Legal advice

COFFEE SIGN modified

Eric’s a fancy lawyer in southern Ontario. Personal injury law. Ambulance chaser. Seven years into it, he makes good coin – four hundred a year, which he earns through a personal corporation because he thinks he pays less tax that way. (He doesn’t.) Spends it all.

You’re a smart dude, I said gratuitously, after learning he’s a financial basket case. But how can you be so educated and affluent yet totally dumb about money?

“Because,” Eric replied, “nobody ever taught me. It’s why I read your pathetic blog. I don’t even really know what an RRSP is. But I do know I don’t have any. Should I?”

So this is for all the lawyers out there, wisely dispensing advice, and so dearly in need of some. Forthwith, a few things you need to know about registered retirement savings vehicles.

An RRSP is not a thing. You can’t buy one.

The biggest financial myth around (other than ‘gold is money’) is that an RRSP is a product you go to the bank and buy. Nope. It’s simply a way of investing money – a vehicle, not a thing. It means you agree to set aside funds for a future date in a vehicle registered with the government. In return they let you deduct that contribution from your income on the understanding you’ll pay tax when you take it out. This massively favours higher-income earners. The money is then put into assets which grow, tax-free. If you choose a savings account or a GIC, you seriously need help. Like Eric.

It doesn’t save tax. It just defers it.

Tax paid on money put into this vehicle is refunded to you on the next return you file. This may feel good, but it means the cash you’ve put into an RRSP has just become taxable again. You won’t be able to get it without paying up (unless you read the following). So contributing to an RRSP is like sex. Joy now. Consequences later.

The best possible use is to shift tax between years.

The original idea was to stuff an RRSP during years of work and high taxes, then cash the plan during retirement when your income and tax load are less. But with governments as pickled in debt as everyone else, it’s reasonable to expect future taxes will be higher than those of today. So use an RRSP for tax-shifting. Contribute when you make good money and can use the refund (to invest, of course), then cash out during years when you’re sick, laid-off, parenting or traveling Tibet finding yourself. If you make little or nothing in a year, the RRSP money comes out cheap.

Save big through income-splitting with your spouse.

A spousal RRSP is a must in any relationship when one spouse earns a lot less than the other. The higher-income person contributes to a plan in the other person’s name, gets all of the tax break, but after three years the funds become the property of the other spouse, who can remove them at a lower rate to have an affair. Just kidding. But maybe you should ask for receipts.

RRSP room never goes away. Hoard it for high-income years.

Earned contributions are called ‘room’ and they accumulate. So instead of piddling away your room during years when you’re not earning a lot, it might make sense to save it up for when the big money rolls in. Remember, the more you earn, the more room you create and the larger the tax break for making a contribution. The RRSP, more than any other tax vehicle, favours the rich. And yet the T2 gang attacked the TFSA. It was political, but fooled the kids.

Use it to save your butt when a pension is commuted.

A great use of all this saved-up room could be for when you retire and take your pension as a lump sum payment, instead of a series of monthly (fully taxable) cheques. A commuted pension typically comes in two hunks – one rolled into a non-taxable registered account and the second in cash. If you have room to use, the tax hit on the cash can be substantially reduced.

Yes, you can put a mortgage inside an RRSP. But don’t.

An RRSP mortgage sounds cool, and sometimes can be. If you have enough liquid assets in an RRSP to pay off a mortgage, you can then borrow back the money and hold it as an RRSP home loan, making payments to yourself. But it costs a lot to set up, requires an administrator, and you can’t charge yourself more than market interest. So save this strategy for when rates go back up.

Make a contribution without money. Get paid for doing it.

Yup, this is good. If you have assets now, like ETFs, or mutual funds, stocks, bonds or REITs, just transfer them into an RRSP up to your allowable room. This will count the same as if fresh cash were used, and earn a refund. The only problem is capital gains may be triggered on the way in, so be ready for that. Still, getting paid to sell yourself stuff you already own is totally phat.

No money? No prob. Borrow it.

Or you can borrow the funds to top up a plan, and come out ahead. For example, borrow ten grand at 3% to contribute, then get $3,500 back as a refund. Use it to pay down the loan and now you have $10,000 in assets for which you paid $6,500. Interest on such a loan is not deductible, but it’s a pittance anyway.

How much can you put in? Does Trudeau know?

Lots. 18% of what you earn in a year, to a max this year of $25,370. So someone making $140,000 can dump in twenty-five grand, and reduce their taxes by more than $11,000. See why it sucks not to be a 1%er?

Self-employed means always stuffing your RRSP.

Entrepreneurs usually don’t have corporate pensions, so it makes oodles of sense to be accumulating RRSP room, and using it. In retirement you can control your own income by drawing down those plans as you wish. It’s an argument for people earning money through corporations to draw a salary, instead of taking dividends.

RRSPs don’t last forever. Beware of the conversion.

You may think you’ll never turn 71, but plan for it. In that year all RRSPs must be converted to RRIFs, which means you must start cashing them in, by law. This money is added to your taxable income, and could shove you into a higher tax bracket, bringing untold misery. So think about removing some of it earlier when you can engineer a low-income year or two, and irritate the hell out of Millennials.

You can melt down an RRSP and pay no tax. Seriously.

Complicated, but doable. Borrow money on your LOC to invest in a non-registered portfolio, then pay the loan interest with RRSP or RRIF withdrawals. The money coming out of the registered plan is taxable, but the interest is tax-deductible. So, in effect, the government is financing your increase in net worth as you transfer your wealth out of the tax shelter, sans tax.

I could continue. But Eric has already nodded off. Figures.

129 comments ↓

#1 TurnerNation on 08.12.16 at 5:28 pm

+ @Jimmy and @Josef

#2 james on 08.12.16 at 5:40 pm

“So this is for all the lawyers out there, wisely dispensing advice, and so dearly in need of some.”

Would love to know how many hours he works.

Last time I checked LSUC stats, median (or perhaps average) salary for lawyers in Ontario was just eclipsed by average salary for teachers. 80k to 81k or something like that. However, teachers get 2 months holiday per year and pensions. I think average in Toronto is 205k, but once again, how many hours are you working to get that? If that is 55-65 hours a week, mind as well become one of those overpaid TTC ticket dispensers making 100k plus pension. The civil service seems to be the way to go in Ontario, sadly.

Having taught at 4 law schools in the USA and Canada, I’d say that the average law student is not particularly bright. It does not surprise me that they are incompetent with finance. There are exceptions, but I’d say about 10% of them. Those with business savvy and hustle tend to do very well.

#3 mitzerboy aka queencitykid on 08.12.16 at 5:43 pm

thanks garth
good job
its for this info and doggie thingys
that most of us come here

#4 Jimmy on 08.12.16 at 5:45 pm

turner nation!!!

Arg.

#5 Jimmy on 08.12.16 at 5:46 pm

Last two days = gold.
Thanks Gartho.

#6 Old Man Too on 08.12.16 at 5:47 pm

Whoa! I like that last one!

#7 Joe2.0 on 08.12.16 at 5:48 pm

The house I bought on the BC Sunshine Coast 5 months ago has appreciated 13% and climbing.

Its a crazy market up here fueled by people who have cashed in on their homes.
As well as a strong foreign interest, American, European, Chinese.

Many local businesses having been or in the process of being bought up by off shore investors, restaurants , resorts , marinas, movie theatres, golf courses, Pubs.
RE agents looking for listings because they are cash in the bank.
The cheap loonie is selling us out.

