with your spouse’s name on them as they are considered ‘Passive Foreign Income Corporations’ (PFICS) subject to complicated reporting, and high taxation rendering them liabilities (but then if you have been following Garth’s advice you won’t have any mutual funds). However there are other PFICS to watch out for – I think ETF’s might be PFICS.

If you think you may have over 250K capital gains on your jointly owned home, Do NOT sell it. USA taxes capital gains over 250K on the sale of a US person’s principal residence despite that it is located in Canada.
And no, your spouse cannot claim mortgage interest on his US tax return if his principal residence is not in the USA.

Your spouse can renounce US citizenship to avoid all this life control by the USA, but since increasing numbers of ‘US persons’ have been doing so, USA just raised the cost of renunciation from $450 to $2,350. If your spouse is lucky (depending on how/when he became a ‘US person’), he may be able to ‘relinquish’, which has no fee. Renunciations, (and certain relinquishments) require confirmation of 5 years of past tax compliancy which is an expensive, messy process.

In addition there is an ‘exit tax’ to renounce US citizenship if a ‘US person’ has more than 2 million net worth, or makes more than 145K per year (averaged over 5 years).

USA is unique in the world with its ‘citizenship-based’ taxation, where US citizenship/US person-hood is easily conferred whether one wants it or not, or is even aware they have it. All other countries (except Eritrea) tax based on residency. Interestingly, USA and Canada recently condemned Eritrea for trying to tax its diaspora.

For more information on the financial hazards of being a ‘US person’ living outside the USA, or having economic ties with a ‘US person’ , visit http://www.isaacbrocksociety.ca.

There is some hope though, Kelly. A law suit has been launched against the Canadian government for agreeing to throw Canadians with ‘US person’ status (along with their unfortunate mates, and children) under the FATCA bus. For more information on the lawsuit visit http://www.adcs-adsc.ca

#48 devore on 09.17.14 at 8:17 pm

#18 Cato the Elder

Does it ever bother anyone that this is so complicated? It’s almost like they do it on purpose…

Just smart business. The convenient path of least resistance always works out to be the most expensive and suboptimal. If you want to save some money, you’ll have to do some work.

#49 DM in C on 09.17.14 at 8:17 pm

#20 but acts 12 ….. “But unfortunately her RRSP with about $68 contributed has grown to $680k at her age 54 ….”

Yes Shawn that’s SO unfortunate — isn’t that what you wanted to hear? Passive aggressive need for attention.
Or was it a pat on the back you want? There there honey, you’re so smart, now run along and play.

#50 Bottoms_Up on 09.17.14 at 8:22 pm

#205 Cato the Elder on 09.17.14 at 6:26 pm
—————————————————-
Yes, you are being a bit naive. We don’t live in an “all or nothing” society.

Follow the money trail. Lots of private companies benefit from government spending, whether it be contract money (government spends lots of money constructing buildings, paying rents, utilities etc.). Where do you think government employees bank? That’s right, bank profits coming ultimately from cheques issued to government employees.

That entrepreneur you discuss? Well she harnesses the mental capacity of individuals taught through social funding (‘free’ school, reduced tuition fees). Those individuals are also healthy and able to contribute to the success of that entrpreneur because there are social health care workers ensuring their health, and other government employees ensuring their safety (police, justice, product and environment safety).

So before you go spouting just how ‘backward’ taxation is, think before you speak.

#51 Bottoms_Up on 09.17.14 at 8:37 pm

#36 TakingResponsibility on 09.17.14 at 7:34 pm
———————————————————–
You’ve obviously never had kids. The universal benefit goes to families with children under 6, it’s to ‘offset’ costs of child care.

How far do you think $100 (taxable) goes toward a $1300 monthly daycare bill?

It’s also not indexed to inflation, so the $100 today that families are getting is more like $80.

#52 Bottoms_Up on 09.17.14 at 8:38 pm

Ask yourself this Q:

What has Harper done recently for working families? For families with young children?

#53 Bottoms_Up on 09.17.14 at 8:44 pm

#23 Freedom First on 09.17.14 at 6:44 pm
—————————————————
You seem to make your decisions based on fact. That’s a good thing.

But did you ever consider that unmarried men die 10-15 years early?

That’s a stat you should probably digest for a bit….

#54 Smoking Man on 09.17.14 at 8:45 pm

All these opinions, all generated by ones programing, their schooling, their life’s experience.

To an Alien from Nectonite, it’s comical.

Just today, a red head gay guy flirting with a dark haired security guard at Starbucks. I got nothing against gays.

They are the only ones that respect my lunicy.

But, nursing a huge hang over, needing a tall blond as my life depended on it.

I got pissed, not at the flirting, not at the huge line developing behind me.

Not knowing how Starbucks brain washes the coffee servers, making them think one more smile gets me on the lear jet…

I got to learn how they do that.. The perfect slave…

#55 Mark on 09.17.14 at 8:46 pm

“So if Canada’s manufacturing can’t possibly be significantly more efficient than US manufacturing, combined with a decreasing reliance on importing Canadian O&G, what (realistic) force will push the CAD up so high?”

Great question. Domestic deflation. People paying back (and/or defaulting on) all that housing debt, and not spending, particularly on imported goods or abroad. A high savings rate. In combination with weakness in the USD$ as they raise interest rates in response to a more inflationary environment. Recent USD$ strength will eventually give way to weakness as the reality of their external trade deficits and budget deficits once again becomes front and center.

Every last drop of surplus Canadian oil and gas is exportable and in demand by countries like the United States at a given price. Sure, it might not be the price we want, but its not like Canada’s exports in that sector are going to go to zero. When push comes to shove, the Americans would rather, whenever technically feasible (ie: feedstock compatibility), buy oil and gas from Canada, than from the usual South American or Middle Eastern despots.

#56 Kenchie on 09.17.14 at 8:47 pm

#177 Smoking Man on 09.17.14 at 2:56 pm

“#172 Kenchie on 09.17.14 at 2:29 pm

Ketchup stop following MSM, get yourself a tin foil hat, make a bowl shape by placing it over your head, then invert it. You can then contact to the UCC, make big bets and get rich…..

Rate hikes with 1/3 of the Population on food stamps..

Give your head a shake..”

Oh Smoking Man, I’ve made my peace with both alternative media and the mainstream media. MSM has its qualities, both good and bad. The question one should ask is whether the MSM message is biased and used to control the masses, or whether there are just providing statistics that I can use to make my own conclusions. Instead of me serving MSM, the MSM serves me.

1/3rd of the population can’t get mortgages or bank loans (variable), can’t get “Major credit cards” as they are called in the US (non-variable), nor can they get car loans at reasonable rates (non-variable). So they won’t be affected by an increase in interest rates. The only concern is whether or not companies will continue hiring at a desirable level enough to offset the “gradual” rise in interest rates. My opinion is that since the end of the GFC, US companies have been hoarding cash. Yes, that’s based on information coming from the MSM. But it is a story that has been around for quite a few quarters, and has come up in US, UK and Canadian news.

http://www.bloomberg.com/news/2014-03-31/apple-leads-u-s-companies-holding-record-1-64-trillion.html

PS: Fact-checking MSM is important and something I do frequently. That’s why I can call out people like Paul Craig Roberts on his BS, oops, I mean BiaS.

#57 [email protected] on 09.17.14 at 8:54 pm

Garth – Is there such thing as divorce insurance? – to cover all your upset if you split up?

#58 Kenchie on 09.17.14 at 8:57 pm

#184 Cato the Elder on 09.17.14 at 3:26 pm
“#182 Boomer

I know, it’s unfortunate. I wish there was an option to ‘opt out’ of all this. I would gladly go without all these government services etc. if it meant I didn’t have to pay in.

I’m young. I’m still finding it hard to move up or make a decent living.”

No offence, but your attitude is probably holding you back. Your postings make you seem like a hardcore pessimist and that you see the worst in every situation. Like “Opt out” of a 1st world society… Go live in India, Central Asia, China or Africa to see how the other 85% of humanity lives. Then you’ll learn to be grateful for what we have created here in North America.

Want to get a better understand of how to help yourself, read the book “48 Laws of Power”. It won’t help you right away or anything, but it will make you think and will probably come in handy in the future.

Another book you should read is called “Why Nations Fail”. It’s an easy one.

