Losing it

ASSHOLE

The easiest money you make is what you don’t send to the government. It’s called tax avoidance. It’s legal and is the antithesis of the ‘shared society’ concept T2-loving Millennials have embraced. So if you have cowboy tendencies and are of dubious social value (like me), it’s useful to know how taxation happens. Or, you can just trust everyone and hand over your income. That should work out well.

When you work for it:

Poor schmucks who toil working for employers are sitting ducks for taxation. Your boss, by law, has to record what you make, withhold taxes at source, remit them (monthly) then issue verification to you and the feds. The more you make, the more you pay under our ‘progressive’ system, with the only serious relief coming from RRSP contributions. (But every time you put money into an RRSP it becomes taxable again.)

In you earn a hundred grand in Ontario, for example, the basic tax is 25% of your paycheque, leaving you with just under $75,000. But while the ‘average tax rate’ is 25.2%, the ‘marginal tax rate’ is 43.4%. That means of every extra dollar earned above this income, you’ll lose forty-three cents. Ouch. This is a really good reason not to buy a rental property, because…

When you collect rent:

Rent’s taxed the same as employment income. So if you earn $100,000 and shell out 25% in tax, then collect $12,000 in rent, the bite is huge – about $5,000 in tax on the rental income alone. This is something most amateur landlords usually discover the hard way.

When you earn interest:

Ditto for interest. It’s also 100% taxed since every dollar in piteously-low returns from braindead GICs or flaccid HISAs is heaped on top of your employment income and hit by that marginal rate. Yes, it’s bad enough when a GIC yields 2% and barely keeps its nose above inflation, but having to pay serious tax on it – often on returns you haven’t yet received – is nuts. And silly people think this is ‘risk-free’. Ha.

When you invest for a gain:

Let’s contrast that with the money you might make owning an ETF instead which, over time, rises in value. The profit here is called a ‘capital gain’ and half of it is not subject to tax. Seriously. Unlike rent or interest, which is 100% taxable at your marginal rate, a capital gain is only 50% subject to pillage. So, someone with a two million-dollar portfolio who harvests a $100,000 gain in higher asset values gets to keep half of it, while paying tax on the other half at a rate determined by their income. The maximum that would amount to (for someone making more than $230,000) would be 26%.

That’s right. The dude with two mill and an income of almost a quarter million pays tax at the same rate on his investment income as the guy working for a $100,000 salary. That’s why rich people stay that way, and don’t have GICs.

When you get investment income:

The same principle – that people with investments have better sex lives than employees – holds true when it comes to taking an income stream from your portfolio. Many investments (such as preferred shares, stocks or some ETFs) pay through dividends, which come with the dividend tax credit. This complicated little break results in a lower tax rate, and can result in a $50,000 tax-free income. How cool is that? It’s also possible to take an income stream in the form of ‘return of capital’ from a portfolio, which is non-reportable. Thus a retiree could have monthly cash flow but stay in a subterranean tax bracket, with no clawback in the government pogey. Moe reasons for Millennials to hate us.

When you work for yourself:

Finally, self-employed people have the greatest flexibility. They can set their own salary level, thereby managing the amount of RRSP contribution room created and the level of withholding tax. They might also pay themselves through dividends, splitting the tax load with their businesses. They can often invest through the corp, enjoying the lower business tax rate. They can repay themselves any personal investment in the business, tax-free. Plus, legitimate deductions abound for everyday expenses, while putting spouses or kids on the payroll, splitting income. Sweet.

Don’t focus on what you make. Obsess about what you keep.

178 comments ↓

#1 Doug t on 08.23.16 at 6:27 pm

Taxes and death

#2 Bessie Hereford Smith on 08.23.16 at 6:28 pm

Fuhrst!

#3 Brexit on 08.23.16 at 6:32 pm

EU President: “Borders Are The Worst Invention Ever Made By Politicians”

https://youtu.be/FvSLrSxL_eQ

At 10:15

No comment necessary.

#4 thornhilldude on 08.23.16 at 6:32 pm

So Garth, what is the prognosis of the townhouse market in TO? Should I sell my 2 bed, 2 bath 1200 sf. townhouse with 350 maintenance fee?

#5 Well then on 08.23.16 at 6:34 pm

I don’t see that “correction” you keep mentioning happening in Toronto. Markham is on fire.

#6 For those about to flop... on 08.23.16 at 6:36 pm

NoName ,do yourself a favour and get a Tfsa.

Why pay tax on non registered if you don’t have to?

Do you want a Xmas card from the Metrosexual Messiah?…

M42BC

#7 the other white meat (pork) on 08.23.16 at 6:42 pm

All true except the self employment bit. Get too aggressive with deductions and discover how arbitrary and heavy handed the CRA can be. Just ask a doctor or dentist what they can deduct, it ain’t much and you’ve got to earn it first.

#8 Smartalox on 08.23.16 at 6:45 pm

Can you ‘Jailbreak’ RRSP assets by living of TFSA savings one year, freeing up room to transfer RRSP holdings into the space created there in the next year, in amounts that trigger favourable tax rates?

Seems like this might be a way to melt down an RRSP over a 10 to 15 year period, transferring TFSA assets into non-registered accounts, then the RRSP monies into the TFSA, and so on.

If you do it a little bit at a time, over several years, the taxman might not notice. Kind of like how Andy got all the rubble past the guards in the Shawshank redemption.

#9 Trojan House on 08.23.16 at 6:47 pm

I don’t mind paying my fair share of taxes.

Millennial, right? — Garth

#10 Mark on 08.23.16 at 6:52 pm

Royal Bank dividend increase tomorrow? Yipee! While house prices stagnate, rents stagnate and fall, Canada’s big-5 will likely continue to churn out the profits and a rich stream of rising dividends.

Houses are for losers who don’t like success. Investments, well, are the way to get wealthy over time.

#11 YVRpeasant on 08.23.16 at 6:53 pm

Do people actually get caught for not declaring rental income?

I could never make the rent vs buy calculation give me a “buy” result, but everyone around here in Van seemed to be buying rental properties. That’s when I realized very few amateur landlords were actually declaring it.

#12 I'm stupid on 08.23.16 at 6:53 pm

#8 Smartalox

It works out the same. You’re taxed when you withdraw money from your rrsp at you tax rate. If you put it into your tfsa you get to deduction for doing so but future gains will be tax free. So taking money out from your tfsa and replacing it with rrsp money is the exact same as just taking money out of your rrsp.

#13 Limousine Liberal and Lovin' It!! on 08.23.16 at 6:53 pm

Exactly, Garth!

And if you can get your Air Canada lounge access for free and have pathetic Albertans pay for it, your quality of life is much better and you can enjoy your salary and hide out safely at your at your cottage after you tell everyone about the billions extra in debt you’re about to plunge them into.

Works for us!

#14 WallOfWorry on 08.23.16 at 6:57 pm

All good points Garth. You didn’t mention however that with investment properties all associated expenses reduce the income generated? Interest on the mortgage, property taxes, general maintenance costs etc. Additionally, for those with a long term view, the mortgage gets paid by the renter and in retirement years the income stream from rent becomes a form of an annuity stream and creates RRSP room for deferring taxes if you do not generate enough income to max out.

#15 Qiip on 08.23.16 at 7:01 pm

What about the people that come via Investor Immigration Program and pay 1400$ taxes same level as a refugee? Is that tax avoidance or tax evasion?

#16 not 1st on 08.23.16 at 7:05 pm

#9 Trojan House on 08.23.16 at 6:47 pm

—-

Govt has proven time and time again they will use your tax dollars to squander on bogus vote buying schemes. They get the absolute min I can give them and not a penny more.

#17 mountain guy on 08.23.16 at 7:06 pm

While I believe taxes are a necessary price to pay for democracy, I also believe we have an obligation to minimise the taxes we pay, using every legitimate mechanism available.
Garth, your blog post today is an excellent summary of basic principles of the Canadian tax system that I naively thought most Canadians were aware of. Apparently not. Keep up the good work.

#18 Metaxa on 08.23.16 at 7:07 pm

Re: Garth’s last point, working for yourself.

Everyone who trades their hours for wages or salary needs to at least ponder this.
See an accountant and set up your personal LLC or whatever as long as its not a simple proprietorship.

Costs a bit and you need to tend it a bit but it opens up endless possibilities.

As an example, a few years ago I was introduced to a fellow who had a small excavating business. One digger and one truck. no books, no business set up, no accountant just a guy and some equipment.

Busy beyond comprehension, this guy as way over booked. He had the employees, he had the desire, man he sure had the jobs but no bank would finance a second set of digger/truck.
A number of reasons mostly him being First Nations and hence no property ownership to lever.

I don’t loan money but I do have a holding company I carry around and I liked this guy so my holding company took over his sole proprietorship. We got him an accountant and soon enough a set of books and I introduced him to a lease guy in Alberni who set him right up.