Trades people can’t supply the demand for renovations.
Busiest year in history for the towns Brick store.
Building suppliers running out of material.

#8 YVRpeasant on 08.12.16 at 5:52 pm

Thanks for the post Garth!

Can you offer some advice on why someone should/should not take advantage of the home buyers plan that let’s you take out your RRSPs?

(assuming you’re sticking to the Rule of 90 and are not buying in Van)

#9 Noone on 08.12.16 at 5:54 pm

Is there such a thing as too much in RRSPs? I have 400k in RRSPs, 300k in non-registered investments and am paying Rev Can 25k a year in taxes. Even though I have RRSP room my advisor says don’t contribute anymore (even to avoid the taxes I am paying now) apparently I’m over funded. I’m 40. Have a defined benefit pension plan plus I am saving 100k a year.

#10 Franco on 08.12.16 at 5:57 pm

Don’t you pay a penalty when you take money out of your RRSP before retirement? Or, do you just pay taxes on whatever you take out, just like regular income? Thanks.

#11 Randy on 08.12.16 at 6:00 pm

if Eric made the right political contribution to the Liberal Party, he could get a nice job at the Bank of Canada.

#12 Context on 08.12.16 at 6:00 pm

I have never met a lawyer yet who knew what he was doing and have stories that are scary. The last time I closed a real estate deal used a senior partner in a big law firm. We met in his office to review the closing papers as he had a fat check for me. I saw something material and looked at the check. His head crashed on the table as it was the wrong name and he blamed his legal secretary. I said did you not review her work and his face turned red.

#13 Oleg on 08.12.16 at 6:02 pm

Thanks for great tax tips Garth. I have a question about spousal RRSP. If I contributed 10000$ in 2014, and then 5000$ in 2016, will I be able to withdraw 10000 in 2017 after 3 years or I am screwed now because I contributed again in 2016? How would CRA know which money I withdrew?
Thanks again for your priceless advice and education

#14 Smartalox on 08.12.16 at 6:04 pm

Great advice Garth, but you forgot to tell people about revenue Canada form T1213 – request to reduce tax deductions at source.

If you’re a working stiff, and you have an agreement to contribute to an RRSP (beyond the usual payroll deduction / RRSP matching), you can file T1213, and get your tax refund in real time – as increased cash flow on every paycheque – instead of waiting up to a year for your tax refund.

This form also lets you reduce the amount of tax deductible based on other tax deductions, like child care expenses, charitable or political donations, or child support and alimony payments.

You’ll need to be able to prove you actually made / are making your payments, but doing this does two great things:

1) it avoids taxes, and increases your cash flow
2) if the government takes your maximum taxes on every paycheque, even if you get a refund in a year, you’re loaning the government your money interest – free, until they grudgingly give it back.

Personally, I love the fact that I take the money I would have contributed to a $10k TFSA, dump it into my RRSP, and pay less in taxes, as a result.

#15 BobbyC on 08.12.16 at 6:05 pm

What about the bubble in Vancouver? Realtors here see a slowdown on expensive properties, but sheeples still pay above listed prices on townhouses below 500k.

#16 Victoria Real Estate Update on 08.12.16 at 6:06 pm

It’s probably safe to say that most Canadians are clueless when it comes to making small money decisions and even more clueless when it comes to assessing risk and potential reward when taking on massive mortgages.

Canadians will learn the same lessons that Americans did as house prices fall (crash?).

Mortgage fraud is a huge problem in Canada and, apparently, not much is being done about it.

Mortgage fraud was a major contributor to the American housing meltdown.

Mortgage fraud will play a major role in Canada’s deep market correction as well.

The most mortgage fraud is probably taking place in areas where buyers are stretching themselves the most (Victoria, Vamcouver and Toronto). It is in these areas where we will likely see the deepest and steepest price declines.

#17 Sebee on 08.12.16 at 6:20 pm

Seems like RRSPs ideally should be used up before 71.

#18 Mean Gene on 08.12.16 at 6:23 pm

Seems odd that a personal injury lawyer didn’t know much about investing, he could have provided some ideas (not advice) to his clients when they got their settlements.

#19 the other white meat (pork) on 08.12.16 at 6:27 pm

So if a person followed your advice and used the borrowed money to buy something paying in Canadian dividends, they could lower their tax rate to just about zero, at least on the first 50 or 60 grand. Best free advice I’ve read in a month of Sundays, thank you Mr T !

You mentioned commuting a pension and I’ll be one of those within the next five years. A lot of blog dogs are sadly mistaken about the security of government employee pension plans, at least in BC. I suggest they peruse the Pension Benefits Standards Act which passed almost a year ago. Benefits can now be reduced and plans converted to “target benefit” instead of defined benefit. Low interest rates make for higher commuted values, the only benefit I can see in today’s low rate world.

#20 Danforth on 08.12.16 at 6:29 pm

I do the RSP program at work because of the 1:1 match, never turn down free money!

But I crank away another $2700 a month out of my take-home money, and its all TFSA and unregistered. That tax bomb in 20 years over all the growth will be a stupid amount of money paid to some future T3 government.

#21 word on 08.12.16 at 6:31 pm

Word

#22 bdwy sktrn on 08.12.16 at 6:33 pm

back to the basics today. good refresher.

re the melt down – don’t you end up with a taxable pile today vs a tax deferred one?

wait till finished working for this?

#23 Brett in Calgary on 08.12.16 at 6:36 pm

Now that last trick is a neat one. Garth you devil.

#24 crossbordershopper on 08.12.16 at 6:38 pm

please explain why a ccpc is not a lower tax rate then personal? only an idiot would salary out 400k income because he needs it all. the lawyer needs some discipline. all small business who earn a good income keep the income inside the corp, and divi out to themselves their spouse and grown children only what they need.
i dont have an rrsp, why? i dont pay personal tax ever. the corporate, pays 12.5%, 10.5% plus 2 provincially. on the first 500k.
wife gets paid about 45 in divi and my adult daughter the same, things are good, corp is good, personal is good. just like the window of your rrsp story, its strategy.

#25 Freedom First on 08.12.16 at 6:38 pm

….an RRSP is like sex. Joy now. Consequences later.-Garth. ………………Perfection!

Yes. I am forever grateful for the oldtimer’s who told me to enjoy my life and let everybody else have the kids. Mind you, this was before it became obvious, even to some of the herd, that humans were overpopulating themselves into extinction.

RRSP’s. Yes. The joy of getting 40-50% back upon insertion, and paying 25% upon withdrawl, after earning 10-15% for 10/5 year terms on CSB’s and GIC’s, 5-10% on equities, plus tax free capital gains on houses I could pay cash for and lived in for years. It all adds up, just like debt. And, then Garth gave us the TFSA, thanks Garth, 2nd best gift to me after the RRSP. And yes, the young were screwed over by the lowering of the TFSA amount. Sadly, most of them didn’t even know it.

Mileniuls, xxx’s, yyy’s, Booombers, the majority of every generation is the same. Proven fact. Time immemorial.

People always say you have to love yourself first. But few practice it.

Freedom First 007
PHD in Freedomonics

#26 salonist on 08.12.16 at 6:45 pm

daughter, about to be a court of justice roster family certified mediator,family justice services,family mediation sevices, Ontario ministry of the attorney generals office.
various employment options
she will be compensated
won’t ever even listen to getting personal financial advice

she says your business, your success…..”i don’t see it”

to her as a millennium,now is now

still at home….no intention (refuses) to launch

#27 CJBob on 08.12.16 at 6:47 pm

Something many people don’t know if you can contribute to an RRSP and take the deduction in future years if you have room. I.e. contribute $40,000 now and deduct $20,000 in 2016 and $20,000 in 2017 to maximize the refund.