#59 OG on 09.17.14 at 9:01 pm

I’m a Chef. I don’t see my money.
-Ya gotta eat-= Job stability?
I love my house.

How much is Granite anyway I see it mentioned here quite often? Can I write it off as a business expense( use it to temper chocolate)? Haha laminate is just fine ( so says the wife)

#60 Smoking Man on 09.17.14 at 9:02 pm

#56 Kenchie on 09.17.14 at 8:47 pm

Ketchup.

Dude, CIA, NSA, Mossad, CSIS. or just plane stupid..

Do tell…

#61 Kenchie on 09.17.14 at 9:10 pm

#201 I’m stupid on 09.17.14 at 5:17 pm
“Cato The Elder

I can tell by the way you think that you are young and naive. You complain about taxes and wanting to opt out of services but you don’t understand that the safety net provided by things like welfare, unemployment, OAS etc is the reason we don’t have more crime. Extreme poverty creates instability and breeds violence. Common criminals are the poorest people in society. Imagine what would happen if welfare was eliminated.”

Precisely. When I people blasting the “welfare state” without comprehending that it saves us from the worst, I always remind myself of this particular scene in the movie The Dark Knight Rises:

https://www.youtube.com/watch?v=nK056dWK7ts#t=69

When the plutocrats try to push the poor too far, it’s always good to remind yourself that anyone can have their lives ended in a blink of an eye by someone who has nothing to lose.

#62 Kenchie on 09.17.14 at 9:20 pm

#205 Cato the Elder on 09.17.14 at 6:26 pm

“And before you harp about how we would fund government, there are plenty of other models that don’t require wealth confiscation (user fees, low tariffs, royalties on resources, etc.).”

Lol, these things you mention are effectively taxes by another name.

And

“There’s nothing naive about what I’ve been saying. Countries with lower tax burdens are typically wealthier, regardless of resource wealth. ”

You’re talking about HK, Singapore, Luxembourg, etc. You do realize these countries’ economic system are not easily scalable to 35 million (Canada), nevermind 320 million (US). If you didn’t realize that, you’d probably be naive… Just sayin’

And

“Unemployed people don’t have much to do and get desperate.”

Yup, just like a mentioned earlier. They might end up stabbing you while you ride your bike because they want your backpack. Or they might band together and outvote mainstream political parties like what’s happening in Europe.

#63 Kenchie on 09.17.14 at 9:23 pm

Continued:

“2. I recognize that TAX is THEFT and inherently immoral, even if the funds are used for good purposes.”

I hope you don’t have sick grandparents, or parents. And I certainly hope they don’t hear you say that to them while they are sick.

And

“3. I don’t want to pay into a system that I will never get to benefit from. Old age pension is not going to be there when I go to collect, and yet I have to contribute to it my whole life? And yes, it WON’T be there.”

More pessimism and certainty (of the pessimistic kind) about the future! Geez, go outside and have some fun. Stay away from alcohol, it’s a depressant.

#64 Cocoabean on 09.17.14 at 9:28 pm

$105,000!

MUST be a government employee directly. Or one by virtue of involvement in the natural resource sector. Or via a government-funded outfit. Or by way of union membership.

But that kind of income can only be generated as a result of government protection from the free market.

Why don’t you profile some real people, private sector people, with private sector incomes?

Like Tom? — Garth

#65 dad w/ stay at home wife on 09.17.14 at 9:28 pm

Started backpaying provincial tax increase this month for the higher tax bracket..I hope harper makes good on his promise to income split to balance things out.

#66 randman on 09.17.14 at 9:32 pm

Words of great wisdom from the Automatic earth…take heed…
“Our political and economic model is well and truly broken. All that’s been keeping our nation states, and the organizations they have signed up to, alive over the past 3 or 4 decades, is the – seemingly – never-ending growth of additional debt. This is a very crucial point I think you should lock into your memory and never forget as long as you live: in our growth driven and obsessed economic model there’s only one thing left that actually grows, and that is our debt.”

http://www.theautomaticearth.com/debt-rattle-sep-17-2014-scotland-must-vote-yes-for-all-of-us/

#67 Smoking Man on 09.17.14 at 9:44 pm

Ketchup

I so feel your life force.. Hassbra..

Do you really want to publicly dule with the great smoking man, I’m from another plant, what your security clearance not high enough to be briefed..

Sucks for you, read art of war 10 times before you want to give me a blind, behind slap to the head.

Been married for 35 years… I know when it’s coming. Oh yeah….

How much does hassbra pay you. Tell your bosses about me.. Archives..

My hourly rate, 1000 an hour….

#68 Vicpaul on 09.17.14 at 9:46 pm

New statistics suggest the divorce rate has been dropping ( though these rates don’t include relationships outside of marriage – i.e., common law – a growing percentage of relationship formation). As my friend Bill says, “if you tell me the chance of my parachute NOT opening is 40-50%, why the f¥€£ would I jump?”

#69 Bailing in BC on 09.17.14 at 9:46 pm

#41

Sounds like you should not only avoid sharing finances with him, you should also avoid marrying him.

#70 Cici on 09.17.14 at 9:47 pm

#20 Shawn,

Missed your post earlier, but now I’m back with a solution for you both: You gift me the $679,932 from the RRSP, I give your wife the $68, and you get your old age pension from the government = everyone happy!

#71 Shawn on 09.17.14 at 9:50 pm

Child Tax Benefit is (not) Universal?

Taking Responsibility at 36 said:

Janice and Tom get Child Tax Benefit Cheques??

I always thought that was something for poor families.
My bad, I guess.

It is universal. — Garth

******************************************

Not quite universal although there is a high cut off.

Cuts off at around $116l family net income for 2013

http://www.cra-arc.gc.ca/bnfts/cctb/cctb_ncms-eng.html

#72 ya baby on 09.17.14 at 9:53 pm

A must read blog for every pseudo-knowledgeable ‘environmentalist’.

http://www.huffingtonpost.ca/cody-battershill/naomi-klein-new-book_b_5837486.html?utm_hp_ref=tw

#73 ya baby on 09.17.14 at 9:59 pm

BTW…. a ‘friend of mine’ has more than a million in invested accounts outside real estate holdings …( cue the rage) . What is an acceptable percentage to keep in cash for future investment opps and maintaining a frivolous lifestyle should the market crash for a while ( two -three-five years as it may..or may not…at any time) ? Dawgs?…Anyone?

#74 Setting the Record Straight on 09.17.14 at 10:00 pm

@

“#202 devore on 09.17.14 at 5:38 pm
#193 Setting the Record Straight

Unfettered capitalism is by definition a very destructive force.

And who owns all the land and natural resources this “unfettered capitalism” is supposed to be destroying? Oh, what’s that, no one, you say? That’s not very capitalistic, is it?

I’m the last guy to be arguing for “unfettered capitalism”, but you’re building a strawman out of a boogeyman.

If you’re gonna go around setting the record straight, at least provide facts. Start with definition of “unfettered capitalism”, so that we know what you are talking about. Saying something is “by definition” doesn’t impress anyone, if there is no definition.

I believe you meant to challenge Retired Boomer who is the author of this sentence.

However you could follow Schumpeter –and discuss creative destruction.

#75 Sheane Wallace on 09.17.14 at 10:00 pm

The smart leaders will build manufacturing with a cheaper Ca dollar:

https://ca.finance.yahoo.com/news/rebuilding-canadas-export-sector-decade-lower-loonie-cibc-183030946.html

Gold trashed today after Yellen hinted on … whatever gibberish came out of her mouth.

I really hope they bring gold to 800.

#76 rosie "moving forward" in the knowledge that, "this won't end well" on 09.17.14 at 10:02 pm

Well at least the shareholders did well.

http://www.theglobeandmail.com/report-on-business/ontario-facing-400-million-bailout-over-pensions-at-us-steel-canada/article20649825/

#77 Shawn on 09.17.14 at 10:03 pm

Flat Tax – post number 25 A Yank in BC

Simple, yes. Progressive, no. A gift to the rich, so Shawn would love it. — Garth

ooh look I scored a response from Garth, on a third person post. This must be good for triple points, at least.

Flat federal income tax is not fair but would benefit me. I would learn to live with it.