He now has multiple sets of equipment, specialty stuff, triple the employees, a good, solid company and all our obligations one to the other are done to both of our mutual satisfaction. I made a little, he made a lot and its continuing for him.

Continuing for me? I have yet to pay a single dime for gravel, top soil, mulch, rock or grading, excavating. Firewood. His wife makes pickles and drops off a dozen jars each year. Etc.
That is money I don’t have to earn or declare or worry about.

Plus my rep is gold among the trades and the tribe, both. I have zero issues getting a trade in because I did one of their own a solid and buckets of spot prawns appear on my back step regular…in season of course.

Its not always about the money but the return, eh?

Anyway, set up a LLC and figure out how to utilize it. I could fill a blog post with how mine has helped me out over the years…

#19 MoMoney on 08.23.16 at 7:07 pm

I don’t mind paying my fair share of taxes.

Millennial, right? — Garth
——-———————————–//—–

Even hardcore socialists don’t like paying taxes.

Besides, paying a reduced rate on cap gains or divvies is still paying a fair share of taxes. At least until the tax code is changed.

#20 Smoking Man on 08.23.16 at 7:07 pm

Great post Garth…

Self Employed, why would anyone in their right mind punch a clock and have no control over there loot.

Employees are dead ducks from the get go.

Smoking Man.
Entrepreneur since 1980.

#21 Silent the people on 08.23.16 at 7:08 pm

Taxes Garth are a good thing! Avoidance or whatever you call it is another reason why our country will struggle for generations! We need to stop thinking as a individual and more like a community! Your financial advice is good but don’t go into the “every man for them self” mentality! We could do a lot better as a society if we quit with the “money win” mentality! Sure, you’ve done well and your free advice is a blessing with all the sharks out there but we need to look at taxes in a different way!!!!

#22 Schmucks on 08.23.16 at 7:11 pm

So what you are saying Garth is that Canadian politicians legislated tax laws that intentionally creates poor schmucks – unless said politicians can prove that an economy can exist without poor schmuck employees, it is the individuals decision whether they chose to be poor schmuck or everybody decides to be a self-employed, which can creat the economy of sole proprietors – what else could be without available poor schmucks to hire?

You are basically saying that there is an intentional, institutionalized financial discrimination against an identifiable segment of the Canadian population?

Who would have thought?

#23 Mike in the Okanagan on 08.23.16 at 7:12 pm

When you win the money:

Government keeps their sticky fingers off the cash. Too bad we can’t all rely on winning lotteries for a living.

#24 The Greater Cauliflower on 08.23.16 at 7:12 pm

Can anyone speculate how Justin Trudeau’s trust fund is setup? and how much Canadian taxes he pays? is his trust fund setup offshore?

#25 salvatore on 08.23.16 at 7:17 pm

what about buying a rental property for 275K in 2013, and having it appraised at 425K in 2016? Didn’t pay any tax there..
All while having my mortgage, taxes and maintenance covered by rental income each month. Sure doesn’t bother me to pay tax on the $9000 left over at the end of the year after deducting mortgage interest, insurance, property tax and maintenance.

#26 Cecil Henry on 08.23.16 at 7:18 pm

‘I don’t mind paying my fair share of taxes.’

Means they don’t pay. Someone else does with the violence of the state at their back.

What is your fair share of what someone else has earned??? It has to be EARNED before it can be taxed and stolen.

No service is free– you just want someone else to pay. And the government to use force to take the money from others.

“I have never understood why it is “greed” to want to keep the money you have earned but not greed to want to take somebody else’s money.”

#27 BS on 08.23.16 at 7:19 pm

Pay taxes? Just start a non-profit or charity then charge for access (aka donations) to meet with you like the future President does.

WASHINGTON — More than half the people outside the government who met with Hillary Clinton while she was secretary of state gave money — either personally or through companies or groups — to the Clinton Foundation. It’s an extraordinary proportion indicating her possible ethics challenges if elected president.

http://thechronicleherald.ca/world/1391150-many-donors-to-clinton-foundation-met-with-her-at-state

But the Clinton Foundation is a respected non-profit, isn’t it?

The Clinton Foundation’s finances are so messy that the nation’s most influential charity watchdog put it on its “watch list” of problematic nonprofits

But all the money goes to charity, right?

The Clinton family’s mega-charity took in more than $140 million in grants and pledges in 2013 but spent just $9 million on direct aid.

The group spent the bulk of its windfall on administration, travel, and salaries and bonuses, with the fattest payouts going to family friends.

http://nypost.com/2015/04/26/charity-watchdog-clinton-foundation-a-slush-fund/

Yikes only 6% of the 140 million money ‘donated’ in 2013 went to aid. Does this qualify as legal tax avoidance?

#28 Love My Kia on 08.23.16 at 7:27 pm

I don’t mind paying my fair share of taxes.

Millennial, right? — Garth
======================
I pay my fair share as well, but I prefer to put my savings in a TFSA and invest outside of GIC’s.

#29 For those about to flop... on 08.23.16 at 7:28 pm

Here ,have another useless chart…

M42BC

http://imgur.com/5cx6t7L

#30 timOfTrees on 08.23.16 at 7:32 pm

Thanks for giving a bit of credit to the business owner’s, Garth.

We entrepreneurs have a tough go, and in Canada (unlike, say, the Yankees), people don’t understand that, if it wasn’t for private wealth, private business owner’s and entrepreneurs, where would the country be?

Private business is the MOST IMPORTANT part of our society. It is what funds everything else. T2 doesn’t get it – he reneg-ed on his small biz promise because he truly has absolutely NO IDEA what it means to run a business. The work ethic, energy, motivation, fortitude and sacrifice it requires.

The worst thing is that, as a business owner, once you’re no longer suffering, no longer driving that beater rust box and stressing to put food in the mouths of your little guys… all of a sudden, you becomes ‘one of them’…

Crazy.

I don’t mind paying ‘a share of taxes’ – the smallest possibly share that my accountant can figure out. The smallest LEGAL share. If I’m going to be charitable, it’s with my Church, or some homeless dude who really know’s what it means to suffer. I’d rather pay him, in fact, than THEM ( teacher, gov’t bureacrat, PM, MP…etc)

This from a Millenial.

#31 crowdedelevatorfartz on 08.23.16 at 7:33 pm

Excellent tips. Especially the last paragraph.

As for the “people with investments have better sex lives than employees”……………’

Garth is that doubly true for investment advisors?

#32 Andrew Woburn on 08.23.16 at 7:38 pm

Coming soon to Canada.

” (US) Millennials aren’t buying homes. Good for them.”

https://www.washingtonpost.com/opinions/millennials-arent-buying-homes–good-for-them/2016/08/22/818793be-68a4-11e6-ba32-5a4bf5aad4fa_story.html

#33 Holly Smith on 08.23.16 at 7:39 pm

First of all, the first $11,500 or so of income is 0% income taxes.

After that, until from $11,500 to $45,000 a year is taxed at 21.4%.

Interest, annuity, investment income like foreign dividends, interest etc. are not subject to paying C.P.P, E.I., union dues etc.

This is at least 10% less annual taxes, deductions just there when one retires or stop working and is not paying.

Disability amount, age amount, RRIF and pension income amounts and other amounts save another $2,000 to $3,000 a year in annual income taxes.

A couple earning $90,000 a year can easily minimize income taxes and deductions from CRA and pay very little tax with C.P.P, OAS, RRIF income, interest income etc.

A total income tax bill of $7,000 to $9,000 a year or 7.7% to 10% total income tax rate is more common and doable than most people know.

RRSP’s, TFSA’s, RESP’s, family income splitting and many other things can be done to keep taxes in a lower range 10% to 15% at most total.

It is a myth that income taxes in or near retirement is a the major problem. It is debt, debt and more debt that is the real problem.

People really need to focus on cutting high interest credit card, payday loan, unsecured non mortgage debt as well as mortgage debt and being house, real estate obsessed.

They can easily save $10,000, $15,000, $20,000+ a year just in these alone not to mention the large housing costs of electricity, heating, water, insurance,repairs and maintenance, H.S.T., increased property taxes and assessments that this brings.

Canadians are lost young and old and just know how to go to work and pay monthly bills.

#34 Smoking Man on 08.23.16 at 7:42 pm

Perfect example of egnorant young mind fkd.
Snow flakes TRIGGER WARRING.

Viewer discretion.

https://youtu.be/qIW99Di3bqw

Trump in a landslide win in November, Apprentice PhD Dr’s of Herdonomics, study the Brandly effect.

https://en.m.wikipedia.org/wiki/Bradley_effect

#35 Pepito on 08.23.16 at 7:45 pm

Sounds to me like a pretty unfair taxation system. And your gloating about it borders on repulsive. Do you not see it?

#36 Canadian in LA on 08.23.16 at 7:47 pm

Don’t Canadians get depreciation expense on their rental income schedule? If so, doesn’t that usually work out as a tax deferral?