#28 Ace Goodheart on 08.12.16 at 6:58 pm

RE: #2 James:

“Would love to know how many hours he works.

Last time I checked LSUC stats, median (or perhaps average) salary for lawyers in Ontario was just eclipsed by average salary for teachers. 80k to 81k or something like that. ”

True, if you’re a lawyer on a salary.

Doing that however is equivalent to telling someone “pay me a set amount per year, and I’ll in turn work an unlimited amount of hours”.

The smart lawyers don’t work like that. They earn what they bill, and they don’t work for anyone or for a salary. Their incomes of course aren’t part of LSUC stats because no one knows what they earn other than Revenue Canada.

Lawyers earn “billable hours”. If one works for oneself, then the billables are yours, minus overhead. If one works for someone else, then one is funding someone’s cottage or new Porsche or vacations in fancy resorts.

One thing I have noticed about lawyers is as Garth has pointed out, spend every penny they earn, and invest like eighth graders. No concept of the value of money. The flashy lifestyle is the key, not value for money. Drive a Porsche, live in a million dollar house, own another million dollar cottage, look amazing, but it’s all mortgages and loans, and you haven’t got a dime saved. Earnings all go to upkeep and interest.

No idea why they’re like that. Just something I noticed.

#29 jas on 08.12.16 at 7:07 pm

Cost of negative interest rates in Germany

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/economy/german-bank-starts-charging-customers-to-hold-their-cash-in-negative-interest-rate-world&pubdate=2016-08-12

#30 Dual Citizen In Canada on 08.12.16 at 7:11 pm

I see so many people boasting about how much they get back in a refund yet I tell them your goal is to get back $0 or pay, at most, $50-$100. This means the taxman does not have your money all year to make even more. Also, rather than making that lump sum contribution in February, contribute more to RRSP each paycheck.
Being out of Canada for 11 years, I returned to a huge contribution room amount. I asked my parents to lend me the money (gift it) to top up my RRSP rather than giving me a down payment for an overpriced house.

#31 crowdedelevatorfartz on 08.12.16 at 7:11 pm

@#26 salonist.
“still at home….no intention (refuses) to launch…”
*******************************************
She’s about to get a good paying job?

Then “launch” her with your foot…..

#32 Context on 08.12.16 at 7:15 pm

Lawyers are no different than real estate agents so beware. One day got a call from a lawyer telling me that I owed him one as he needed a witness. His client sold his deli business and today was closing and the purchaser was stalling. He wanted to set a trap as told the purchaser to meet him at the deli at 6:00 PM. I am behind the counter making sandwiches with the owner, and in walks this young man. Behind him the lawyer and the secretary making notes walks in reading him the riot act. The young man says he is going to his banker a few doors down and comes back with no money thus is in default for a legal action.

#33 Gramps on 08.12.16 at 7:25 pm

Now u have my attention!

#34 Tremblant110 on 08.12.16 at 7:25 pm

Spousal RRSP significant advantages where there is a difference in age of the spouses.

#35 Sideshow Rob on 08.12.16 at 7:29 pm

“People always say you have to love yourself first. But few practice it. ”

I was watching women’s beach volleyball. I witnessed a horrible wrist injury that day. But not to worry. The Dr says I will be fine by Monday.

#36 Andrew Woburn on 08.12.16 at 7:31 pm

Could this explain some of our fellow blog dogs and Zero Hedge?

“For reasons I have never understood, people like to hear that the world is going to hell,” historian Deirdre N. McCloskey told the New York Times this week.

It’s hard to argue. Despite the record of things getting better for most people most of the time, pessimism isn’t just more common than optimism, it also sounds smarter. It’s intellectually captivating, and paid more attention to than the optimist who is often viewed as an oblivious sucker.

http://www.fool.com/investing/general/2016/01/21/why-does-pessimism-sound-so-smart.aspx

#37 Andrew Woburn on 08.12.16 at 7:50 pm

Of course, pessimism isn’t always misplaced.

– “The Chinese government is poised to effectively shut the door on $2-billion in annual exports of canola seed from Canada – a potential blow to bilateral trade with the Asian giant that could land just as Justin Trudeau makes a historic visit to the country to try to rebuild relations with Beijing.

China is preparing to enact a rule as of Sept. 1 that would require the amount of extraneous plant material in canola-seed exports to make up less than 1 per cent of each shipment. The Chinese are a major customer for 43,000 farmers, mainly in Western Canada but also Ontario and Quebec, who export their product through grain handlers. Last year, China bought more than 40 per cent of all canola Canada sold abroad.

Canada’s canola industry says this new measure would all but halt shipments to China, where the canola seeds are mostly used to make cooking oil and livestock meal. It says it’s impractical for Canadian shippers to filter and remove sufficient plant material to meet this new standard.”

Over to you, T2. It’s showtime.

http://www.theglobeandmail.com/news/politics/canola-dispute-threatens-to-overshadow-trudeaus-trip-to-china/article31384092/

#38 John Galt on 08.12.16 at 7:52 pm

DELETED

#39 Huckleberry Finn on 08.12.16 at 8:16 pm

“The biggest financial myth around (other than ‘gold is money’)” best sentence ever.
US and Canadian Treasury bills have outperformed the barbaric relic over all time periods even ignoring storage costs.

#40 Cory on 08.12.16 at 8:17 pm

Lawyers, doctors, and dentists are notoriously poor investors. I believe this has even been studied and results indicated the same.

Why does someone have to teach him? With a little initiative anyone can do anything especially in today’s world where the world is literally at your fingertips everywhere you go. Nobody taught me either but I keep reading, studying, trial and error but I’ve certainly hit my stride but every day I try to learn something new, like from today’s blog for example. I can now read financial statements including the ever important notes where all the “fine print” is and analyze a business fundamentals and it’s really not that hard. Learning accounting was the best move I ever made for surviving in the markets. Bought books, watch(ed) videos (I love YouTube), read and learn here etc…

Anyways, good blog today.

#41 jimN on 08.12.16 at 8:22 pm

Years ago, when my seemingly healthy old man kicked the can unexpectedly, (single father) his 150k RRSP was taxed at full rate and pretty much halved for us three siblings to inherit…..so not sure that’s what he had in mind when he was saving that money….

(Maybe there was some kind of tax shelter measures that could have prevented this? )

Take what you will from my short story, but basically saving for the future looks great on paper …..until there is no more future…

#42 Brian on 08.12.16 at 8:34 pm

Still think its a good time to buy 604 RE?

#43 Capt. Serious on 08.12.16 at 8:38 pm

>>I said did you not review her work and his face turned red.

Fun fact. 99% of legal paper work is done by clerks and secretaries. It’s not worth actually spending lawyer time writing routine documents. Most lawyers come out of law school needing a good secretary/clerk to show them how to actually work as a lawyer and get paid.

#44 April. on 08.12.16 at 8:40 pm

I haven’t nodded off; pray, do continue. :)

#45 Ret on 08.12.16 at 8:43 pm

#37 – Canola trade with China

The truth is rather elusive in China. Who knows what China’s real motivation is behind these actions. That would be the real story.

If Trump was the US President, China wouldn’t dare to threaten the US with this kind of cheap crap.

This bully behaviour directed at Canada needs to stop now. Time for JT to man up and play a little hardball with these clowns if they want access to our markets and universities.