I am in Alberta where due to flat provincial tax the marginal tax rate is 36% on taxable income (that’s after some deductions) of $88 to $136k and then tops out at 39%. Nova Scotia tops out at 50%.

I wonder how many Albertans look at retiring back to Ontario or the Maritimes but decide against it due to much higher income tax rates. Not to mention those 15% HST taxes versus 5% GST in Alberta.

#78 Shawn on 09.17.14 at 10:03 pm

Marginal Tax rates available here:

http://www.taxtips.ca/marginaltaxrates.htm

Scroll down and look for your province…

#79 crossbordershopper on 09.17.14 at 10:09 pm

its very disappointing to see the official bankruptcy of us steel canada, formerly stelco. i know about 100 people who are pensioners, who worked in the coke ovens and gave their sweet for the corporation. we are expecting a hair cut of about a third of their pension cheques and post retirement benefits to be substantially removed.
its a big black whole to the thousands of pensioners of stelco, and the hundreds of remaining jobs to be gone in 15 months. very little national voice about it, it was simply a note in todays news.
more poverty to hamilton and its people.

#80 2or3orsometimes7 on 09.17.14 at 10:19 pm

#71 Shawn

Nope, no income cut off for the UCCB.
UCCB is not the same thing as CCTB which is where your link goes.

#81 Martin9999 on 09.17.14 at 10:20 pm

#39 JuliaS on 09.17.14 at 7:47 pm
Garth, you forgot adding a good divorce lawyer to your investment plan.
———
Good one, that’s what i had in mind and made me lough

#82 Fed-up on 09.17.14 at 10:26 pm

She makes $105,000 as a health & safety consultant
—————————————————————————————-

A health & safety consultant…now there’s yet another job that will make Canada a world leader in the lucrative and highly regarded ummm, errr, ahhhh health and safety consulting industry.

Does anyone actually go to work and make or build anything besides loans, sandwiches and houses or push paper in this country anymore???

It’s essentially a construction workplace safety position. They make buildings without killing people. — Garth

#83 Bottoms_Up on 09.17.14 at 10:26 pm

#71 Shawn on 09.17.14 at 9:50 pm
———————————————
The Canada Child tax benefit is different than the universal child tax credit. The former is for ‘poorer’ families and gets clawed back at higher incomes, the latter doesn’t.

#84 Archie Bunker on 09.17.14 at 10:35 pm

Brings to memory Gloria and her meathead husband…

Like All in The Farmily ….

Boy the way Glen Miller played
Songs that made the hit parade.
Guys like us we had it made,
Those were the days.

And you knew who you were then,
Girls were girls and men were men,
Mister we could use a man
Like Herbert Hoover again.

Didn’t need no welfare state,
Everybody pulled his weight.
Gee our old LaSalle ran great.
Those were the days.

http://www.youtube.com/watch?v=ZngGIw5ONWE

#85 Setting the Record Straight on 09.17.14 at 10:36 pm

Shawn wrote yesterday
“Already there are FAR too many tax breaks and lower tax rates for us richer folks.”

Shawn if you believe you are not paying enough tax, you are allowed to meet your moral obligations by donating extra dollars to the government of your choice.

But it is not necessary to send peoples with badges and guns to extract additional payments from those of us who do not share your particular ethical views for you to meet your moral obligations.

#86 Smoking Man on 09.17.14 at 10:37 pm

We are all going to die. Who gives a crap

The challenge, make it back to my room without carpet burns on my head..

At Seneca, my luck is back… Back to my original seat.

Foot ball pool is mine.. Fellow tax farm slaves.

Where is Ketchup? does he need approval to take me on.

#87 M on 09.17.14 at 10:43 pm

Unrelated to the present article but related to the one yesterday :)

http://www.bloomberg.com/news/2014-09-17/fed-keeps-considerable-time-pledge-as-growth-is-moderate-.html

Here your answer: QE the eye can see. (of course Garth you realize that they ll find a way to print even more :) )
..and here is the crux of the problem: it’s the market that will force things into normality. Whatever gringos do is just postponing.
Bond yields 6 to 8 % and higher coming to a bankrupt country near you :)
I’ve seen it all unraveling once. Tremendous pain but also a start with a clean slate.

And this is actually the good thing.

#88 Capt. Obvious on 09.17.14 at 10:48 pm

Garth, you forgot adding a good divorce lawyer to your investment plan.

I recommend Prickem, Stickem & Burnem. — Garth

Not Dewey, Cheatem & Howe?

#89 Nemesis on 09.17.14 at 11:21 pm

#RainForestConversations… #ForBurgeoningAuthorialVoices… #FromMagiciansTo… #SmokingMenApproachingTheLight:

http://tinyurl.com/2372dvq

#90 Nemesis on 09.17.14 at 11:45 pm

#Erratum #PriorCut’nPasteFailure #Should’aBeenThisOne:

http://youtu.be/WfET8AaV9W0

#91 Black Jack Jones on 09.17.14 at 11:56 pm

Tough times coming to Hamilton as US Steel Canada ( the old Stelco) goes into bankruptcy. Pensions may be slashed 30-40% ….who knows if any jobs will be left when the dust settles? Tragic.

http://www.bnn.ca/News/2014/9/17/Hamilton-under-pressure-as-US-Steel-leaves-Canada.aspx

#92 Linda on 09.18.14 at 12:06 am

While there are advantages to pooling income, many of which were outlined by Garth, there is also risk. Risk that the pooled resources might just be diverted for other purposes than building wealth. Anyone who pools their incomes needs to be very sure their pool partner is on the same page, has the same values & goals. Also pay attention to your pool partners habits & health. Sadly, anyone can develop mental issues that might result in actions that they normally would never do. Alzheimer’s & dementia are not the exclusive province of the elderly; medication can alter mental processes & behavior as a side effect. Plus if the relationship goes sour, there is every chance that pooled financial assets will be accessed in a detrimental (to whoever was second) manner. Not sure what the chances are of recovering your share of the assets would be or what recourse in law you would have if your pool partner took the money & ran…..

#93 Happy Renting on 09.18.14 at 12:22 am

#9 Firestorm on 09.17.14 at 6:17 pm

Prior to getting married, I had a financial advisor explicitly tell me not to combine our accounts. He’d seen the headaches clients suffered in untangling everything when divorcing, and the drawbacks (one spouse with no credit history, etc.) Not very romantic, but I could understand where the advice came from, based on his professional experience.

If you have an ideal relationship and ideal circumstances, marriage and co-habitation is amazing. But in the real world imperfections abound, and many couples have interesting (and sub-optimal) financial arrangements. Those arrangements say a lot about the relationship and the people that are in them. I’d guess a lot of the motivators are things like selfishness, irresponsibility, lack of trust, and an unhealthy relationship with money. Of course, being “all-in” shows 1) you are fully committed to the marriage, and 2) you may be royally screwed in a divorce. People keep those levels of separation because, as you point out, in their gut they know the relationship’s not 100% right.

#94 Happy Renting on 09.18.14 at 12:38 am

#14 Hawk on 09.17.14 at 6:25 pm

Separate finances alone won’t protect Janice from paying spousal support to Tom if they split. And he can try to go after half of all the wealth earned and accumulated during their marriage, even if every dime came from her paycheque. The cleanest way for Janice to avoid all this would have been to not get married, not live together, and not financially support Tom at any point during the relationship. In their case, the separate accounts give only the illusion of separation in their finances.

#95 Happy Renting on 09.18.14 at 1:14 am

#52 Bottoms_Up on 09.17.14 at 8:38 pm

Ask yourself this Q:

What has Harper done recently for working families? For families with young children?

Young children do not vote, and any ill effects from a current lack of investment in children will not show up until well after the next election is won. Spending on programs for young children will not be a priority unless their grandparents (seniors) decide that it should be. More probably, those grandparents who can afford to will just subsidize a better lifestyle for their grandkids (pay for daycare, private school, tutors, university, extra-curricular activities, vacations, toys), and the kids whose grandparents can’t afford to will just do without.

#96 Happy Renting on 09.18.14 at 1:18 am

#53 Bottoms_Up on 09.17.14 at 8:44 pm

#23 Freedom First on 09.17.14 at 6:44 pm
—————————————————
You seem to make your decisions based on fact. That’s a good thing.

But did you ever consider that unmarried men die 10-15 years early?

That’s a stat you should probably digest for a bit….