#37 chopstix on 08.23.16 at 7:47 pm

http://www.cbc.ca/news/canada/british-columbia/real-estate-unemployment-1.3733093
”Tax on foreigners leaves Vancouver real estate exposed, analysts say”
excepts:
“We feel that foreign investors have been propping up real estate in Vancouver, creating more demand, which is raising prices,” said Susan Hosterman, director of U.S. structured finance at Fitch Ratings.”

”Simon Fraser University professor Andrey Pavlov says the real issue isn’t that higher local unemployment might make the local market unsustainable absent foreign buyers — it’s that without foreign buyers, the region’s already low unemployment rate won’t be enough to support the market.

“We’re hooped even if there’s no change in employment,” he said. “Clearly our prices have nothing to do with local economic fundamentals. They’re driven by intergenerational transfers and foreigners and migration within Canada.”

“I wouldn’t worry about unemployment. If we’re going to have to worry about local economic activity to support these prices, we’re in trouble anyway.”

#38 Vancouverless on 08.23.16 at 7:51 pm

Declaring rental income? People do that? Every rental I had in Vancouver over the past decade was cash-only in envelopes. I’m pretty sure the landlords were declaring the place as their primary residence too.

#39 salonist on 08.23.16 at 7:52 pm

Washington Post 8/23/2016

Millennials aren’t buying homes.

Because mobility is the route to better jobs and income for young Americans, not settling down makes sense.

Across all age groups, the U.S. homeownership rate — at 62.9 percent — has now fallen to its
lowest level in more than five decades. Among younger Americans only, things look especially paltry.

Things have gotten so dire that young adults have now replaced the elderly as the age group most likely to live in multigenerational households, according to the Pew Research Center.

So why are young people delaying getting that deed?

One, they’re putting off getting married, which many still see as a prerequisite to

homeownership. (Though a large chunk of millennials, I should note, instead view homeownership as a prerequisite to marriage.)

Two — and this is part of the reason they’re delaying marriage, too — is that they’re poor.

https://www.washingtonpost.com/opinions/millennials-arent-buying-homes–good-for-them/2016/08/22/818793be-68a4-11e6-ba32-5a4bf5aad4fa_story.html?utm_term=.34768c04d8e3

#40 acdel on 08.23.16 at 7:53 pm

#18 Metaxa, Garth, Great post,blog today, although I get frustrated at times; people like you keep me going.. Thanks.

#41 Focus on 08.23.16 at 7:56 pm

Don’t focus on what you make. Obsess about what you keep.

——

Sounds really anti-growth, anti-productivity, paper-pusher friendly system, placing tax experts, tax lawyers in star role, though they create zero real economic value.

#42 Mark on 08.23.16 at 7:57 pm

“Here ,have another useless chart…”

Answer me this, if the US economy is so darn productive, why do they run horrifically high trade deficits? You think all that productivity would be good enough to actually balance imports with exports.

Maybe the problem here is that US productivity really isn’t all that high, once you strip out minimally-value-adding activities such as employment in the public sector or the financial sector.

An example I’ve given in the past is that let’s say that two banks meet to consummate a derivatives deal that generates $1M in bilateral fees. The calculation of GDP will consider that to be $1M in ‘activity’. But has such activity really produced any consumable goods or services that are truly of benefit to real people? I would suggest not. That’s why you see such a divergence between the alleged “productivity” numbers, and median family income which represents ongoing claims on the actual productive capacity of the economy.

#43 Mark on 08.23.16 at 8:03 pm

“Private business is the MOST IMPORTANT part of our society. It is what funds everything else. T2 doesn’t get it – he reneg-ed on his small biz promise because he truly has absolutely NO IDEA what it means to run a business. The work ethic, energy, motivation, fortitude and sacrifice it requires.”

For the record, Trudeau’s proposals were about balancing the playing field between all businesses. Not just “small” business. Why should a specific type of business get a tax preference not available to another type of business, after all? Are large businesses less worthy of tax breaks than small businesses? Large businesses are owned by people like you and I, and we need the returns from our ownership of business just as the small business owner does.

The problem with preferring small business through tax policy is that it represents an attack on large business and the large investment and social infrastructure that it can provide on a wider scale basis. Many types of workers in the economy basically can’t effectively work for small businesses, especially with higher end skills (ie: a coal mine really can’t be a small business!). A level playing field is much fairer to everyone involved, which is why the Trudeau proposed to act to level the playing field.

#44 paulo on 08.23.16 at 8:05 pm

#10 mark

Defiantly, grab the juice than sell the lemon before it gets squeezed

#45 Marko on 08.23.16 at 8:06 pm

#18 @ MetaxicaRe:
Garth’s last point, working for yourself.

Everyone who trades their hours for wages or salary needs to at least ponder this.
See an accountant and set up your personal LLC or whatever as long as its not a simple proprietorship.

Costs a bit and you need to tend it a bit but it opens up endless possibilities.

As an example, a few years ago I was introduced to a fellow who had a small excavating business. One digger and one truck. no books, no business set up, no accountant just a guy and some equipment.

Busy beyond comprehension, this guy as way over booked. He had the employees, he had the desire, man he sure had the jobs but no bank would finance a second set of digger/truck.
A number of reasons mostly him being First Nations and hence no property ownership to lever.

I don’t loan money but I do have a holding company I carry around and I liked this guy so my holding company took over his sole proprietorship. We got him an accountant and soon enough a set of books and I introduced him to a lease guy in Alberni who set him right up.

He now has multiple sets of equipment, specialty stuff, triple the employees, a good, solid company and all our obligations one to the other are done to both of our mutual satisfaction. I made a little, he made a lot and its continuing for him.

Continuing for me? I have yet to pay a single dime for gravel, top soil, mulch, rock or grading, excavating. Firewood. His wife makes pickles and drops off a dozen jars each year. Etc.
That is money I don’t have to earn or declare or worry about.

Plus my rep is gold among the trades and the tribe, both. I have zero issues getting a trade in because I did one of their own a solid and buckets of spot prawns appear on my back step regular…in season of course.

Its not always about the money but the return, eh?

Anyway, set up a LLC and figure out how to utilize it. I could fill a blog post with how mine has helped me out over the years…

I for one would love to learn more on the potential possibilities you’ve spoke about. Good on you for helping the guy out.

#46 Canadian in LA on 08.23.16 at 8:08 pm

We love you Garth. The comments sections is almost as entertaining as your posts.

The only people who don’t mind paying “their fair share” are people putting in less than they are getting out of the system… In the US, the top 20% pay 84% of income tax. (it was a newspaper article so take it with a grain of salt).

#47 Prairie person on 08.23.16 at 8:20 pm

Real Interest Rates

A company I have been following has just borrowed a large chunk of money. In Canada. Interest rate? 15%. No, that is not a typo. Years ago, I followed some alternate lenders and their rates. 13%. The rates for mortgages are so out of line as to be ridiculous. Free enterprise The market place? Nowhere in sight until you leave the govt controlled rates.

#48 WUL on 08.23.16 at 8:23 pm

Even this aging, dopey, leftie SJW gets it and is wholly onside with Garth’s avoidance advice. Probably because I tend to guide myself, at least in part, by the brilliance of pre-eminent jurists.

Justice Learned Hand (1872 – 1961) – Judge U.S. Court of Appeals:

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

Gregory v. Helvering

#49 paul on 08.23.16 at 8:30 pm

#11 YVRpeasant on 08.23.16 at 6:53 pm

Do people actually get caught for not declaring rental income?

I could never make the rent vs buy calculation give me a “buy” result, but everyone around here in Van seemed to be buying rental properties. That’s when I realized very few amateur landlords were actually declaring it.
———————————————————-

It’s the same for “in-law suites” If the C.R.S looked to close people wouldn’t rent to lower income folks . Since rent control has basically stopped the construction of high rise apartments in favor of Condo’s people need to live somewhere without buying.

#50 800 RMM on 08.23.16 at 8:33 pm

Garth, maybe you made this is overly simple on purpose for those less apt with taxation.

But what you collect in rent is not fully taxable as there are ample opprotunities to deduct expense against rental revenue to arrive at a taxable rental income.

Sigh. What a silly argument all you amateur landlords put up. All net income is taxable at your marginal rate. If you have so many expenses that there is no net, what’s the point? — Garth

#51 WUL on 08.23.16 at 8:34 pm

And:

“No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores.”

James Avon Clyde, Lord Clyde,

Ayrshire Pullman Motor Services and Ritchie v. IRC
(1929) 14 TC 754.

Lord Justice Turner of Caledon, need I cite more authority or may I sit down?

#52 paul on 08.23.16 at 8:37 pm

#24 The Greater Cauliflower on 08.23.16 at 7:12 pm

Can anyone speculate how Justin Trudeau’s trust fund is setup? and how much Canadian taxes he pays? is his trust fund setup offshore?
————————————————————-
LOL He doesn’t need a trust fund now he has the Canadian tax payer!