#46 joblo on 08.12.16 at 8:49 pm

with Guberment pickled in debt is it not also reasonable that Dividend tax credit and Capital Gains taxes will also be negatively effected?

We are screwed every which way but loose!

Unlikely changes will occur, since investment capital would simply flow elsewhere – negative for markets, and everyone. You can’t run an economy on GICs. — Garth

#47 Steve-0 on 08.12.16 at 8:50 pm

#41 jimN

Not saving for the future looks good on a blog comment… Until your are forced to retire and have no money… Good luck with that.

I may die young and not get to spend what I have saved, but at least whoever I leave my money too will get to enjoy it. Also, I plan on retiring early (50 – 55 range).

Seriously, you are complaining that your fathers inheritance wasn’t big enough because taxes took to much? Are you a millennial by any chance?

#48 Tony on 08.12.16 at 8:52 pm

Re: #7 Joe2.0 on 08.12.16 at 5:48 pm

B.C. is history, the bank should call your mortgage for more money upfront in a year or less. Where did you get the idea prices were going up? I read sales and prices have been falling since February this year. That means you bought at the peak.

#49 Context on 08.12.16 at 8:54 pm

#40 Cory: – Doctors and Dentists are as clueless as they come but have a great group plan that they think is God. I had one doctor who had a ton of cash just sitting around and wrote me out a big check telling me to place it in second mortgages with a very high equity value. I used a new lawyer to close out a deal and he called me for funds as was ready to close, but said there was a small problem on title. His ex-wife filed a claim behind the first but wasn’t a problem as it was small. I told this idiot that my client would be in a third position and am not closing period. Then he informed me that I had to pay his legal costs and replied that would be the day so eat your costs as am not going to pay a dishonest lawyer zip.

#50 Brian Ripley on 08.12.16 at 9:04 pm

I have updated my Canadian Household Debt, GDP, Foreign Direct Investment and Balance of Trade chart:
http://www.chpc.biz/household-debt.html

Net trade is hitting new lows; debt remains at all time highs to finance our consumption and net off shore investment also hits new highs since like other global players, Canadian capital finds better yields outside of Canada. Sure our real estate assets are valued by sellers who are earning big capital gains currently, but what maintains asset values is income and household income in Canada is topping except of course in the energy patches where it’s dropping visibly: http://www.chpc.biz/earnings-employment.html

As someone remarked I think on this blog yesterday, incomes dropping will eventually turn real estate values down because sentiment will change to saving and debt repayment; hence a new definition of value in overvalued assets. But before that, more uncertainty has to develop in the animal spirits.

#51 Mark on 08.12.16 at 9:04 pm

“US and Canadian Treasury bills have outperformed the barbaric relic over all time periods even ignoring storage costs.”

That’s not true whatsoever. Definitely not true in the 1970s where gold absolutely smoked the T-Bills. Gold’s long-term return is similar to that of treasury bills, with significant inverse correlation to long-term government bonds.

A gold and T-bill portfolio, periodically rebalanced, outperforms a portfolio solely of T-Bills, or solely of gold.

You can verify this by manipulating the numbers at:

http://www.ndir.com/cgi-bin/downside_adv.cgi

#52 Smoking Man on 08.12.16 at 9:16 pm

Doesn’t surprise me in the least.

My drunken account tells me his Mds and Laywers are his biggest challenges. Alot spend more than they make.

I don’t even know why I pay him. I get audited almost every year. I wrote some software that reads all my csv bank statements, business credit cards.

I click a button and inside 5 seconds have my year end done. He just transposes the data into his system.

But he gives great advice. Always a fully stocked bar with good Cohebas. All the shit that Garth said up above and then some.

#53 Tony on 08.12.16 at 9:19 pm

Re: #13 Oleg on 08.12.16 at 6:02 pm

You can withdraw RRSP money in any year even in the same year that you took out the RRSP. It doesn’t matter if it’s a calendar year or not. The whole idea is to use it as a tax deferral knowing taxes will spike sharply higher in coming years due to the national debt increasing exponentially due in part to negative growth and projected negative growth in the years to come. Commodities may see levels not seen since the 1950’s in the coming years a big negative for growth in Canada.

#54 Andrew Woburn on 08.12.16 at 9:21 pm

#129 WordPress International on 08.12.16 at 6:42 am
#85 Andrew Woburn
_____________________________________________

Can you try to write an even longer post next time. I almost fell asleep, but not quite. A few more excruciating paragraphs and it would have been perfect. Off to REM land.

Sheesh.

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

Not everything can be reduced to 140 characters.

And if you could sleep through that information provided by the Financial Post, not me, you either have nerves of steel or a low level of comprehension.

#55 not 1st on 08.12.16 at 9:22 pm

#37 – Canola trade with China

T2 can clear all that up in a simple email. “Dear china if you wont take our canola, we wont take your corrupt money into Vancouver. Lets talk.“

#56 not 1st on 08.12.16 at 9:24 pm

Cant wait until T2 hammers all those lawyers, dentists, doctors and RE agent hiding personal services in corporations.

#57 Alan Dee on 08.12.16 at 9:26 pm

Garth. How is income deferred in an rsp any different than income defered in his small incorporation? If he nets 400k after expenses in his company, he can just take out what he needs and leave the rest in, after the low business tax rate, earning income on $$ he otherwise would not have at all … the company pays taxes at a similar rate on investments as he would in the highest tax bracket. ..

Money withdrawn from the corp as dividend income is after corporate taxes – then he must pay personal tax. The total of the two equals the tax payable if he had just taken salary, which is 100% deductible to the corporation. But by taking salary he earns RRSP room, and can deduct $25K from his taxable income, which the corp cannot do. Money parked within the corporation must be withdrawn at some point, lest the CRA consider it investment income, and tax it at the highest rate. A small business corporation is not a tax-efficient place to leave retirement funds, and it’s about to get worse. — Garth

#58 Freedom First on 08.12.16 at 9:28 pm

#9 Noone

You should be okay if you stay out of debt

#59 Freedom First on 08.12.16 at 9:30 pm

#10 Franco

Yes.

#60 Freedom First on 08.12.16 at 9:36 pm

#16 VREU

Great post girl. Right on the money!

Thought I would say the truth before the morons attacked you.
…………………………………………………………………

Also. Sad to say, most women are smarter than men. Garth knows. He gets to see the women come out on top on a regular basis. I know I do. But then again, I always come first.

#61 Adam on 08.12.16 at 9:44 pm

“The RRSP, more than any other tax vehicle, favours the rich. And yet the T2 gang attacked the TFSA.”

Just because the RRSP favours the rich more than a $10k TFSA limit, doesn’t mean that a $10k TFSA limit didn’t strongly favour the rich, it just didn’t favour them as much as RRSPs. So trimming either the TFSA, or the RRSP, does the political and real job that it was supposed to, what’s the problem?

Besides, if they decided to gut the RRSP instead of the TFSA, you’d be whining about that, too.

So here’s a question you should answer: what would’ve been the right move on the topic of doing something to the RRSP vs TFSA. Let me guess what you answer would be: leave everything as it was (including $10k TFSA limit) Never would’ve seen that coming.

Unlike the RRSP, which generates a bigger benefit the more income is earned, the TFSA is egalitarian, democratic and equal for everyone. The Trudeau attack on it was moronic, on every level. — Garth

#62 acdel on 08.12.16 at 9:50 pm

#14 Smartalox

Great advice on something I knew nothing about, I am going to look into that.
—————————————————

Garth, thanks, good one! Great ideas….