Well, you know what they say: married men live longer, but married men are a lot more willing to die. ;)

Until Freedom First meets someone he’d like to live that last 10-15 years with, he’s better off snuggled up to his money and freedom. He could do a lot worse, and many do.

#97 Helen on 09.18.14 at 1:28 am

#41 Cici on 09.17.14 at 7:56 pm
” I trust that if my boyfriend and I merged all of our income together, every penny would go to Oreos, Doritos, beer, chips…”

He will NEVER change. Now you can’t say you weren’t warned.

#98 Happy Renting on 09.18.14 at 2:41 am

New issue of Toronto Life came in the mail today. This month’s main story is a bunch of RE horror stories (that aren’t really all that terrifying – read scarier on here) and full pages devoted to “hot” streets and sales (majority Jan-May) that have (mostly) gone way over asking. The sales are cherry-picked, but still interesting to see actual sale prices. Yup, everything is still expensive as hell.

#99 Fed-up on 09.18.14 at 3:35 am

It’s essentially a construction workplace safety position. They make buildings without killing people. — Garth

———————————————————————————–

Yesssssss another housing and construction job!

Go Canada!

#100 Londoner on 09.18.14 at 4:41 am

#42 Millennial_Falcon
#34 Kenchie

Central Banks didn’t intend for rates to stay this low for this long and they haven’t been fear mongering either. If anything they’ve been trying to prevent speculation by providing extended forward guidance (something they’ve never done before). The truth is they were expecting an economic resurgence but it just hasn’t happened yet. Your friends that took out huge mortgages at low rates have done well over the past 5 years and their luck may continue for a while longer. Eventually rates will go up, not as a result of government intervention to prevent a credit bubble, but instead when economic productivity increases and remains stable. This could be some time away if you look at the example being set by the BoE. (rates remain low despite a sustained drop in unemployment and GDP growth). Anyways, when the Fed/BoC does raise rates it will on the back of real wage growth. People will have a higher incomes to support repayment of debt at higher rates. Not everyone will be affected equally. Some will suffer as a result of higher rates while others will benefit disproportionately. Some of your friends will walk away looking like geniuses despite their ignorance. Others not so much. Your biggest mistake is assuming everyone will be in the same boat. They certainly will not.

You can continue to preach to your friends about risks but the outcome will not be the same for all. On the other hand you could take what you know and make a bet on something else. Your friends have been winning on their bets so maybe it’s time you did a little gambling of your own?

#101 Fortune500 on 09.18.14 at 4:42 am

https://businessincanada.com/2014/09/17/canada-housing-bubble-china-corruption-crackdown/

#102 Londoner on 09.18.14 at 5:01 am

#54 Smoking Man

Haha… I had a similar thought this morning while walking through Liverpool St station. There’s a travel currency dealer in the station that always has a queue of tourists. I looked at their rates (CAD as an example) – buy/sell: 1.91/1.71. Now here’s a company advertising how they’re going to rape you and they draw an endless line of customers. I would be pissed if my Forex broker charged more then 4 pips. Go figure.

#103 learningfromyou on 09.18.14 at 6:17 am

Open your accounts at Tangerine and they do not charge you for having your accounts with them, unlimited transactions.
negotiate with the other banks the following two options.

1-even you close your checking accounts with them
2-even they accomodate your accounts to avoid paying monthly fees.

I still think that they should pay us for having our money with them, it should be a privilege to be chosen by us for that because they will make money with our money.

The previous two offers are something that they won’t refuse. :)

#104 eddy on 09.18.14 at 6:44 am

What has Harper done recently for working families? For families with young children?

They can deduct music lessons.
But I suspect the real point of this initiative was to get private music teachers (working from home) to declare income that may have been previously undeclared.

#105 Kevin on 09.18.14 at 7:28 am

@Shawn (#21)

Even more unfair are myriad tax breaks for the rich.

Like what?

You want to see a demographic for whom the system has been arranged to minimize their taxes, look at seniors. Pension income tax credit, income splitting, age credit… a senior citizen who pays more than 10% in tax is truly rich indeed.

Hardly. Those tax breaks are relatively miniscule. — Garth

#106 Nick on 09.18.14 at 7:42 am

Is a spousal RRSP necessary if the higher earner gives the lower earner money to put into their RRSP? Is that even allowed by the CRA?

If the higher earner contributes to the spousal RRSP, that amount comes out of their contribution room not the lower earners contribution room. If the higher earner can max out their RRSP and contribute money to the lower earners RRSP, then why not do that?

Because that does not split income and reduce the overall family tax profile. But, of course, you can gift money to anyone. — Garth

#107 Kevin on 09.18.14 at 7:46 am

@Kenchie (#44)

There is no guarantee that a bank will, as your phrase “can just reamortize” implies, automatically allow you to do this without adding new equity if their maximum borrowing amount is below the mortgage value.

A reamotization is a refinance. Of course they’ll have to once again qualify to borrow the outstanding mortgage balance ($370k). Assuming no one’s lost their job, why wouldn’t they qualify?

#108 Kenchie on 09.18.14 at 8:52 am

SM, funny post. Nope, not going to “duel”. At least not for the next 10 hrs or so. Maybe later.

Glad to hear you have been married for 35 yrs. that’s a great accomplishment. My parentals just celebrated their 38th anniversary last night. Cheers to them.

However, my gf has been giving me a terrible stink eye every night for the past week or so for reading this blog too much. Hence, for the sake of my own self-preservation, I closed the comp early last night. Too early to see your barb about duelling with the great Smoking Man.

#109 Holy Crap Wheres The Tylenol on 09.18.14 at 8:54 am

#149 Smoking Man on 09.17.14 at 11:34 am

#144 TD RAISES RATES on 09.17.14 at 11:11 am Do you think the herd knows or cares. It’s what MSM feeds them that counts…

My prediction, yellen backs off…
_____________________________________________
Yep…

http://www.businessinsider.com/janet-yellen-press-conference-sept-17-2014-9

#110 frank le skank on 09.18.14 at 8:58 am

#88 Capt. Obvious on 09.17.14 at 10:48 pm
Garth, you forgot adding a good divorce lawyer to your investment plan.

I recommend Prickem, Stickem & Burnem. — Garth

Not Dewey, Cheatem & Howe?
===========================

I guess I should have read all the comments before posting…. ohh the shame!!

#111 Holy Crap Wheres The Tylenol on 09.18.14 at 9:07 am

#86 Smoking Man on 09.17.14 at 10:37 pm
We are all going to die. Who gives a crap
The challenge, make it back to my room without carpet burns on my head..
At Seneca, my luck is back… Back to my original seat.
Foot ball pool is mine.. Fellow tax farm slaves.
Where is Ketchup? does he need approval to take me on.

_____________________________________________

Of course we are all going to die Smoking Man.
Do you know the answer to the ultimate question of meaning of life?
Answer to the Ultimate Question of Life, The Universe, and Everything from the supercomputer, Deep Thought, specially built for this purpose. It takes Deep Thought 7½ million years to compute and check the answer, which turns out to be 42.
http://www.youtube.com/watch?v=sgeMrzbfrxg

#112 Holy Crap Wheres The Tylenol on 09.18.14 at 9:09 am

Smoking Man…..
By the way what exactly does it mean getting back to my room without carpet burns? I think you spend too much time at Seneca.

#113 Randol on 09.18.14 at 9:10 am

The single, biggest financial decision you make in life, probably without knowing it, is your choice of spouse/partner.

#114 Kevin on 09.18.14 at 9:13 am

Basic personal amount: $11,038
Age amount (65+, up to $34,500 net): $6,854
Pension Income Tax Credit: $2,000
OAS (not taxed): $6,700
CPP (average): $7,300

Those tax breaks are relatively miniscule.
– Garth

Are you kidding me? Take a retired couple, each pulling in OAS and an average CPP ($611/month/each), with the husband also getting a meager $30,000/year defined benefit pension. They have nothing in TFSAs or RRSPs. Their OAS ($6,700/year/each), CPP ($7,300/year/each, I used the average amount, not the maximum), and pension income give them an annual household income of $58,000, which they can split down the middle, so they each claim $29,000 in income.

After each of them claims the basic personal amount ($11k), the age amount ($6,800), the pension income tax credit ($2,000), and the fact that OAS benefits are not taxable income ($6,700), that only leaves $2,500 for them each to pay tax on! Out of a $29,000 income!