#53 Freedom First on 08.23.16 at 8:39 pm

Yes. Freedom First rules.

#54 mike from Mtl on 08.23.16 at 8:45 pm

Great to see a post about something other than trashing RE even though I wholeheartedly agree.

What’s your thoughts on handling multiple investment accounts? Like a filled TFSA and a regular for the balance?

Keep same exact preparation of holdings on both? Keep only high growth & dividend stuff in TFSA?

#55 For those about to flop... on 08.23.16 at 8:45 pm

#42 Mark on 08.23.16 at 7:57 pm
“Here ,have another useless chart…”

Answer me this, if the US economy is so darn productive, why do they run horrifically high trade deficits? You think all that productivity would be good enough to actually balance imports with exports.

Maybe the problem here is that US productivity really isn’t all that high, once you strip out minimally-value-adding activities such as employment in the public sector or the financial sector.

An example I’ve given in the past is that let’s say that two banks meet to consummate a derivatives deal that generates $1M in bilateral fees. The calculation of GDP will consider that to be $1M in ‘activity’. But has such activity really produced any consumable goods or services that are truly of benefit to real people? I would suggest not. That’s why you see such a divergence between the alleged “productivity” numbers, and median family income which represents ongoing claims on the actual productive capacity of the economy.

//////////////////////

I dunno man,maybe Boom will help me out.

Isn’t when the two lines decouple when big corporations started to take over and big Ron was in full flight…

M42BC

http://imgur.com/5cx6t7L

#56 Greg on 08.23.16 at 8:46 pm

You know Garth. I seriously lambast you every opportunity I get. THIS – was a good article.
Thanks. Now go buy some gold ans silver!:)

#57 WallOfWorry on 08.23.16 at 8:47 pm

#47….Prairie Person….you are referring to the companies WACC (weighted average cost of capital) and cannot be compared to securing a mortgage or a loan or line of credit where the borrowed money is secured.

#58 NoName on 08.23.16 at 8:48 pm

@floppy
nice trolling…
if we get anything around Christmas time from trust fund kid it will be invoice for more tax .
and that working stiff and sex is a true.

#workingstiff

#59 waiting on the westcoast on 08.23.16 at 8:50 pm

So – here are July’s numbers (sorry for the delay)…

Still decent growth in our premium household services business (well except for the Maple).

Numbers are YoY growth for July:

Entire System: +13%

First – the bad news…

Canada -3%
BC -2%
Prairies -10%
ON eastward -1%

US +16%
NE +7%
Mid to S ATL +16%
Central +11%
West Coast +26%

AUS +14%

So again – Canada is getting worse. The US and AUS (while still having strong positive numbers) are slowing down compared to earlier in the year. If you recall, our numbers have typically grown over 20% a year since 2011.

#60 Andrew t on 08.23.16 at 9:04 pm

Pay taxes? Just start a non-profit or charity then charge for access (aka donations) to meet with you like the future President does.

WASHINGTON — More than half the people outside the government who met with Hillary Clinton while she was secretary of state gave money — either personally or through companies or groups — to the Clinton Foundation. It’s an extraordinary proportion indicating her possible ethics challenges if elected president.

http://thechronicleherald.ca/world/1391150-many-donors-to-clinton-foundation-met-with-her-at-state

But the Clinton Foundation is a respected non-profit, isn’t it?

The Clinton Foundation’s finances are so messy that the nation’s most influential charity watchdog put it on its “watch list” of problematic nonprofits

But all the money goes to charity, right?

The Clinton family’s mega-charity took in more than $140 million in grants and pledges in 2013 but spent just $9 million on direct aid.

The group spent the bulk of its windfall on administration, travel, and salaries and bonuses, with the fattest payouts going to family friends.

http://nypost.com/2015/04/26/charity-watchdog-clinton-foundation-a-slush-fund/

Yikes only 6% of the 140 million money ‘donated’ in 2013 went to aid. Does this qualify as legal tax avoidance?

Different country. Stay focused, buddy.

#61 bb on 08.23.16 at 9:07 pm

#5 Well then on 08.23.16 at 6:34 pm

I agree with you on that. Markham condos are on fire!! Mostly new Canadians and renters buying their 1st home.

#62 For those about to flop... on 08.23.16 at 9:10 pm

48 pm
@floppy
nice trolling…
if we get anything around Christmas time from trust fund kid it will be invoice for more tax .
and that working stiff and sex is a true.

#workingstiff

///////////////////////////

Whatever your motivation get yourself a TFSA account.

You don’t like the guy in charge give him less of your money,you can always go back to non registered when someone comes along that you like.

If you are waiting for a non wasteful government to come along you are going to be a skeleton before this happens.

In 10 years time there will be good coin in TFSAs and you could save yourself several thousands of dollars each year.

There is a guy that can explain it better than me but I have forgotten his name…Gary…Gus…Garth,oh I give up can’t remember.

You will have less contact with the Metrosexual Messiah.

You will thank me one day…

M42BC

#63 WallOfWorry on 08.23.16 at 9:14 pm

What a silly argument all you amateur landlords put up. All net income is taxable at your marginal rate. If you have so many expenses that there is no net, what’s the point? — Garth
**************************

Really? You offset rental income with expenses to improve the asset for future gains, to fund the long term acquisition of the asset, to create a revenue stream in retirement etc. I can only assume that someone as smart as you is being so dismissive because you have the “grey” in the argument undermines your basic premise?

Real estate always goes up. Is that what you doomers believe? Too funny. — Garth

#64 Andrew t on 08.23.16 at 9:22 pm

#34 Smoking Man on 08.23.16 at 7:42 pm
Perfect example of egnorant young mind fkd.
Snow flakes TRIGGER WARRING.

Viewer discretion.

https://youtu.be/qIW99Di3bqw

Trump in a landslide win in November, Apprentice PhD Dr’s of Herdonomics, study the Brandly effect.

https://en.m.wikipedia.org/wiki/Bradley_effect

Smokey, I love ya but come on…
Alex Jones channel? That vid has 8K views.
This bad boy has a million more views than Alex Jones has subscribers, and has more substance.

http://www.youtube.com/watch?v=TE2r0vjkXK0&sns=em

This is all you need to know. Hillary in a landslide. The Senate flips, and maybe the House as well.

#65 NEVER GIVE UP on 08.23.16 at 9:22 pm

#15 Qiip on 08.23.16 at 7:01 pm
What about the people that come via Investor Immigration Program and pay 1400$ taxes same level as a refugee? Is that tax avoidance or tax evasion?
—————————————————————-
The people who do this are so many levels more clever than the simpletons who make our laws.

#66 Scumop on 08.23.16 at 9:24 pm

Sweet post, great summary.

Augmented by #33 Holly Smith details, its been a rewarding read.

However, the lack of xenophobes, re pumpers, and gold floggers is puzzling.

#67 not 1st on 08.23.16 at 9:31 pm

I want to remind people that T2 took your tax dollars, about 2 billion of them, and spread them around to countries who claim they are under siege from climate change. No questions asked about how the money would be spent, who would get it.

I didnt vote for that, and I wont contribute to it and there are hundreds of similar little projects just like that.

#68 Damifino on 08.23.16 at 9:31 pm

#35 Pepito

“Sounds to me like a pretty unfair taxation system. And your gloating about it borders on repulsive. Do you not see it?”
—————————————–

The tax system is designed to encourage people to take capital risks. To create jobs. To grow the economy.

Ask Mr. wage earner or Ms. interest collector how much risk they’re willing to take with their hard earned cash for the benefit of our country’s economy.

That’s correct… none. Not a scrap. Bupkis.

Do you not get it?

#69 stage1dave on 08.23.16 at 9:32 pm

Bravo, Mr. Turner…columns like this are why I keep lurking around here!

(I feel as if I should make several dozen copies and paste it to the foreheads of most of my relatives and several acquaintances; it would save a lot of verbiage on my part when they inquire: “…do you have a real job?”)

Anyway, some of the replies are also illuminating (tip o’ the hat to Metaxa, btw) as far as the attitudes about small business in general.

I’ve always thought communities work better when people are doing what they’re happiest doing, which in my ideal world would be a whole bunch more self-employed individuals; along with some realistically-obtainable financing options to “grow” their business.

Strangely, I’m working thru some GST (re)assessments tonite, so the whole “I work fer myself” gig does have a couple drawbacks…the hourly rate on this self-book keeping absolutely sux!