#63 Freedom First on 08.12.16 at 9:56 pm

#41 jimN

You’re a man. Nobody cares about you. There. I have set you free.

#64 not 1st on 08.12.16 at 10:05 pm

A personal services corporation is an income trap. If this guy tries to take out $400k in salary or dividend, he will first pay $60k in company tax then another $150k in personal tax. Widdles down that $400k pretty fast. And he cant spend it inside the company as well because he has no plant or equipment. He will find as most do he will have stranded cash or investments in that shell he cant access one day without big tax bill.

Most legit business owners will get a capital gains exemption that they use to liberate those moneys tax free. This guys has nothing to sell but his smarmy “services“ which are worth exactly zero.

#65 Bottoms_Up on 08.12.16 at 10:05 pm

#9 Noone on 08.12.16 at 5:54 pm
———————
Did you miss the part that says at age 71 you will be forced to take money out of your RRSP?

Do you realise that if you have a great DB pension, pulling a nice salary in retirement, then are forced to take more income at age 71, you could be in a 50% tax bracket? When today you are in a 30% tax bracket? Why save on 30% today when you’ll pay 50% in the future?

#66 No Mercy on 08.12.16 at 10:14 pm

#52 Smoking Man

Never dis your drunk accountant. I have a buddy who does my corporate filing. I could do it, but then I would have one less reason to hang out with him.

#67 No Mercy on 08.12.16 at 10:34 pm

#57 Alan Dee

I agree with Garth.

I did the math and at some point, it makes more sence to not pay dividends and get a paycheck. This way you can contribute to RRSP’s and overall pay less taxes.

As well, unless you have 5 full time employees, you can be deemed a personal services corp. That’s when all gloves are off and and the CRA comes after you.

#68 Smoking Man on 08.12.16 at 10:38 pm

Hey teachers, dare you to watch this to the end.

No wonder kids can’t get decent paying jobs. The employers, you know, entrepreneurs won’t let these mind fk cancer cells into the building.

https://youtu.be/lCcvexAXEjM

#69 Linda on 08.12.16 at 10:39 pm

Regarding people & money, I have wondered whether there is a ‘money sense’ gene. Some people seem to have a knack for money, both in making it & in keeping it. They may or may not have had extensive education on the subject. Besides these ‘naturals’ at making/keeping money, there are the people who educate themselves on the subject & work at building their assets. As long as they follow some basic principles they seem to do well, but for the most part they do not have the ‘flare’ of the natural money sense individual. Then we come to the remainder. Despite intelligence or lack thereof; ditto education, these individuals do not seen to be able to hang onto any money whatsoever. They spend every cent they make & more besides. I don’t know if it is ‘can’t’ or ‘won’t’ do what needs to be done. All I do know is, these people are perpetually broke in real terms, no matter how much income comes in.

#70 Aggregator on 08.12.16 at 10:46 pm

You may think you’ll never turn 71, but plan for it. In that year all RRSPs must be converted to RRIFs, which means you must start cashing them in, by law.

By the time more middle-age folks get to 71 the government will enforce soft capital controls and change the rules for RRSPs and RRIFs, i.e., increase withholding taxes and annual withdrawal threshold by age.

Don't ever rely on government retirement vehicles. Ever. Savings in a corporation is by far more flexible because you can always control how much is paid out.

#71 Barb on 08.12.16 at 10:49 pm

Garth,
have you considered writing a revised/updated version of your 2009 book After the Crash…?

#72 No Mercy on 08.12.16 at 11:08 pm

#61 Adam

I have younger friends that don’t make that much now. They loved the TFSA’s. Invest now, never pay taxes on that about. 5K, 10K, OK.

They thought, RRSP’s can wait when they jump into the high brackets.

Smart 20-somethings get it.

The rest, just believe on the Government spending money on paving highways and streets is good investments versus investing in innovation.

Conservatives or Liberals, same old shit, just a different pile.

#73 Futures bleak on 08.12.16 at 11:11 pm

Wacko Trudeau Liberal Economic Wrecking Ball won’t miss taxing your savings the way Germany has begun to do.

http://business.financialpost.com/news/economy/german-bank-starts-charging-customers-to-hold-their-cash-in-negative-interest-rate-world

With the economy crashing under the crazy boot of Trudeau Liberals and tax revenue drying up look to Trudeau Liberals to grab your savings to pay for pandering…just like good old daddy T did. 100% taxation thanks to Trudeau Liberals.

#74 Tom from Mississauga on 08.12.16 at 11:30 pm

Make a contribution without money. Get paid for doing it.

Having a non-registered margin account allows for transferring to TFSA and RRSP without money and is tax deductible FYI.

#75 WUl on 08.13.16 at 12:01 am

After reading an article in the Grope & Flail, I texted my 21 year old daughter in Cowtown that her application to participate in P.M. Trudeau’s Youth Council (ages 16 -24) is one of 10,000 for 30 spots.

In part she responded, “Trudeau might not want any Hurtin’ (feminist) Albertan.

She’s tougher than a West Texas Tornado. She’d pulverize him.

If she is selected, I will invite the Dawgs to suggest items she should take to the table.

#76 Ben Trundle on 08.13.16 at 12:11 am

Trudeau Liberals have been getting their ‘green’ marching orders from American fundraisers who hate Canada. I wonder if the bleeding of jobs wakes Junior while he basks on a bed of selfies. The ranks of unemployed are growing, the economy is tanking, seniors are starving and Junior wants to kill our soldiers in Africa to deflect the media from the Trudeau Liberals abject failure in Canada.

http://www.offsettingresistance.ca/TarSandsCoalition-StrategyPaper2008.pdf

#77 SWL1976 on 08.13.16 at 12:18 am

AWSOME!!! Great Post Garth

No wonder you got the boot

Too bad

#78 Ray Skunk on 08.13.16 at 12:20 am

#9


Is there such a thing as too much in RRSPs? I have 400k in RRSPs, 300k in non-registered investments and am paying Rev Can 25k a year in taxes. Even though I have RRSP room my advisor says don’t contribute anymore (even to avoid the taxes I am paying now) apparently I’m over funded. I’m 40. Have a defined benefit pension plan plus I am saving 100k a year.

Well, I find this extremely interesting.

How can you be saving $100k post DB contribution and only be paying $25k in taxes? Assuming living costs of ~$40k/yr, you’d need to be grossing way over $200k to make your $140k net, and there’s just no way you’d be forking over a meagre $25k on that. Even if you max out your RRSP contribution, your taxes should still be over $25k.

Put it this way, I’ve “donated” $43k to the feds so far this year, and my savings won’t hit $100k – despite living extremely frugally.

#79 Cloudy on 08.13.16 at 12:30 am

One of the best posts in recent memory. Thanks Garth. Lots of very useful information.

#80 Jessica on 08.13.16 at 12:30 am

Thanks Garth for explaining “But by taking salary he earns RRSP room, and can deduct $25K from his taxable income, which the corp cannot do.”

I knew the tax paid either way was close to the same, so I also didn’t get why it mattered that he didn’t draw a salary.

#81 Bram on 08.13.16 at 2:51 am

Teranet HPI still up hard this month for YVR.
http://www.cbc.ca/news/business/national-bank-teranet-house-index-1.3718296

It will be interesting to see what the August and September numbers will look like.

But for now, a SFH in vancouver is up $40k or so from last month. So much for the ‘crash’.