So how much tax do they owe on $2,500? Their MTRs are 15% (Federal) and 5.05% (Provincial, in Ontario), meaning they’ll pay $501 in total income tax (assuming they have absolutely no other deductions, like rent, medical, charitable donations, etc.).

$500 in total income tax. On $29,000 in income. That’s an effective tax rate of 1.7%. 1.7%! And you’re telling me those tax breaks are “miniscule?”

The household pulls in $58,000 in income, and only pays $1,000 in tax? Imagine if they had TFSAs to draw from too. It’d be entirely tax-free, driving their effective tax rate even lower!

I reassert my claim: If you’re a senior citizen in Canada and you’re paying more than 10% in effective income tax, you’re filthy rich. The tax code is extremely favourable toward seniors. I guess that’s what you get when your demographic has a reputation for voting in droves.

72% of people have no defined benefit pensions. Your argument is zero. — Garth

#115 Holy Crap Wheres The Tylenol on 09.18.14 at 9:17 am

Then hire him. If you have a business – incorporated or sole proprietorship – you can give your kid a job, pay him or her a wage, and deduct that from the taxable income of your enterprise. Just ensure that the work being done is ‘reasonable’ in the eyes of the CRA for someone of that age and skill level, which probably means Junior will not be your marketing consultant.
____________________________________________
Did this for years with my wife when she exited the school system as a calculus teacher. She retired early, had enough of the school board and their cronies. She worked for me as accounting assistant. Not only did I get to pay her well but she was brilliant at managing cash flow! CRA did an audit once and she told them they made a mistake on their calculations. She was told Quote” The CRA doesn’t make mistakes.” She spread out all of the details in front of them and after 2 hours they walked out and never said a thing. The issue was retracted by them.

#116 Kevin on 09.18.14 at 9:38 am

@Bottoms_up (#51)

The universal benefit goes to families with children under 6

How far do you think $100 (taxable) goes toward a $1300 monthly daycare bill?

It’s also not indexed to inflation.

Wow. Wrong on 3 fronts.

The benefit goes till age 18, not 6. And it’s not taxable. And it is indexed to inflation.

#117 Simon on 09.18.14 at 9:42 am

Hey Garth and blog dogs,

Could you recommend good book that details at length all the ways a canadian married couple can split their income?

Posts like today’s are a great place to start, and I’d like to learn lots mroe on the topic.

#118 Rational Optimist on 09.18.14 at 9:44 am

36 TakingResponsibility on 09.17.14 at 7:34 pm

Minimum income or basic income is a very interesting idea. It could appeal to people from both the left and right. This is being tried in Switzerland.

There is both the Universal Child Care Benefit and a second, income-tested benefit (the Canada child tax benefit). At $50,000 a year, Tom likely qualifies for a reduced amount of the latter as well.

#119 Rational Optimist on 09.18.14 at 9:45 am

Apologies- first part of the last comment was for Kenchie (one of his dozen comments). The idea, Kenchie, is to replace numerous sprawling social service bureaucracies with a single cheque, mailed to everyone, that can reasonably be expected to cover the basics of life.

#120 Kevin on 09.18.14 at 9:46 am

72% of people have no defined benefit pensions. Your argument is zero. — Garth

In my example, only the husband had the DBP. The wife had nothing. You’re claiming almost 3/4 of people don’t have DBPs (RetirementAdvisor says it’s actually 62%, but whatever), meaning roughly 1/2 of married retired couples have at least one member collecting a DBP. So my example only applies to half of all retired couples.

So half of retired families are paying basically no income tax. And you don’t think that’s significant.

It’s a progressive system. You pay top buck when working, and less when not working. Seems reasonable. — Garth

#121 Harbour on 09.18.14 at 9:51 am

Instead of QE, Fed could have given $56k to every household in America

http://finance.yahoo.com/news/instead-qe-fed-could-given-094500275.html

#122 Jeff on 09.18.14 at 9:52 am

What fees are you talking about regarding banking? I pay nothing. They charge me $4.00 a month and then I get it back as a multiproduct rebate.
I pay for checks, but that’s like $30 every few years.
$9.95 for an investment purchase in a TFSA or RRSP.

Cheques, not checks. — Garth

#123 Kevin on 09.18.14 at 9:57 am

It’s moot anyway, Garth, as it doesn’t matter whether the income comes from a defined benefit pension, an RRIF, or anywhere else for that matter. The pension benefit is actually the smallest piece of the puzzle. The problem is that all the other tax gifts (the pension splitting, the age credit, the tax-free OAS) make it so that a senior couple pays basically no significant income tax unless their combined household income far exceeds the national average. A working family earning the same household income pays an order of magnitude more in income tax.

Now you have something to look forward to. — Garth

#124 Kenchie on 09.18.14 at 9:57 am

#107 Kevin on 09.18.14 at 7:46 am
“@Kenchie (#44)

There is no guarantee that a bank will, as your phrase “can just reamortize”, implies…

A reamotization is a refinance. Of course they’ll have to once again qualify to borrow the outstanding mortgage balance ($370k). Assuming no one’s lost their job, why wouldn’t they qualify?”

Well, the main reason they may not qualify, particularly on a small combined wage of $70,000, is that their wage growth over the 5 years isn’t strong to offset the increase in interest rates. I will post an example later.

Also, “reamortizing” is not the same as refinancing. The former means to change the amortization term (I.e. Going from 20 years back to 25 years because they can’t afford the new mortgage on refinancing). The latter has to do when the “payment term” (5-year fixed, etc) is up.

So if the person needs to “reamortize” upwards, that’s not a good thing. Nor does the CMHC allow it (at least for commercial loans).

#125 liquidincalgary on 09.18.14 at 10:06 am

@ #75 Sheane Wallace says:

I really hope they bring gold to 800.

==========================================

if gold cannot hold in the 1180-1200 area, you will get your wish…down to 700 even

#126 Kevin on 09.18.14 at 10:09 am

@Kenchie (#124)

“reamortizing” is not the same as refinancing.

Of course not. But you cannot reamortize without refinancing.

When your mortgage is up for renewal, you can simply sign the paper agreeing to the new rate and send it back. Your payments adjust, and you continue paying the loan down on the same schedule as before. No need to requalify, no appraisal, no need to pay CMHC again.

But if you wish to change the amortization, then that changes the situation from a renewal to a refinance. It opens to door to needing to requalify, possibly pay CMHC again, and maybe even face an appraisal. However, you can also shop the loan around to other lenders if you want.

None of those things should be problems. If you qualified to borrow $400,000 5 years ago, then qualifying for $370,000 today should be easy. As for the “higher payments” due to increased loan rates, I already showed how extending the amortization back out to 25 years partially mitigates that.

#127 Rational Optimist on 09.18.14 at 10:39 am

#124 Kenchie

“Well, the main reason they may not qualify, particularly on a small combined wage of $70,000, is that their wage growth over the 5 years isn’t strong to offset the increase in interest rates.”

Note that a combined wage of $70,000 cannot truly be said to be ‘small.’ It is slightly less than the median family income. You guys were talking about a mortgage of $400,000- that’s the average price of a Canadian home (in all markets), and the average down payment is now well under twenty percent (meaning a few thousand in CMHC fees rolled into the loan). So maybe there aren’t that many households earning $70,000 with $400,000 mortgages, but it happens.

I would say that the greatest risk to this hypothetical typical Canadian homeowner who is experiencing interest rate shock at the end of his term is that his equity is also not what he thought it would be. Kevin is saying that he thinks most Canadian homeowners will be able to cut back their expenses to afford the higher interest rates, and he’s right. But some proportion will choose to sell rather than tighten their belt to stay in a home they weren’t truly able to afford, and markets will soften/decline/whatever. Add to that the fact that higher interest rates spell lower house prices no matter what, and there is big risk that a significant number of homeowners will get a letter from the bank offering to renew at an appreciably higher rate and payment that will be punishing, subject to another appraisal that might mean they need to bring cash when they sign for another term.

I’m not sure that things will go to hell, but I can see how they might. If Kevin is right, and people cut their discretionary spending to afford their higher payments, that is terrible news for the economy. If Kenchie is right, and significant numbers of homeowner are unable to afford their mortgage payments and have no practical choice but to sell, that is terrible news as well.