#70 NEVER GIVE UP on 08.23.16 at 9:33 pm

#16 not 1st on 08.23.16 at 7:05 pm
#9 Trojan House on 08.23.16 at 6:47 pm
—-
Govt has proven time and time again they will use your tax dollars to squander on bogus vote buying schemes. They get the absolute min I can give them and not a penny more.
————————————————–
Astute of you Not 1st…
Canadians are suckers over and over again for the above.
Every time gov raises or adds a new tax they say they will put the money into (whatever social nice program that feels good).
Actually they NEVER NEVER NEVER put money into any program. No tax money goes anywhere except into GENERAL REVENUE.
So the shell game starts. This year they put a little more money into some pet program that buys votes. In a year or 2 when everyone has forgotten they start to reduce or halt increases.
You can never track money from any tax to any program. It is completely hidden from your view.

Canadians are sucked into this dogma every time without any challenge. No wonder we are whipped like burros until death!

Im feeling a little cranky today. I need a scotch!

#71 BOOM! on 08.23.16 at 9:35 pm

#55 For Those about to Flop

Regarding the chart. 1980. Big Ronnie the Ray-Gun is the new president.

His accomplishments:

Bedtime for Bonzo

Record Deficits

Military Build-up

Tax Cuts for everybody (most cut at the top)

…THEN.. Largest TAX increase in US History!

The de-industrialization of America

You will notice during the 1990’s the bottom line made some gains back towards convergence (Clinton years)…the it has been all downhill…

…..um…. what was your question again?

#72 Joey on 08.23.16 at 9:38 pm

Capital gains on principle residence are tax free. You’d be way further ahead with a house. Amazing that you omit this from your biased analysis

So are capital gains within a TFSA. I omitted that too. — Garth

#73 Mark on 08.23.16 at 9:40 pm

“#47….Prairie Person….you are referring to the companies WACC (weighted average cost of capital) and cannot be compared to securing a mortgage or a loan or line of credit where the borrowed money is secured.”

If the company has literally no other capitalization, then the loan rate = WACC. However, I think the reference made was that of an unsecured loan to a rather risky business. Probably in the oil and gas services sector, where credit is very tight because many of the businesses are at very serious risk of insolvency in the low oil and gas price environment.

One of the tragedies of the contemporary Canadian economy is that, because the CMHC has driven down the cost of subprime credit to the housing sector extremely (and thus fomented a bubble), credit to other sectors of the economy and even property which cannot fall under CMHC insurance is unduly expensive. Such as that example you cite with credit having a very high cost for that particular business. Which may or may not be justified by its risk, but certainly is more expensive than it ordinarily would be in a true market economy rather than the CMHC-distorted economy we have today.

#74 Smoking Man on 08.23.16 at 9:42 pm

#48 WUL on 08.23.16 at 8:23 pm
Even this aging, dopey, leftie SJW gets it and is wholly onside with Garth’s avoidance advice. Probably because I tend to guide myself, at least in part, by the brilliance of pre-eminent jurists.

Justice Learned Hand (1872 – 1961) – Judge U.S. Court of Appeals:

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

Gregory v. Helvering
……….

Canada is a colonial country of suck ups and pleasers . It’s in our DNA. I have used all of the above tactics to paying taxes on my consulting income. And always fk around a bit so the auditor feels worthy.

But my gambling income. We are talking proxy servers, text encryption, stealth communication. BVI. Call CRA on me. I see the auditors almost every single year.

They visit longbranch almost every year for an un organized bag of recipes. Have fun I say as I taunt them.

Typically they nail me for about 10k which I agree to pay over the course of the next year because look at me.

They feel so sorry for me, they tell me to sell the Ford ranger with the cracked wind sheild and lease a nice car. It’s deduction form your gross, this year she said, why haven’t you fixed the shower.

I said two funerals, mom, dad, greedy employees. It’s so hard to save.. And I have a Gambling problem, look at all the ATM with drawls at Seneca.

I sort of want to get caught on the big stuff….

Serious bragging rights.

Even drunk out of my mind, I’m not stupid. Look at the secret I keept about my previous tax farm gig.. Pretty impressive… I’ve never slipped wasted beyond belief.

Or mabey I did. And Graths big red delete button saved me.

Know this dogs, life is but a stage and we are all actors. Find a good roll and rock it..

Dr Smoking Man..
PhD Herdonomics.

PS yeah I paid 90k for the dock and. Solar powered boat lift. Granet stone steps, Gazibo, and a wrap around deck.. The door knocker got me on a wasted night.. Good for him if I over paid…

I’m found of door knockers. Use to do it myself.

#75 Metaxa on 08.23.16 at 9:42 pm

I’ve been voting and doing the Canadian citizen stuff since the ’60’s.
Almost 60 years.
seems to me its about 50-50 as to who was elected majority or minority government.

As in 50% of the time its been PC or Con, 50% its been Liberal.

This constant whinging about the new (less than a year) Liberal government is both counterproductive and childish.

If things are so bad why didn’t your guys do something about it? The cons have had almost equal kicks at that cat, eh?

I’ve voted PC all my life, sure wouldn’t vote for Mr. Harper tho…still waiting for someone, anyone to come along and restore true conservatism to Canada.

Meanwhile…no whine.
Live, laugh, love.

gotta go, local rack of lamb onto the grill…gotta get dinner with my sweetie on the go…

#76 Mark on 08.23.16 at 9:46 pm

“Really? You offset rental income with expenses to improve the asset for future gains, to fund the long term acquisition of the asset, to create a revenue stream in retirement etc. I can only assume that someone as smart as you is being so dismissive because you have the “grey” in the argument undermines your basic premise?”

Garth’s comment was (as pretty usual) spot-on here. What’s the point of a revenue property if there is no net revenue after expenses? The tax system recognizes the fact that depreciation exists, by allowing for a deduction in recognition of such. The deduction is intended to approximate, over the long term, the physical deterioration of the buildings and land and the sort of re-investment (or accumulation of sinking funds) required to retain the long-term viability of the asset.

Many amateur landlords, who do not properly recognize depreciation, will wake up, maybe a few years from now, maybe 10-20 years from now, and realize that while they’ve paid off a good chunk of their mortgage with the rental proceeds, they really haven’t accumulated any equity on account of depreciation in their property and the required quantum of maintenance (ie: new roof, new HVAC, increasing property tax assessments to pay for depleted shared infrastructure, condos special assessments, etc.).

A notorious area of oversight is that in condominiums. People often mistakenly assume that condo fees and “reserves” are adequate for long-term maintenance. They’re rarely. Another area they neglect is interior unit maintenance. After 10-30 years, basically a condo unit will need all new carpets, wall coverings, taps, and many things that are not included as part of the overall condo maintenance agreement. Without depreciating these items adequately, amateur condo landlords vastly over-estimate the profitability of their ventures.

#77 TRT on 08.23.16 at 9:48 pm

Show me who pays taxes or declares rental income from Surrey’s 60,000 basement suite. Trudeau knows not to mess with his voters.

Most have 2 suites and get $20,000 a year tax free.

I’ve just submitted your email address and IP addy. They’re coming. — Garth

#78 Long Branch Apprentice on 08.23.16 at 9:59 pm

All the folks on here saying taxes are the price of democracy hopefully aren’t referring to income taxes, which are the price of having a debt based currency system which perpetuates government debt.

Gary Johnson has the right, (although too radical for ‘Mericans) idea with replacing the income tax with a flat consumption tax. This would also mean getting rid of the IRS, which would likely guarantee additional head ventilation, if you know what I’m saying.

It sounds dirty, but I want to know what’s going to come out of Jackson’s Hole on Friday. Could influence the weekend’s extracurriculars, eh there Smokey?

And for those of you who say things would be different if women were in charge, you don’t know how right you are. Potentially Hillary in Nov., Yellen, Merkel, Lagarde, and Wynne.

Yikes.

#79 Smoking Man on 08.23.16 at 10:01 pm

I’ve just submitted your email address and IP addy. They’re coming. — Garth

There you go lefty phycos. Rat out fiction writer Alien smoking Man…

Book release soon.. Under an assumed name if a Forex, shit I ment foreign country..

Bring it.. Let’s have fun.. Smokey lives on the south west corner of 38 street and James… In long branch… Bring your cameras….

#80 WalMark of Sadkatoon on 08.23.16 at 10:13 pm

And Mark you are missing the point here, more capacity drives down pricing severely. So sure that 300k house is now 800k say 5 years later. But guess what, suddenly there’s 3x insurers that quote, so the 300k price 5 years ago, same price, except now the limit is 800k. Net zero, higher exposure.

Finally! Common sense.

Schooled again.

Sad

#81 Al on 08.23.16 at 10:13 pm

Garth,

I think you need to talk to your cfa dudes Influenza and whatever the other guys name is.

You only get taxed on net income…

You $5000 of tax on $12,000 of rental income is super misleading to any sheep reading your pathetic blog.

If your gross income is $12,000 by the time you add in all the write offs like mortgage interest, property tax, maintenance, mileage, insurance , perineal home office, personal prop tax, etc….if your smart your left with close to $0 of taxable income….because your expenses bring your gross income down close to $0…

Come on Garth….thought u were a big grizzled financial guy who owned real estate.