#82 Cottingham a bargain on 08.13.16 at 6:59 am

I encourage everyone to watch last Thursday’s episode of hot property in CP24. Al Sinclair and his cabal of other guests growing more militant by the week with their advice to call ins, to hold second properties, buy co dos with closing a 3 or 4 years out , NOT to rent because you are simply ” paying off someone else’s property” ( he mentioned this a few times) . Bottom line from the entire group of snake oil salesmen was ‘BUY BUY BUY”

The number of people watching this and getting horny for RE reading this blog means housing has nowhere to go buy ” uppa , Uppa UPPA” !!

Good luck with your message Garth lol

#83 Wordpress International on 08.13.16 at 7:04 am

#54 Andrew Woburn

“And if you could sleep through that information provided by the Financial Post, not me, you either have nerves of steel or a low level of comprehension.”
——————————————————————-
zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

#84 Larry B on 08.13.16 at 7:18 am

A small technical correction for Garth regarding spousal RRSP’s. The LIFO rules (last in first out) mean that your spouse cannot take your contributions out and be taxed in their names until 3 years has PASSED since your last contribution to their RRSP. Your words suggests that a spouse could just take out the contribution from 3 years ago. Do this and the withdrawal becomes fully taxable as the contributors income. Strange that a brilliant financial mind would fail to get that small part right. Telling CRA that “Garth” said so won’t work.

Just open a new plan. Duh. — Garth

#85 earthboundmisfit on 08.13.16 at 8:09 am

Personal injury lawyer. Marginally higher than the repo man on the slug scale. Where I hail from, extortion is still a hangin’ offence.

#86 AfterTheHouseSold on 08.13.16 at 8:11 am

#54 Andrew Woburn

Thanks for your post yesterday. Informative and interesting, as always.

#87 F.dover on 08.13.16 at 8:16 am

It is great to be reading Garth on RRSP’s just like the good old thirty year ago days. At that time I never would have believed the tax rate today would be this low.
Paying all levels of government’s way forward through debt never even entered my mind as I thought there would have been a peak acceptable level reached years ago.
We only ever bought RRSP’s to avoid the next tax bracket, and dumped them at the first opportunity to do so.

Deferred salary leave – work three/take a year off proved to be the best tax avoidance for our situation.

Worked for us four consecutive times.

Then Skippy brought in pension income splitting, a gift from heaven. Even better than dropping the GST 2 points, which is the only form of federal tax I pay, being with out income myself.

If you miss the deadline to earn income, you don’t get taxed!

#88 Pepito on 08.13.16 at 8:22 am

#37 Andrew Woburn on 08.12.16 at 7:50 pm
Of course, pessimism isn’t always misplaced.

– “The Chinese government is poised to effectively shut the door on $2-billion in annual exports of canola seed from Canada ”
_______________________________________

Canola seed is a GMO version of rapeseed whose oil is suitable only for industrial uses, not for human consumption. Canola seed should have never been marketed for human or even livestock consumption. Canada learned nothing from its rGBH scandal in the late 1990s and continues to have a rather poor record of ignoring the problems of GMOs.

#89 Ben Trundle on 08.13.16 at 8:36 am

DELETED

#90 simulyrew on 08.13.16 at 9:11 am

#25 Freedom First on 08.12.16 at 6:38 pm

Yes. I am forever grateful for the oldtimer’s who told me to enjoy my life and let everybody else have the kids.”

You like to brag about how smart you are, but you are effectively removing yourself from the human gene pool by not procreating…..hmmm….reminds me of that scene in Blazing Saddles,…when the guy holds the gun to his own head…

#91 Rabbit One on 08.13.16 at 9:21 am

I know many people have multiple RRSP accounts.
(one at green bank, small one at insurance co, largest at securities co etc)

Suggestion to double check beneficiary.
(should be on the statement)
Occasionally bene is blank = Estate, or some have ex-wife’s name on it.

#92 simulyrew on 08.13.16 at 9:21 am

#40 Cory on 08.12.16 at 8:17 pm

Lawyers, doctors, and dentists are notoriously poor investors. I believe this has even been studied and results indicated the same.”

You have obviously never heard of the mythical Belgian dentist investor….try googling it…you;d be shocked

https://news.google.com/newspapers?nid=1301&dat=19860717&id=CbJjAAAAIBAJ&sjid=kOgDAAAAIBAJ&pg=5651,623832&hl=en

#93 Rocker on 08.13.16 at 9:22 am

#32 Context

“Lawyers are no different than real estate agents so beware.”
—————————————————————————————–

Do any realtors charge 95% commission?

A Toronto personal injury lawyer is facing a class action spearheaded by a former client who won $150,000 as a settlement award but alleges she ended up keeping only $8,000 of it.

http://www.lawtimesnews.com/201301212131/headline-news/class-action-targets-law-firms-fees

#94 maxx on 08.13.16 at 9:34 am

#11 Randy on 08.12.16 at 6:00 pm

“if Eric made the right political contribution to the Liberal Party, he could get a nice job at the Bank of Canada.”

:-)))))))

#95 Huckleberry Finn on 08.13.16 at 9:34 am

Mark,
I had run the numbers against US bills some time back …….US vs Canadian T bills might have made the difference. Also though not conventional T bills…the site I had looked at run 6 month Interest rates which for most part would be higher than 3 month interest rates. The 1970 is a weird starting point as Gold had been artificially suppressed at $35 for a long time. Go to 1960 or 1980 as a start point and Gold looks really horrible. Factor in 1% storage costs and “money” suddenly looks horrible.

#96 Smoking Man on 08.13.16 at 9:39 am

Basement dwellers feast on this.

https://betterdwelling.com/the-really-big-short-the-13-7-billion-dollar-bet-against-canadian-banks-over-housing-and-insider-sales/

I’m still long on Long Branch.

#97 RBull on 08.13.16 at 9:42 am

I’m melting down my RRSP. I’d like to pay no tax on withdrawals by using my LOC to invest in an unregistered investment account.

How about a little detail in addition to the teaser?

#98 Tammy Quintal on 08.13.16 at 9:58 am

Borrowing to invest worked out well for us. We borrowed $750,000 back in 2000 when the rate was 8.0% variable.

We knew that the trend for interest rates was down. We invested in log term government zero coupon bonds at 6% to 6.25%.

Our $150,000 RRSP matures in 2030 with a maturity value of $924,612.

Our remaining $600,000 was invested in non-registered accounts and mature in 2031 with a total value of $3,929,600 by then.

We paid off all our loans after 9 years and paid $270,000 interest and cut our income taxes by $73,000.

We retired once we paid off our loans in 2009 and our total per year net compound interest is around $127,000 a year but after income taxes final net amount of $95,000 a year or 12.66% a year of our original investment of $750,000.

Compound interest at these 6%+ rates were worth to borrow even at 1.75% to 2.0% higher rates initially.

When long term interest rates are high, compound interest multiplies your money many times more than people can believe.

#99 For Brian Ripley on 08.13.16 at 10:32 am

I appreciate the work you do in putting together these charts. You may find the following document of interest in helping to design and format your charts.

https://www.amazon.com/Street-Journal-Guide-Information-Graphics/dp/0393347281

Cheers

#100 Smoking Man on 08.13.16 at 10:37 am

The power of a dyslexic mind.

We typically see things in five dimensions but can’t for the life of us communicate it in written form.

I would love to present my theory on electromagnetic mass ejection, the advantages of having itchy hemorrhoid.

Up until recently, it would be next imposable for a hardcore Dyslexic to get it out in a readable way. The world blind to the beautiful colors and visions we see.

Then came along Grammarly. (Find an error here my dogs)

Boom!!!!!!