#128 Basil Fawlty on 09.18.14 at 10:42 am

There is an interesting article in todays Vancouver Metro newspaper. Which asks: “Should owners of empty condos be taxed?” A UBC professor indicates that vacant apartments in Coal Harbour total 25%, based on a census study, while the vacancy rate for rentals is very low in general.
It is common knowledge in Vancouver that offshore purchasers like to park money here and this study would support this thesis.
What do you think Garth?

I think Van people waste their time worrying about irrelevant things. Nobody prevented locals from buying any properties that out-of-town investors did. Making those people pay a little more tax now will change nothing. — Garth

#129 Rational Optimist on 09.18.14 at 10:53 am

#126 Kevin

“When your mortgage is up for renewal, you can simply sign the paper agreeing to the new rate and send it back. Your payments adjust, and you continue paying the loan down on the same schedule as before. No need to requalify, no appraisal, no need to pay CMHC again.

….

If you qualified to borrow $400,000 5 years ago, then qualifying for $370,000 today should be easy. As for the “higher payments” due to increased loan rates, I already showed how extending the amortization back out to 25 years partially mitigates that.”

What you describe is not necessarily how things work, and people would do well to remember that a mortgage ends when the term ends. At that point, yes, you sign the renewal letter (as you know, smart people do not agree to the rate in the renewal letter, they shop around or at least meet with the lender). But the lender is free not to send one, just as you are free not to accept it. You and the lender either agree to new terms, or the lender is paid in full.

We haven’t talked about ratios at all. In yesterday’s example of a rather large (but not monstrous) mortgage, interest rate changes increased payments by over a thousand a month. How does that change the borrower’s debt service ratios? Do you really think there’s no risk of the lender rejecting a refinance (back to a 25 year am) because the borrower’s payments have increased by ten percent or more of income?

#130 Vstrom rider on 09.18.14 at 11:00 am

Garth, I wish you were my dad. It would have been nice to graduate with no osap debt, and have a fully funded tfsa. Not to mention the big inheritance I’d get when you croak. My own parents don’t even know the difference between a stock and a bond.

I’m touched. — Garth

#131 Kevin on 09.18.14 at 11:01 am

@Rational_Optimist

Do you really think there’s no risk of the lender rejecting a refinance (back to a 25 year am) because the borrower’s payments have increased by ten percent or more of income?

Of course. But there is risk to the lender, too. If the lender is worried about the borrower’s ability to handle the payments if they’re allowed to reamortize to a 25 year loan, then wouldn’t they be even more worried about their ability to carry the same loan with only a 20 year amortization (and thus even higher monthly payments)?

The lender does not have the option to decide not to renew. They cannot simply say, “Rates have changed and we don’t think you can afford this mortgage anymore, so we’re not going to renew you. At all. You have to pay off the entire mortgage, in full, right now.”

Sorry, it doesn’t work that way in Canada.

#132 Bucketshop on 09.18.14 at 11:04 am

If you’re paying bank fees, you’re not doing it right….

nothing wrong with having two accounts. Just run everything off your LoC…no bank fees, you can carry a small “positive” (from your perspective) balance (avoids interest charges), free cheques, you can set the LoC up as your “chequing account” since they’re all assigned a standard account #…..just be prepared for confused tellers who don’t understand how you’ve made it through life without a “real chequing account”

Everyday savings accounts – Any associated fees are easy enough to get waived on those.

Also #7…you and your spouse save 90% of your net income? That sounds like an enjoyable life…..

#133 Smoking Man on 09.18.14 at 11:09 am

#112 Holy Crap Wheres The Tylenol on 09.18.14 at 9:09 am

Carpet Burns…..

Visualize this.. You stager to your room, the last JD of the night is kicking in hard.

You close the door…

Your legs go rubbery, you fall.

You are so hammered you still think you’re walking.

With your feet moving and your head firmly planted on the ground. You make your way to bed.

In the morning, you look in the mirror and notice carpet burns on your head…

Got scars to prove it…

#134 High Plains Drifter on 09.18.14 at 11:16 am

If you are reading this offering inside a 500 mile radius of Fort McMurray, do not share this article without consulting divorce stats. Or any town that starts with Fort.

#135 Nomad on 09.18.14 at 11:27 am

Hamilton real-estate prices should react to US Steel leaving Canada:

http://www.bnn.ca/News/2014/9/17/Hamilton-under-pressure-as-US-Steel-leaves-Canada.aspx

#136 Happy Renting on 09.18.14 at 11:43 am

#116 Kevin on 09.18.14 at 9:38 am

The universal child care benefit is a flat $100, taxable, until age 6.

http://www.servicecanada.gc.ca/eng/goc/universal_child_care.shtml

You’re probably thinking of the Canada Child Tax Benefit. As posted earlier, the family income cutoffs for that are pretty high. Tom and Janice wouldn’t qualify at 150k pa, though.

http://www.cra-arc.gc.ca/bnfts/cctb/menu-eng.html

#137 The real Kip on 09.18.14 at 11:46 am

“It’s a long list. But it all starts with trust. Share that first.”

After one divorce, I’ll never trust a woman again, ever.

#138 Panhead on 09.18.14 at 11:59 am

#130 Vstrom rider on 09.18.14 at 11:00 am
Garth, I wish you were my dad.

Don’t forget there is always adoption …

#139 liquidincalgary on 09.18.14 at 12:17 pm

I’m touched. — Garth

==========================================

in same way SM is?

#140 Longterm on 09.18.14 at 12:21 pm

#102 Londoner on 09.18.14 at 5:01 am

Not a Londoner yet mate, otherwise you’d be ‘pissed off’ unless you just came from knocking back a few early morning sharpeners at the Wetherpoons at the Bishops Gate entrance and are truly ‘pissed’.

#141 Scott Prentice on 09.18.14 at 12:24 pm

TFSA’s for a family of four, $5,500*4=$22,000 annually compounding at 3.90% with current strip bonds would amount to $2,121,566.

This is equal to $3,000,000 in RRSP’s for the average tax bracket of Canadians.

Why would you ever choose strips? — Gart

#142 Mark on 09.18.14 at 12:26 pm

“The lender does not have the option to decide not to renew. They cannot simply say, “Rates have changed and we don’t think you can afford this mortgage anymore, so we’re not going to renew you. At all. You have to pay off the entire mortgage, in full, right now.”

Sorry, it doesn’t work that way in Canada.

Actually that’s exactly how it works in Canada. And if the loan is CMHC subprime insured, there is no option for the lender to increase the amortization beyond the schedule without voiding the insurance (hence, it doesn’t happen). Loan renewals in Canada are at the pleasure and the discretion of the lender. Renewal is a privilege, not a right, and many borrowers with weakening equity may very well find themselves paying a sort of penalty rate on such account.

#143 Kenchie on 09.18.14 at 1:30 pm

Garth,

The 5-year GoC bond yield has steadily moved up since your post about it recently. 1.737% as of 1:30 ET

http://www.investing.com/rates-bonds/canada-5-year-bond-yield

#144 Fubared on 09.18.14 at 1:35 pm

The problem with marriage now is that we have too many options. The Ex-wife was the one better with money in our relationship until she reached 25. Once we had thousands of dollars in the bank and the bank extended us credit of tens of thousands more she decided she could go to the bar 4 nights a week. After a year of this we ran out of money and she decided she could borrow money from our LoC to pay for her and another man to travel the world. She racked up ten grand of debt in 2 months. We had been together 8 years at this point, never took on debt for anything and she had always been the level headed responsible love of my life. There is no reason to get married or share finances to save a few bucks.