Stop misleading the moist millenials…

I am that guy you just described and it was one of the best investment I made because of the automatic leverage with owning real estate…

Granted I have a hefty financial portfolio as well but my real estate property so far way way way beats my financial portfolio…especially for the ‘synergies’ of the maintenance portion of the rental…like grass seed…cleaning supplies…etc

Come on Garthosaurus be fair. Skewing the facts here.

Stop being a deadwood!

Of course it’s net income. Duh. Why would you own a ‘revenue’ property that does not generate net revenue? — Garth

#82 WalMark of Sadkatoon on 08.23.16 at 10:14 pm

I don’t see that “correction” you keep mentioning happening in Toronto. Markham is on fire

Indebted Toronto homeowners are dead man walkin

#83 JSS on 08.23.16 at 10:14 pm

Can you not purchase an income property, put the property under a corporation, collect dividend income, and then pay less taxes?

#84 WalMark of Sadkatoon on 08.23.16 at 10:18 pm

“(US) Millennials aren’t buying homes. Good for them”

Of course not. Scared. Renting them from ppl like me

#85 mathman on 08.23.16 at 10:20 pm

Garth and Mark – spot on. Most people I know that have rental properties don’t have the faintest clue what their actual yield is. Negative cap rates, claiming net rental losses, major capex every 7-10 years. Again the reason we have a 1%, the smart landlords know exactly what they make, costs, the economics of each property, but they are statistical outliers among our country of amature property gods.

When the gasbag blows, we will find many an average person who owns 3+ rental properties. It is this type of rampant speculation that will goose the condo market. Their is no intrinsic value to a box in the sky, where you have very little control over a variable cost that can wipe out your equity. Think about it.

#86 AK on 08.23.16 at 10:25 pm

#53 Freedom First on 08.23.16 at 8:39 pm

“Yes. Freedom First rules.”
————————————————————
It sure does.

Were you on vacation? Haven’t seen you post in a while.

#87 Smoking Man on 08.23.16 at 10:26 pm

78 Long Branch Apprentice on 08.23.16 at 9:59 pm
All the folks on here saying taxes are the price of democracy hopefully aren’t referring to income taxes, which are the price of having a debt based currency system which perpetuates government debt.

Gary Johnson has the right, (although too radical for ‘Mericans) idea with replacing the income tax with a flat consumption tax. This would also mean getting rid of the IRS, which would likely guarantee additional head ventilation, if you know what I’m saying.

It sounds dirty, but I want to know what’s going to come out of Jackson’s Hole on Friday. Could influence the weekend’s extracurriculars, eh there Smokey?

And for those of you who say things would be different if women were in charge, you don’t know how right you are. Potentially Hillary in Nov., Yellen, Merkel, Lagarde, and Wynne.

Yikes.
….

Jackson hole will be blowing sunshine… Your long Usdcad will yield nicely.

Devous and Bilderburg never studied Bradley effect.

Link up top..

I love it.

#88 james on 08.23.16 at 10:27 pm

“The tax system is designed to encourage people to take capital risks. To create jobs. To grow the economy.”

Uh, that is the most inane description of modern tax regimes that I have ever heard.

The introduction of personal income taxes was sold to the public as a matter of job creation?

Even the most dense child realizes that taking money from person A to give to person B does not necessarily ‘create jobs’. It is called ‘redistribution’, and the main arguments for it (whether you buy them or not) concern distributive justice, fairness, etc. Hence Rawls, etc.

No politician sets out seeking to ‘grow an economy’. They set out to introduce policies to benefit select interest groups (e.g., CGI, Bombardier, sealers, etc).

#89 JSS on 08.23.16 at 10:27 pm

Buy XRE in your TFSA.

voila – tax free money distributed monthly!

#90 Mr. Capital risk and Mr. Wage earner on 08.23.16 at 10:31 pm

The tax system is designed to encourage people to take capital risks. To create jobs. To grow the economy.

Ask Mr. wage earner or Ms. interest collector how much risk they’re willing to take with their hard earned cash for the benefit of our country’s economy.

—-

Ask Mr. Capital risk how much growth and jobs could he “create” all by himself, without Mr. Wage earner.

What is the right ratio of reward for the participants in a system where none of the parties can exist without the other?

#91 Barb on 08.23.16 at 10:35 pm

Maximizing tax avoidance is the only way to live.
We’re idiots otherwise.

#92 Rats vs KPMG on 08.23.16 at 10:37 pm

#77 TRT on 08.23.16 at 9:48 pm
Show me who pays taxes or declares rental income from Surrey’s 60,000 basement suite. Trudeau knows not to mess with his voters.

Most have 2 suites and get $20,000 a year tax free.

I’ve just submitted your email address and IP addy. They’re coming. — Garth

No worries, KPMG is waiting for them.

#93 For those about to flop... on 08.23.16 at 10:44 pm

#81 Al on 08.23.16 at 10:13 pm
Garth,

I think you need to talk to your cfa dudes Influenza and whatever the other guys name is.

/////////////////////////////

Hey Al ,are you pregnant, because your about a month late with that joke.

I got a write up on page one to prove it.

Btw the other guys name is Robax…

M42BC

#94 IHCTD9 on 08.23.16 at 10:47 pm

Today’s post is right up my alley! I’m a wage slave so I do what I can to avoid funding the T2 regime. Here are a few of my methods:

1. Avoid retail, slightly used on Kijiji is tax free
2. Pound it into RRSP’s
3. Wife has a part time contract position a day a week, we save every receipt
4. Reduced consumption of high tax conventional energy.
5. Eliminated sin taxes ie. Smoking, drinking etc…
6. Reduced consumer spending across the board.
7. Packing a lunch.
8. I maintain all of our vehicles.
9. I maintain our house and property 99%

I’ve eliminated about 120.00 per week of direct consumer spending, some of it very high tax. I’d guess 30-40% of that number is pure taxation due to the products involved.

Next is a multi faceted home electricity generation scheme, and maybe a Chevrolet Bolt if Wynnie and T2 cough up a big enough rebate…

#95 For those about to flop... on 08.23.16 at 10:49 pm

At least with Lewenza and Robax you know what you are getting each Saturday.

One gets me all hot and bothered and the other one is a muscle relaxant…

M42BC

#96 Self-employed on 08.23.16 at 10:51 pm

The self-employed part is not quite correct.

Have you heard about PSC (Personal Services Corporation)? It’s when the CRA comes in, cancels deductions and adds penalties.
Most self-employed would fall under PSC if they try fiddling with dividends and deductions to a significant extent. In the eyes of the CRA, a self-employed is the same as employee.
Garth, your statement was valid about 20-30 years ago.
Things have changed since then, not for the better.

I did not refer to a PSC, but to an opco. Statements hold. — Garth

#97 Nobody on 08.23.16 at 10:51 pm

Surely then you should pay no tax at all?
A favourite among UK government ministers is to live in a tax haven, fly into London on monday, fly home on friday. Days you travel don’t count so you only spent 3days in the UK, so 3*52 is less than half a year so non-resident so no tax.

Another trick if you are self employed is to be paid into your tax haven located company. That company never pays you a dividend or a salary so no tax or CPP. It does however lend you a $100K each year interest free which you can live on.

If you are on an Ice Cream store owner level salary. You simply create a privately held company with 10M shares. Your friend buys one for $100, so the company is fairly valued at $1Bn. You donate 10K shares to a charity and claim the $1M donation against your tax.

Only millennials pay tax – somebody has to pay for the country I suppose

#98 Smoking Man on 08.23.16 at 10:52 pm

91 Barb on 08.23.16 at 10:35 pm
Maximizing tax avoidance is the only way to live.
We’re idiots otherwise.

Love your mind. Let’s have an affair… I can teach you cool moves.

#99 TCContrarian on 08.23.16 at 10:53 pm

Helped a relative sell a rental in YVR for $1.8M that was netting $16k/annum. Not very financially literate, but after some coaxing he ‘saw the light’. Could make more on GIC’s I told him.
Of course, there will be huge cap. gains taxes so ‘only’ about $1.4M net from sale.

Sometimes, you’ve gotta know when to cash in and ‘run’! This is (was) one of those times.

#100 Just call them what they are... on 08.23.16 at 10:54 pm

#81 Al on 08.23.16 at 10:13 pm
Garth,

I think you need to talk to your cfa dudes Influenza and whatever the other guys name is.

Don’t worry about the names… Just mention them as the poor schmucks who toil working for Turner Investments, Garth will know.

#101 BG on 08.23.16 at 11:11 pm

#21 Silent the people on 08.23.16 at 7:08 pm
Taxes Garth are a good thing! Avoidance or whatever you call it is another reason why our country will struggle for generations!
[…]
—————————————————————-

Tax “avoidance” should not even be called this way.
It’s tax optimization.
It’s not very different to optimizing your expenses.