My Ph.D. editor friend has been blown away with my fiction novel. “I’ve never read anything like this in my life, its brilliant, hilarious, I can’t put it down.” -LM

Two chapters, zero errors found. Thank you, Grammarly
Technology is changing the world for the better.

The problem with the book, the biggest market for fiction, the mind fkd lefties are going to hate it. The right minded folks will love it. But they don’t read that much fiction, usually financial mags, and get rich books.

So it ain’t going to be a best seller, that’s a given, but for my 70 or so fans on here, you will cherish it. And I can be proud that I acutely published a book with such a severe handycap. I’m not in it for the money.

#101 Moron Face on 08.13.16 at 10:45 am

The bear market in bonds is underway. July 2016 was a long term top for the global bond market (and a long term bottom for global interest rates). Rates hikes will chase growth. “Risk off” sectors have begun a long term period of underperformance (i.e. govt bonds, utes, cons staples, healthcare, REITS, real estate.).

High beta is back. EMs – most importantly, small caps, TIPS, financials, tech, aerospace, $CAD preferreds & even commodities to some extent.

Feb 2016 was an inflection point history will look back on.

#102 TnT on 08.13.16 at 10:54 am

Hey Blogs Dawgs

If I have $300,000 RRSP room and I contribute the whole $300,000 in one year will I get the full tax break (44%) or is there a limit?

#103 Damifino on 08.13.16 at 10:57 am

#69 Linda

“Regarding people & money, I have wondered whether there is a ‘money sense’ gene. Some people seem to have a knack for money, both in making it & in keeping it.”
——————————–

I think there’s three stages of ‘money sense’.

1. pursuit of higher wages
2. learning to save
3. learning to invest

Most people are stuck at 1 forever. I moved on to 2 very early in life. I didn’t get to 3 until I was about fifty (65 now). That changed everything.

People think that 2 and 3 can be covered off simply by buying a piece of residential real estate. They are badly misguided. Garth has been trying to help them for a very long time. Perhaps he’s misguided too.

#104 Smoking Man on 08.13.16 at 11:24 am

This ex kbg guy calls it perfectly from way back in 1984.

http://russia-insider.com/en/must-see-video-ex-kbg-agent-exposes-process-cultural-marxist-subversion-west/ri16016

Nov 18…last chance to make America Great Again..

#105 Karlhungus on 08.13.16 at 12:05 pm

RRSP does save tax if you do it right. Contribute when you are in ~40% marginal tax bracket and withdraw it when you are retired, (potentially 0% tax).

#106 Joseph R. on 08.13.16 at 12:11 pm

One thing to add on Garth’s post, for you bloggers, you can use a RRSP to finance full-time training or education (up to $20,000) for you or your spouse; it’s called the Lifelong Learning Plan (LLP)

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/llp-reep/jnng-eng.html

#107 TurnerNation on 08.13.16 at 12:14 pm

Some say our elite rulers are using three tools to further our enslavement and control:

– Climate change [sic]
– Terrorism
– Special interest groups.

Seems to be working. Look how they’ve changed the world since 15 years of a (this) September.
And now after forty years I have a label from them: “cis”.

Should I pin a scarlet star onto my lapel? (Mixed metaphors there).
My mind remains free.

Say…how come that tweeting twerp the cops took out on the 11th didn’t even shatter the windows of that taxi. Nice scene. On the 11th too.

M40ON

#108 John on 08.13.16 at 12:21 pm

A small technical correction for Garth regarding spousal RRSP’s. The LIFO rules (last in first out) mean that your spouse cannot take your contributions out and be taxed in their names until 3 years has PASSED since your last contribution to their RRSP. Your words suggests that a spouse could just take out the contribution from 3 years ago. Do this and the withdrawal becomes fully taxable as the contributors income. Strange that a brilliant financial mind would fail to get that small part right. Telling CRA that “Garth” said so won’t work.

Just open a new plan. Duh. — Garth

Are suggesting that opening another Spousal RRSP plan gets around the three year rule?

#109 Rabbit One on 08.13.16 at 12:21 pm

#102 TnT

Your refund limit is up to your 44% of your taxable income in 2016.

You can carry forward unused RSP for future years.

#110 Joseph R. on 08.13.16 at 12:27 pm

#88 Pepito on 08.13.16 at 8:22 am
#37 Andrew Woburn on 08.12.16 at 7:50 pm
Of course, pessimism isn’t always misplaced.

– “The Chinese government is poised to effectively shut the door on $2-billion in annual exports of canola seed from Canada ”
_______________________________________

Canola seed is a GMO version of rapeseed whose oil is suitable only for industrial uses, not for human consumption. Canola seed should have never been marketed for human or even livestock consumption. Canada learned nothing from its rGBH scandal in the late 1990s and continues to have a rather poor record of ignoring the problems of GMOs.

—————————————————-

You are confused : Canola, CANadian (O)il (L)ow (A)cid, is a GMO version of rapeseed that is low in Erucic acid:

https://en.wikipedia.org/wiki/Erucic_acid

Erucic acid is believed to cause heart disease: rapeseed has a 20-24% content while canola is <2%.

Canola is better made for human consumption, not rapeseed.

The current belief is that China is trying to liquidate their rapeseed oil surplus by blocking the importation of Canadian oil.

#111 Vampire Studies GMST 454 on 08.13.16 at 12:51 pm

9 Noone

I cant follow your numbers. $25k in taxes is $100k or less taxable income depending on province. So even if maxing your RRSP gross income is $125kish. So you only have $100k total if you live with no costs.

But you cant max your RRSP if youre making pension contributions.

If youre taking dividends out of a lucrative small business you are not earning incme so no RRSP contributions.

If you have non-registered investments you are paying yet more tax (albeit at lower rates) on top of your wages.

Too many holes to substantiate your claim. Please elaborate.

#112 waiting on the westcoast on 08.13.16 at 1:08 pm

#63 Freedom First on 08.12.16 at 9:56 pm
“#41 jimN
You’re a man. Nobody cares about you. There. I have set you free.”

Your Mom loves you! Might be the only one but it’s there for the taking… and giving if you are so inclined.

#113 maxx on 08.13.16 at 1:19 pm

#29 jas on 08.12.16 at 7:07 pm

“Cost of negative interest rates in Germany

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/economy/german-bank-starts-charging-customers-to-hold-their-cash-in-negative-interest-rate-world&pubdate=2016-08-12

Precisely what many have known for years…..so keep an eye on the histrionic MSM emanations from Jackson Hole later this month…..where the world’s wealth goes to die.

It’s not so much about sending out “signals” as it is saving face….what face? This repetitive, idiotic charade costs the world, big time.

Yes indeed, central bankers have the big, bad, bogey-man economy allll under control…..more fruity punch at 11. Tools? What tools? They make out like they’re using or threatening to use laser scalpels, but instead employing sledgehammers to cut, cut, cut those rates. They’re not just cutting rates, they’re bleeding the economy dry. Retail, restaurants and bars, services are being slaughtered. Big ticket, same thing. Why would you buy a banker’s calculator for $50 plus tax when you can get a perfectly good one for $1.50 in a charity or second-hand shop? It is not a huge mystery as to why coffee shops are mushrooming on steroids. People are going out for coffee for $2 rather than spending $20-30 on a meal. The more these idiots cut, the more people will find ways to cut, cut, cut back on spending. And what happens when huge consumer debt collides with increasing taxes?

Pin-striped buffoons. I often wonder if they even have so much as an inkling of the aggregate future damage caused by such imbecilic monetary policy – even if only rolled out a few years down the road.