#145 DreamingInTechniColour on 09.18.14 at 1:38 pm

When companies consolidate operations – there are always lay-offs.

http://www.bizjournals.com/seattle/blog/techflash/2014/09/microsoft-announces-second-round-of-layoffs-747-in.html?ana=e_sea_bn_newsalert&u=BFpTWYhszwJMBO5wDInmJQ01691f86&t=1411061778

#146 Holy Crap Wheres The Tylenol on 09.18.14 at 1:52 pm

#133 Smoking Man on 09.18.14 at 11:09 am
#112 Holy Crap Wheres The Tylenol on 09.18.14 at 9:09 am
Carpet Burns…..
Visualize this.. You stager to your room, the last JD of the night is kicking in hard.
You close the door…
Your legs go rubbery, you fall.
You are so hammered you still think you’re walking.
With your feet moving and your head firmly planted on the ground. You make your way to bed.
In the morning, you look in the mirror and notice carpet burns on your head…
Got scars to prove it…
__________________________________________
lmao,,,,,,,not at you but just the whole experience. Been there done that! I have a nasty scar from Vietnam and everyone assumes its war related! Nope on leave at a bar with my buddies. What do guys do when on leave during a war, well,,,,,,,,,,,,,, lets just say several things but heavy drinking is one of them. I got nailed on leave at a local boozer in Vung Tau a Boom-Boom Girl tried to coax me into a room. When I declined her manager whacked me with a pool cue or something as we were leaving. 20 stitches in the head and almost a night with the meat-heads. My buddies rushed me away as quick as possible, no fight, just the local med, they didn’t even freeze it as I was full of JD.
Oh the good old days……………………
Hell no, on the other hand I’ll take my brandy at home its a lot safer!

#147 Son of Ponzi on 09.18.14 at 1:57 pm

Nobody prevented locals from buying any properties that out-of-town investors did – Garth
—————–
Only problem, they usually sell out within 24 hours.

#148 Son of Ponzi on 09.18.14 at 2:01 pm

Garth, I wish you were my dad. It would have been nice to graduate with no osap debt, and have a fully funded tfsa. Not to mention the big inheritance I’d get when you croak. My own parents don’t even know the difference between a stock and a bond.
—————
Garth, the surrogate father!
Priceless.

#149 tkid on 09.18.14 at 2:03 pm

if gold cannot hold in the 1180-1200 area, you will get your wish…down to 700 even

Promise?

#150 Holy Crap Wheres The Tylenol on 09.18.14 at 2:26 pm

Just read this “ISIS Bans Children From Learning Math And Social Studies”

Too hilarious, really? So when they indoctrinate these poor youngsters into their twisted ideology and say go forth with this grenade and count to five and throw it. Their screwed!

Read more at http://www.inquisitr.com/1481829/isis-bans-children-from-learning-math-and-social-studies/#c4cpzPrkQrzYc4EB.99

http://www.inquisitr.com/1481829/isis-bans-children-from-learning-math-and-social-studies/

#151 Holy Crap Wheres The Tylenol on 09.18.14 at 2:28 pm

I know this is MSN but ………………
Dow on a high!

http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140918&id=17943484

#152 Flawed on 09.18.14 at 2:36 pm

You just commented earlier this week about how Fed will likely raise them soon, guess that isn’t happening. What will this mean for Canada interest rates?

The Fed statement is no big surprise. Rates will still begin to rise next year and continue into 2017. Don’t get too excited. — Garth

**************************************

Garth look up your posts….its near the end of 2014…Last year you said they would raise rates this year. Now its next year into 2017 and next year it will be 2018 into 2025. And .25% for 6 months by the private bank called the FED is hardly raising rates.

They are trapped. They can’t raise rates. The debt is too high among “everyone” in the world. They only way to control debt is to get rid of the criminal activity called “invention of money at interest” you know….like bitcoin (no interest). As long as money is “invented” by central banks or private banks with credit or whatever spin money people put on it…..debt will grow. There needs to be INTEREST FREE MONEY from govt. But of course that will never happen. Yes…..but people that say such things are crazy, conspiracy theorists and on and on. Yet when you ask the so called experts how “EVERYONE” has debt which is impossible in a zero sum game of buy and sell….you hear crickets.

Welcome to the coming crash….

It must be calming to be so naive. — Garth

#153 pbrasseur on 09.18.14 at 2:40 pm

Big day in Scotland today!

As a Quebecker I remember 1995 and let me tell you I don’t envy they one bit!

Win or lose Scotland will lose.

That being said I almost (selfishely) wish for the yes to win just to show PQ lefties in Quebec what happens when you try to build a country when 49% of the population opposes it…

#154 Nemesis on 09.18.14 at 2:40 pm

#aFamilyPlanning… #”Ooops”…

[FT] – Tax changes hit wealthy foreign homebuyers

…”A little-noticed tax change has levied another blow on foreign buyers of luxury London homes, adding to the slowdown in the previously booming sector.

Since early August, non-doms must pay tax of up to 45 per cent when they use overseas assets as collateral to finance purchases in Britain.

Previously, foreign assets such as stocks, shares and property could be used as security for borrowings in Britain with no tax charge as they were not considered to be transfers of wealth into the UK.

The change means that foreign assets are now taxed as remittances from abroad – facing either capital gains or income tax, depending on the precise nature of the assets.

The esoteric step adds considerably to the cost of a high-value property for overseas buyers who fund their purchase with borrowings.

The move is the latest in a series of government steps to clamp down on foreign buyers. In 2012 Chancellor George Osborne announced plans to impose capital gains tax on expensive properties owned through companies – a structure that makes it hard to trace legally questionable cash flowing from abroad.

The government has also imposed an annual tax on homes held in companies, which has raised £198m in 10 months, HMRC figures revealed this summer.”…

http://on.ft.com/YVaGnC

#BonusZen…

“Thy wee-bit housie, too, in ruin!
It’s silly wa’s the win’s are strewin!
An’ naething, now, to big a new ane,
O’ foggage green!
An’ bleak December’s win’s ensuin,
Baith snell an’ keen!

Thou saw the fields laid bare an’ waste,
An’ weary winter comin fast,
An’ cozie here, beneath the blast,
Thou thought to dwell,
Till crash! the cruel coulter past
Out thro’ thy cell.

That wee bit heap o’ leaves an’ stibble,
Has cost thee monie a weary nibble!
Now thou’s turned out, for a’ thy trouble,
But house or hald,
To thole the winter’s sleety dribble,
An’ cranreuch cauld.

But Mousie, thou art no thy lane,
In proving foresight may be vain:
The best-laid schemes o’ mice an’ men
Gang aft agley,
An’ lea’e us nought but grief an’ pain,
For promis’d joy!”

#155 JuliaS on 09.18.14 at 2:43 pm

#43 Cici

Married for 8 years. Separate accounts. Separate everything 1 kid, which 1 too many if you ask me.

Had to get married to find out whether it was my thing. Turned out it wasn’t. Not disillusioned in the partner, but in the concept of family in general. I enjoy career a lot more. That doesn’t prevent us from co-existing peacefully and doing what families typically do.

Investments? We both have’em. Kid’s education? I paid for my own with no parents’ assistance, so selfishly I expect mine to do the same.

Overall, family debt – zero. Enough savings to last a few years if SHTF. Home – rented and way below market average. I value mobility, so mortgages aren’t my thing.

Garth’s advise is simply not for me. Peaceful divorce is a possibility. No need for a lawyer in my case as everything worth dividing is already divided. What’s worth sharing is shared.

Marriage itself is a risk-bearing investment. As long as you see it that way, you’ll realize, Garth’s advise may not be right for everyone, at least not right away. Live together for a few years, then decide whether saving a few bucks is worth the commitment.

#156 Flawed on 09.18.14 at 2:45 pm

#82 Fed-up on 09.17.14 at 10:26 pm
She makes $105,000 as a health & safety consultant
—————————————————————————————-

A health & safety consultant…now there’s yet another job that will make Canada a world leader in the lucrative and highly regarded ummm, errr, ahhhh health and safety consulting industry.

Does anyone actually go to work and make or build anything besides loans, sandwiches and houses or push paper in this country anymore???

It’s essentially a construction workplace safety position. They make buildings without killing people. — Garth

********************************

Agreed. In the film industry there was the first death in Vancouver in 17 years. They are a busy “stuff and special effects” moving business. Pro’s like this lady keep people alive and our film industry thriving.

NOTE: I’m partial to Falling Skies and all the sci-fi produced in BC :-)

#157 Tony on 09.18.14 at 3:03 pm

Re: #75 Sheane Wallace on 09.17.14 at 10:00 pm

We’ve heard the same thing year after year about how interest rates will rise but alas they’ll continue to fall as the ten year bond in America drops below one percent and short term rates turn negative. America is finished and all their lies won’t change that.