When you go shopping, do you pick the most expensive item on purpose?
Then what should you overpay when it comes to taxes? Pay you share, nothing more.
If the taxman wants more from your group, trust me, they will come up with a new rule.

#102 White Crock BC on 08.23.16 at 11:26 pm

Canadian in LA on 08.23.16 at 7:47 pm

Don’t Canadians get depreciation expense on their rental income schedule? If so, doesn’t that usually work out as a tax deferral?
——————–

Yup. Remember the old Fram oil filter commercial?

“Pay me now, or pay me later.”

#103 Nate on 08.23.16 at 11:36 pm

Owning a rental property isn’t nearly as bad as you make it out to be….

You should allow me to do a guest post so I could educate your readers on some key strategies to shelter rental income from taxes…

1) Being generous with claiming ‘rental property expenses is an art form that should be mastered…push the boundaries.

2) Claiming depreciation on the building to wipe out 100% of the net income…yes that means you pay 0% tax on the rental income. Although when you sell the building the cost basis is adjusted to your lower depreciated rate. This means you pay a massive lump sum in tax the year you sell the property – but inflation and building up RRSP reserves helps reduce the pain.

3) If you own a rental property and are not using the cash flow dam you are stupid. You should put your life on hold and immediately research for yourself and then implement the cash flow dam. Your welcome.

#104 OffshoreObserver on 08.23.16 at 11:39 pm

#9 Trojan House on 08.23.16 at 6:47 pm
I don’t mind paying my fair share of taxes.

Millennial, right? — Garth
——————————-
More like a moron, Garth.

Why would not one exercise one’s right to avoid taxes?
Get help on setting up an offshore trust/foundation:

https://www.creatrust.com/

#105 BOOM! on 08.23.16 at 11:50 pm

Minimizing, or avoiding TAXES using perfectly “legal” ways of avoidance is something most smart people try to do each year.

The government gives you these tools, only a fool (greater, or lesser matters not) fails to use them when available.

If you like paying taxes, fine. I’ll do what I legally can to minimize them, thank you.

As a retiree, with few deductions to claim, it becomes a bit more of a challenge. So, I restructure what I can to minimize D.C.’s and Madison’s tax bite.

While I can’t eliminate them ALL, I sure as heck can do what I can! I figure I can spend it more advantageously
than they will….

#106 rknusa on 08.24.16 at 12:04 am

there are a lot of so called self employed out there who are defacto employees, they have had one employment contract for many years

employers love it because they dodge payroll taxes, pension contributions

it seems CRA continues to ignore these people

#107 SickofBC on 08.24.16 at 12:07 am

“The average Canadian family spends more on taxes than on housing, food and clothing combined,” says the Fraser Institute, described as a conservative and libertarian think-tank. It says that 42.4 per cent of the average family’s income went to taxes while 37.6 per cent was spent on basics.

The think-tank notes that “this represents a marked shift since 1960, when the average family spent 33.5 per cent on taxes and 56.5 per cent on housing, food, and clothing.”

As personal taxes have gone up, the corporate tax rate has decreased dramatically. The left-leaning Canadian Centre for Policy Alternatives notes that Canada’s corporate tax rate has gone from 36 per cent in the 1980s to 15 per cent today.

http://www.rcinet.ca/en/2016/08/23/individual-taxes-up-corporate-taxes-down/

#108 The Spangler on 08.24.16 at 12:11 am

#83 JSS on 08.23.16 at 10:14 pm
Can you not purchase an income property, put the property under a corporation, collect dividend income, and then pay less taxes?
————————–

Dividends are taxed lower due to the DTC as this gives credit for tax paid at the corporate level.

The corp still pays tax, and you will on the dividend, so no tax advantage and you have to deal with the admin costs of having the corp.

Read about tax integration.

#109 Julie K. on 08.24.16 at 12:17 am

“Obsess about what you keep.”

Could not agree more.

#110 Bill Gable on 08.24.16 at 12:28 am

As if we don’t have enough to get sweaty about – read this: I hope you are sitting down.

“FORT ST. JOHN, B.C. – The Fraser Institute is out with a new study that has found taxes, and not basic necessities like food, clothing, and housing, make up the largest expense for the average Canadian household.

It found the average family paid $34,154 in taxes of all sorts last year, including what it calls “hidden” business taxes passed along in the price of goods and services purchased.

The conservative think tank says last year the average family bill for income taxes collected by governments was $10,616.

It puts the second-biggest category, payroll and health taxes, at $7,160 dollars, and it is followed by sales taxes at $4,973, and property taxes at $3,832.

The study’s authors conclude that visible and hidden taxes would have been equal to 42.4% of the cash income for an average Canadian family in 2015, estimated at $80,593.

By comparison, that’s nearly five percent more than the average family paid, for food, clothing, and housing combined”.

Link: http://tinyurl.com/jtyqtv4

#111 NoName on 08.24.16 at 12:50 am

#62 For those about to flop…on 08.23.16 at 9:10 pm

There was a time when no self respecting FA wouldn’t consider touching ours portfolio light with ten foot pole, trust me. So finally we get to met this guy, who tells me lets sit down and see can we make any sense out of all your nonsense. So we did.
It felt like he took up a challenge to make something out of lots of nothing…
So i have to stick with him just for that reason alone, and not to mention all those unimportant mickey mouse attributes that person can possess, like honesty, integrity truthfulness, straightforwardness. no one cares about those now days anyways.
Now you know why i cant leave my guy.

#112 NEVER GIVE UP on 08.24.16 at 12:50 am

Hey Garth:
Your web site verification service that we are sent to when we are in a foreign country does not work in China.
Did you know that?
The great firewall of China does not mind your web site but the verification part is killed by them.
If anyone has a way to read the blog in China please let us know?
The only way so far I have been able to read the Blog is by using Rogers Roam Like Home service. The problem with that is reading that small smart phone screen is hard on the eyes!

#113 OffshoreObserver on 08.24.16 at 1:03 am

#88 james on 08.23.16 at 10:27 pm
“The tax system is designed to encourage people to take capital risks. To create jobs. To grow the economy.”

Uh, that is the most inane description of modern tax regimes that I have ever heard.
—————————————————-
U.S. Income taxes were implemented as a “temporary war measure” : https://www.loc.gov/rr/business/hottopic/irs_history.html

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

History of top rates[edit]

Historical federal marginal tax rates for income for the lowest and highest income earners in the US.[61]
In 1913, the top tax rate was 7% on incomes above $500,000 (equivalent to $12 million[62] in 2015 dollars) and a total of $28.3 million was collected.[63]
During World War I, the top rate rose to 77% and the income threshold to be in this top bracket increased to $1,000,000 (equivalent to $18.5 million[62] in 2015 dollars).

I can’t find the quotation, but from memory there was a Senator who screamed, on learning of the World War I imposition of the US Income Tax: “Hell, before you know it will be 10%!

Other quotes on the subject: http://www.goodreads.com/quotes/tag/taxes

#114 millenial82 on 08.24.16 at 1:43 am

Great post Garth, highly motivational. Like anything in life you generally get what you put in. Anyone can get a job, a lousy GIC and apparently a leveraged rental home and so the returns should reflect that fact. Building a kick ass portfolio or business that can roll out these strategies takes hard work and the utmost dedication and perseverance over a long period of time. Not many people can or will do that. That effort should be rewarded as it is and hopefully it always is that way.

#115 Love My Kia on 08.24.16 at 1:47 am

#79 Smoking Man on 08.23.16 at 10:01 pm

I’ve just submitted your email address and IP addy. They’re coming. — Garth

There you go lefty phycos. Rat out fiction writer Alien smoking Man…

Book release soon.. Under an assumed name if a Forex, shit I ment foreign country..

Bring it.. Let’s have fun.. Smokey lives on the south west corner of 38 street and James… In long branch… Bring your cameras….
===========================
I see no Ford Ranger in the driveway.

I guess you werent aware of Google maps Smokey.

#116 Freedom First on 08.24.16 at 2:30 am

#86 AK

No. My Freedom First Impersonators fan club has been slacking off. They were up to 60% of the Freedom First posts, but the average has recently fallen. I am afraid they may have lost their jobs or gone into foreclosure. Or, Heaven forbid, gotten served with a divorce. 50% chance of divorce. Ultimate high risk. Vast majority initiated by women. Court backed all the way. No Fault. Men ruining.

#117 April. on 08.24.16 at 2:56 am

Thank you. I know the real estate stuff is your thing, but I am grateful when you share other information.

#118 PDX Canuck on 08.24.16 at 3:55 am

Great article -the reason I read this blog religiously.

Too few investors focus on tax minimization.

A timeless article.

#119 Ace Goodheart on 08.24.16 at 6:33 am

What I always say. World’s set up for rich folk. If you can’t beat them (you can’t), join them.