At any rate, how could they care? Most are 1%-ers and the rest will be mollycoddled by fat pensions with benefits.

Make no mistake: Canada and the world at large are getting poorer and more fragile by the day.

The clock is ticking louder and faster. Funny thing about running out of time………

#114 Context on 08.13.16 at 1:25 pm

There is an auction sale on condos in Toronto with ads being placed one after the other. The two bedroom condos including parking are selling below $300,000 as people are dumping. Much too expensive as you haven’t seen anything yet.

#115 MF on 08.13.16 at 1:41 pm

#113 maxx on 08.13.16 at 1:19 pm

Another amazing post from you. Take comfort in knowing there is more and more people waking up to the lie and failure that these folks are.

Brexit was the first victory. One of many many to come.

They will lie and cook the statistics, manipulating markets as much as possible to keep the charade going. Witness Carney cutting rates to “help lesson the sting” of Brexit. What a joke.
If you disagree you are immediately branded a bigot or xenophobe and discredited as much as possible.

MF

#116 PR on 08.13.16 at 1:50 pm

Invaluable informations. Thanks.
You should be a rock star banker !

I notice something as I am getting older: We need more law, as the population expand. Much more.

#117 Nobody on 08.13.16 at 1:52 pm

#113 when I moved from Europe to Canada I couldn’t believe banks charged customers a monthly fee. Then charged them to use their debit card, then charged them for checks. It all comes to a lot more than 0.4% of my current account balance.

On the other hand charging people who have $100k in cash – an idiot tax of 0.4% seems totally reasonable

#118 LIFO - spousal RRSP on 08.13.16 at 2:03 pm

Just open a new plan. Duh. — Garth

===

Can this be just a new (additional spousal RRSP) account at the same direct investment firm, which has an existing spousal RRSP account already?

Sure. Have as many as you wish. — Garth

#119 jess on 08.13.16 at 2:13 pm

….is it in the “wording”

This report preferences the Australian Securities and Investments Commission’s (ASIC) terminology
– illegal phoenix activity – as opposed to the Australian Taxation Office’s terminology – ‘fraudulent’ phoenix activity.
In this report we identify five categories of phoenixing; two of which are legal, and three of which are illegal. Basic (one after the other) or sophisticated (within corporate groups) phoenixing can take place within all five of our categories.
http://law.unimelb.edu.au/__data/assets/pdf_file/0007/170950/15-Definingandprofilingphoenixactivity-reportfinal2.pdf
1.1
WHAT IS PHOENIX ACTIVITY?

Phoenix Taskforce cracking down on dodgy business behaviour
Six search warrants were executed yesterday by the ATO as part of a cross-agency investigation into alleged illegal ‘phoenix’ activity on the Gold Coast.

“This firm response forms part of our ongoing joint agency investigations into illegal phoenix activity, where a company deliberately liquidates to avoid paying creditors, taxes and employee entitlements. The perpetrators transfer the assets to a new entity, and continue operating the same or a similar business with the same ownership,” ATO Deputy Commissioner Michael Cranston said.

Phoenix activity costs the Australian economy around $3.2 Billion each year. Honest businesses and individuals suffer the most because debts to suppliers are left unpaid, employees are robbed of their superannuation entitlements, and the community is denied revenue to fund essential services. A phoenix company is often able to undercut other contractors when bidding for jobs, leaving its competitors out of work, whilst the controllers of the phoenix company continue to rip off its employees and suppliers.

“There are a number of signs that a business you are working for may be involved in phoenix behaviour,” Mr Cranston said.

“Employees may be pressured to take leave or have their employment status changed from permanent to casual. They may also notice that there are frequent changes in the identity of the company that is paying their wages, or that their superannuation entitlements are not paid.

https://www.ato.gov.au/Media-centre/Media-releases/Phoenix-Taskforce-cracking-down-on-dodgy-business-behaviour/

#120 BOOM! on 08.13.16 at 2:23 pm

I see it quite clearly. Too many equate debt with wealth.

Too many never see the invisible ‘rents’ extracted by the FIRE industry, or your banker.

Strange, we fail to recognize or tax the ‘rentier’ or the ‘rents.’ We merely count it as part of GDP, but is it?

Or, rather is it a parasite on the economy? I think it is a parasite, and have treated it as such.

#121 TurnerNation on 08.13.16 at 2:42 pm

Might be a Canola blog but I noted it in ingredients list of Waffles today. Seems they are desperate for us to get that GMO stuff into us – food is an effective delivery system.

Years ago, maybe late 90s, 60 Minutes had a special on how common industrial chemicals were causing frog and fish spawn to be a-asexual, genderless.
Never heard anything about that again….so just look around and see how things appear today.
Again, water is an effective delivery method.

A gobal slave force of genderless workerbees turning to that Screen for every news and instruction? Duck and cover?
#Killingussoftly.

#122 TurnerNation on 08.13.16 at 2:43 pm

#114 Context – which area of town?

#123 Freedom First on 08.13.16 at 2:55 pm

#90 simulyrew on 08.13.16 at 9:11 am

#25 Freedom First on 08.12.16 at 6:38 pm

Yes. I am forever grateful for the oldtimer’s who told me to enjoy my life and let everybody else have the kids.”

You like to brag about how smart you are, but you are effectively removing yourself from the human gene pool by not procreating…..hmmm….reminds me of that scene in Blazing Saddles,…when the guy holds the gun to his own head…

FF007

Yes, little cricket. I am smart. I am part of one of Alberta’s oldest associations, the AIA. For the uninformed, it’s the Alberta Inbreeding Association. My lines of in-breeding go back to the 1800’s. My gene pool is strong. I have kept myself away from women by choice as a means of developing my zen master traits of higher learning and god enhanced qualities.
I do like to, as you say, brag, but only as a means of inspiring you to greater heights yourself.

Answer this riddle to gain more wisdom:

“Your cousin is your mother and also your sister’s uncle’s best friend, who then is your father if your uncle is also your brother?”

#124 Freedom First on 08.13.16 at 2:59 pm

#112 waiting on the westcoast on 08.13.16 at 1:08 pm

#63 Freedom First on 08.12.16 at 9:56 pm
“#41 jimN
You’re a man. Nobody cares about you. There. I have set you free.”

Your Mom loves you! Might be the only one but it’s there for the taking… and giving if you are so inclined.

FF007

My mom does love me. She is the only woman I will ever need, just like she’s always told me.

#125 LIFO - spousal RRSP on 08.13.16 at 3:00 pm

Just open a new plan. Duh. — Garth

===

Can this be just a new (additional spousal RRSP) account at the same direct investment firm, which has an existing spousal RRSP account already?

Sure. Have as many as you wish. — Garth

===

Awesome. Thank you Garth!

#126 Context on 08.13.16 at 3:06 pm

#122 TurnerNation : – Just a bit west of Chinatown and a penthouse on Bathurst just north of Finch is selling for $508,000.

#127 jas on 08.13.16 at 5:07 pm

Garth, two words only: excellent ideas!!

#128 Jim on 08.14.16 at 12:43 am

Canada oil or Canola makes me constipated, I will not consume it. Talk about restrictive diet. Only use in my mind is bio-diesel.

#129 Noone on 08.14.16 at 12:45 am

#79 et al:

I am paying rev can 25k a year at the end of the year after payroll taxes etc have been remitted. Every year I have a big bill to pay to CRA – I didn’t realize I had to get into so many details to get advice lol. My total income is 300+, and no mortgage. My tax bracket is on the higher end of the scale – still trying to figure out if more RRSPs make sense…..