#158 Rational Optimist on 09.18.14 at 3:14 pm

131 Kevin on 09.18.14 at 11:01 am @ Rational Optimist

“The lender does not have the option to decide not to renew. They cannot simply say, “Rates have changed and we don’t think you can afford this mortgage anymore, so we’re not going to renew you. At all. You have to pay off the entire mortgage, in full, right now.”

Sorry, it doesn’t work that way in Canada.”

Whoa, what? If you happen to have a mortgage, pour yourself a drink tonight and go dig it out and read it. Your agreement with the lender is for the term, not any other length of time. At the end of the term, they either offer to renew it with you, or they do not. If they do, it is at terms agreeable to both lender and borrower.

#159 Bottoms_Up on 09.18.14 at 3:24 pm

#144 Fubared on 09.18.14 at 1:35 pm
————————————-
If you can’t trust someone to share monies, how can you trust them in marriage.

I feel for you, you cannot control how people change.

Garth is right on this one, it is silly to not be married in all aspects. Sure, have your separate savings account if you want that, but pay and bills should be combined.

#160 Bottoms_Up on 09.18.14 at 3:26 pm

#137 The real Kip on 09.18.14 at 11:46 am
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One bad apple don’t spoil the whole bunch girl

#161 Bottoms_Up on 09.18.14 at 3:30 pm

#116 Kevin on 09.18.14 at 9:38 am
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Sorry Kevin, you’re wrong. The key word being ‘universal’:

1. Who is eligible for the universal child care benefit (UCCB)?

To receive the UCCB, all the following conditions must be met.

You must live with the child, and the child must be under the age of 6;

http://www.cra-arc.gc.ca/bnfts/uccb-puge/pplctn-eng.html

#162 Rational Optimist on 09.18.14 at 3:31 pm

#136 Happy Renting on Canada child tax benefit: “As posted earlier, the family income cutoffs for that are pretty high. Tom and Janice wouldn’t qualify at 150k pa, though.”

It’s tested by the income of the “primary caregiver.” This is usually the female parent, but you can designate the male parent. You need the female parent to sign the application form indicating that he is the primary caregiver (or whatever terminology).

It would be worth it to these two to do this as he might get fifty dollars a month, which is good for a bit of beer and popcorn (not sure if anyone remembers Scott Reid’s comments about supporting Canadian parents).

#163 Vamanos Pest on 09.18.14 at 3:31 pm

#131 Kevin

“The lender does not have the option to decide not to renew.”

Both shocking and comical that you think this is true.

#164 Mark on 09.18.14 at 3:56 pm

“Both shocking and comical that you think this is true.”

My American friends are always so shocked when I tell them that 40% of Canada’s mortgage market is literally overnight adjustable (similar to ARM loans in the USA). And that practically all mortgages are ‘balloon”.

In fact, Canadian style “balloon” mortgages were deemed to be so toxic in the 1930s Great Depression that they were effectively banned in the United States.

#165 Funny that on 09.18.14 at 4:48 pm

#150 Holy Crap Wheres The Tylenol on 09.18.14 at 2:26 pm
Just read this “ISIS Bans Children From Learning Math And Social Studies”
+++++++++++++++++++++++++++++
Smokie I know you are laughing out loud about this one.
Next thing you know they will be saying ISIS is making children work 16 hours a day, even on their birthday.

#166 TakingResponsibility on 09.18.14 at 5:07 pm

RE: #51 Bottoms_Up on 09.17.14 at 8:37 pm
#36 TakingResponsibility on 09.17.14 at 7:34 pm
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“You’ve obviously never had kids. The universal benefit goes to families with children under 6, it’s to ‘offset’ costs of child care.
How far do you think $100 (taxable) goes toward a $1300 monthly daycare bill?
It’s also not indexed to inflation, so the $100 today that families are getting is more like $80.”

***Well, well, well, it does seem, upon further research that the “universal” child tax benefit cheques began in … wait for it……2006!!!

Another incredibly ludicrous program began at the same time/year as the “zero down and 40 year” program. I had no idea…. What an Economic Fail.

Btw, when I was raising children, the ‘child tax benefit cheques’ program was a supplement for low income families.

#167 Shawn on 09.18.14 at 5:28 pm

Balloon Mortgages in Canada?

Mark at 164 claims:

practically all mortgages (in Canada) are ‘balloon”.

******************************************

that may be true in legal form but not in substance. In actual practice Canadian mortgages are routinely renewed usually just by signing back their renewal form and the bank does not check employment status. This would be the case for anyone who has been current on their mortgage I believe.

Banks are not about to refuse a renewal to customers who have paid on time.

An exception would be if you get a mortgage from some tiny new outfit that later has financial trouble or decides to get out of the business.

If you have been paying late, it’s true you might get sent to the likes of Home Capital where you pay higher interest rates and where they are adept at foreclosure.

Even if the bank did not offer a renewal they would likely apply some higher interest rate and as long as you kept up payments they would not likely foreclose.

Bottom line, to suggest that Canadian mortgages are balloon just doe not describe what really happens.

#168 Mark on 09.18.14 at 5:45 pm

“Bottom line, to suggest that Canadian mortgages are balloon just doe not describe what really happens.”

But you don’t disagree that the terms and conditions are that of balloon mortgages. The issue fundamentally isn’t about refusal to renew a loan (which is a theoretical possibility of the bank, especially if they know that the CMHC will take care of a defaulted loan), but rather, the sort of offer that may be forthcoming from the bank.

For many families going into increasing amounts of negative equity, getting a letter in the mail only offering the posted rate, and a penalty over and above that on account of negative equity, may very well be functionally the same as the bank simply refusing.

Also keep in mind that mortgages aren’t the only investment option for banks, so the whole idea that they “have” to offer a renewal to stay in business is a bunch of nonsense. Banks can actually, in many cases, earn a much better return lending to corporations than they do lending to residential consumer borrowers.

#169 devore on 09.18.14 at 6:00 pm

#103 learningfromyou

I still think that they should pay us for having our money with them, it should be a privilege to be chosen by us for that because they will make money with our money.

They are already paying you interest for the zero risk you are taking giving them your cash for safe keeping, and people like you are lining up around the block to shove money into their hands, so I don’t think they’re shaking in their boots.

#170 devore on 09.18.14 at 6:06 pm

#115 Holy Crap Wheres The Tylenol

CRA did an audit once and she told them they made a mistake on their calculations. She was told Quote” The CRA doesn’t make mistakes.” She spread out all of the details in front of them and after 2 hours they walked out and never said a thing. The issue was retracted by them.

Just make sure you don’t “misplace” the documentation, or you’ll end up like that one guy, in court for years with CRA, because “they don’t make mistakes”.

#171 liquidincalgary on 09.18.14 at 6:13 pm

#149 tkid on 09.18.14 at 2:03 pm
if gold cannot hold in the 1180-1200 area, you will get your wish…down to 700 even

Promise?

========================================

that is the next support

#172 Steve on 09.18.14 at 9:50 pm

You slay me. “A proboscis” lol. I want to hammer that Porsche.

#173 miketheengineer on 09.19.14 at 1:34 pm

Garth et al:

US Steel – Screwing Pensioners – Bankrupcy of Hilton Works, Nanticoke.

If US Steel screws grandma out of her pension (which is only 1/2 of what my dad received) she is likely going to have to sell her home in Hamilton. No way she will be able to afford the maintenance on the old place (needs about 40k min in repairs) let alone the astronomical city of Hamilton taxes.

I can see many, many people selling their homes in Hamilton….there is a “sea” of white in that city. US Steel is going to make this much much worse.

Bravo, City of Hamilton MP’s and MPP’s…good job. You should all be awarded with big bonus’s for your outstanding jobs…both past and present. Screw Grandma and Grandpa….take away their perscription drug plans, take away their medical.

The stress those “old” people are now going to go through is unbearable, and is going to kill grandma and grandpa, and is the last thing they need.

#174 save. spend. splurge. on 09.21.14 at 4:29 pm

In theory great… in practice, not for me.

We both earn about the same amount of money, and we split the expenses, are expected to pay jointly for common things (kid, etc).. and we both save in our RRSPs, TFSAs and all other accounts (maxed out on both of our sides).

Not only that, our kid’s money (ALL of it), goes into investing for him. It’s not our money, it’s his. He has a higher net worth before the age of 1 than I ever did at 23.