#120 Life is a different girl every day on 08.24.16 at 6:54 am

I take off all the tax avoidance you mention but do one better . I moved to a jurisdiction where I only pay a flat tax at 15 percent, cost of living is a quarter, I pay no CPP or EI, no other ancilliary additional taxes like GST, or Trudeau/Notley/Wynne/provincial taxes and the sun shines every day. Beat that.

#121 Pepito on 08.24.16 at 7:06 am

#68 Damifino on 08.23.16 at 9:31 pm
#35 Pepito

“Sounds to me like a pretty unfair taxation system. And your gloating about it borders on repulsive. Do you not see it?”
—————————————–

The tax system is designed to encourage people to take capital risks. To create jobs. To grow the economy.

———————————————
That’s the same old “Job Creators,” Trickle Down zombie lie that’s been discredited over and over again, yet it just keeps coming back. Prove how purchasing an ETF contributes more to an economy than purchasing a GIC? Or how a trades person who works on his own as a corp with all of the tax perks contributes more than one who works for a fully taxed salary.

Clearly, you’re just regurgitating this bovine excrement without any critical thought whatsoever.

#122 Trojan House on 08.24.16 at 7:21 am

Don’t know if anyone has posted this but:

https://www.fraserinstitute.org/studies/government-spending-taxes

It’s official – Canadians now pay more in taxes than we do in food, clothing and housing combined.

As mentioned, I don’t mind paying my fair share…

#123 Apocalypse2016 on 08.24.16 at 7:40 am

Earthquakes everywhere!!

The Summer of Hell devastates Italy and Burma.

North and South America are next.

Get liquid, dump all needless property, have supplies and a plan.

#124 crowdedelevatorfartz on 08.24.16 at 8:15 am

@#97 Nobody
“Only millennials pay tax – somebody has to pay for the country I suppose….”
********************************************

I guess all the Taxes, CPP, UI , EI etc that I’ve paid over the last 40 working years were a figment of my imagination…….good to know……now I’ll sleep better.

I’ll expect a reimbursement cheque signed by our illustrious Millenial PM T2.
“Because its 2016” .

#125 Dr Doom on 08.24.16 at 8:18 am

Fraser institute’s latest tax study is rather…interesting:

“The average Canadian family now spends more of its income on taxes (42.4%) than it does on basic necessities such as food, shelter, and clothing combined (37.6%). By comparison, 33.5% of the average family’s income went to pay taxes in 1961 while 56.5% went to basic necessities.”

https://www.fraserinstitute.org/studies/taxes-versus-necessities-of-life-canadian-consumer-tax-index-2016-edition

#126 maxx on 08.24.16 at 8:34 am

“Obsess about what you keep.”

Oh yes indeed.

A very powerful road to freedom from slavery, as today, more than ever, work is just no damned fun anymore – for vast numbers of people. And this number grows daily.
Best time of our lives has been since we retired after saving our butts off whilst we were much younger. Started a small business which is huge fun.
We alone decide everything which concerns or impacts our life’s time.
The absolutely prime reason for building wealth is to free yourself from the type of stress which so often accompanies paid employment, over which you have little control. This stress comes from lack of influence over decisions and wasteful politics for the most part.
Two of the worst aspects of employment by another party is the cumulative effects of chronic stress of the wrong kind and the substantial circumference of time spent preparing for, commuting to and decompressing, or recovering from work.
Your precious life must, without exception, arrange itself around work.
I don’t commute, don’t rush through my morning coffee and don’t take orders from anyone but myself.

Saving is so underrated.

#127 jess on 08.24.16 at 9:00 am

#134 Barb on 08.23.16 at 5:21 pm
robert dall – 1977 private label mortgage back securities / Salomon Brothers in the spring of 1978, when the very first mortgage finance department on Wall Street was formed
http://www.ifre.com/1977-us100m-deal-for-bank-of-america-the-first-private-label-mbs/21103057

‘risk-free’?
Black and Scholes invented their equation in 1973
The “midas formula”
The mathematical equation that caused the banks to crash
The Black-Scholes equation was the mathematical justification for the trading that plunged the world’s banks into catastrophe
https://www.theguardian.com/science/2012/feb/12/black-scholes-equation-credit-crunch
======================
Securitizing rental cash
Blackstone, $3.6 billion credit line arranged by Deutsche Bank.

Notice the up tick Home prices were rising October 2012 as the homeownership rate was dropping.

https://fred.stlouisfed.org/series/USSTHPI
The S&P/Case-Shiller index of property “VALUE” in 20 cities increased 12.4 percent in July from a year earlier, the biggest advance since February 2006.

#128 maxx on 08.24.16 at 9:10 am

#7 the other white meat (pork) on 08.23.16 at 6:42 pm

“All true except the self employment bit. Get too aggressive with deductions and discover how arbitrary and heavy handed the CRA can be. Just ask a doctor or dentist what they can deduct, it ain’t much and you’ve got to earn it first.”

Given what some idiots try to deduct, I’m all for CRA to scrutinize deductions. I mean seriously, everyone should pay their freight. Social contracts work both ways.

#129 Income Streamer on 08.24.16 at 9:20 am

I am about to receive solid defined benefit pension plan benefits generating $60K+ per year, which are fully taxable (ouch). After researching and looking at different ways of generating either a tax advantaged supplemental income stream from my investments, I found that by deferring taxes through Return of Capital using T-series funds was the way to go. As Garth indicates, I pay nothing initially on this, and the tax will be paid on capital gains (eventually) once I’m A) really old in the nursing home and don’t care or B) once I’m dead in the ground and don’t care. In planning for retirement, a little research into the tax implications of wealth disbursement can make a HUGE difference.

That is not the ROC to which I referred. — Garth

#130 Have fun TRT! on 08.24.16 at 9:21 am

#77 TRT on 08.23.16 at 9:48 pm
Show me who pays taxes or declares rental income from Surrey’s 60,000 basement suite. Trudeau knows not to mess with his voters.

Most have 2 suites and get $20,000 a year tax free.

I’ve just submitted your email address and IP addy. They’re coming. — Garth

Haha!

#131 Bond Junkie on 08.24.16 at 9:22 am

Pssssssst. Garth… Brampton/HCG/Seeking Alpha.

Full story at 6pm.

#132 Will Chung on 08.24.16 at 9:54 am

#103 Nate
2) Claiming depreciation on the building to wipe out 100% of the net income…yes that means you pay 0% tax on the rental income. Although when you sell the building the cost basis is adjusted to your lower depreciated rate. This means you pay a massive lump sum in tax the year you sell the property – but inflation and building up RRSP reserves helps reduce the pain.
___________________

This is the key to negating a chunk (or all) net rental income from your taxes. You can deduct depreciation of the building to offset the taxable part of the net rental income, so you can in fact pocket your net rental income without it being taxed in that tax year. The deductions are recaptured by the gov’t when you sell your property for a gain and taxed at that time….so it’s in essence a tax deferral structure.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/rntl/cca-dpa/menu-eng.html

Garth, your entire post was about taxes and how to minimize paying them. I know you obviously can’t cover the spectrum of rules/deductions pertaining to all the things you talked about, but this one should have been mentioned to temper your obvious sentiment that rental income is for losers and will be taxed at your marginal rate (which is only partially true if you use the CCA deduction).

Disclosure: I’m not and have never been a landlord nor do I wish to be. Not an accountant either so read the CRA CCA rules yourself.

#133 Renter's Revenge! on 08.24.16 at 10:28 am

Maybe the reason why the feds aren’t cracking down on amateur landlords not reporting rental income is that cap rates are so low now that if they did their taxes properly, the rental income would be entirely cancelled out by expenses.

It’s like they think they’re pulling a fast one on the government, but the CRA realizes they’re idiots, so they go easy on them.

#134 IHCTD9 on 08.24.16 at 10:32 am

#110 Bill Gable on 08.24.16 at 12:28 am
As if we don’t have enough to get sweaty about – read this: I hope you are sitting down.

“FORT ST. JOHN, B.C. – The Fraser Institute is out with a new study that has found taxes, and not basic necessities like food, clothing, and housing, make up the largest expense for the average Canadian household.
__________________________________________

That’s probably why everyone and their brother is making money on the side these days. How much more will legit taxpayers absorb before they do the same? T2 is only making future tax burdens worse with his orgy of borrowing and spending.

Taxing the shit out of folks who pay up while ignoring those who blatantly evade them is what got Greece into the hole they are in right now.

#135 Dominic Poutine on 08.24.16 at 10:34 am

Notley , Wynne , Moroneau all admitting they don’t have a clue how to do their jobs.

http://www.bnn.ca/ottawa-economic-advisors-to-meet-with-morneau-on-canada-s-weak-growth-1.553941

And Juice Box Justin is blowing the people who elected him…no not you….Unifor.

Good luck Canada…..you really screwed up this time.

#136 Income Streamer on 08.24.16 at 11:07 am

Re #129 That is not the ROC to which I referred. — Garth

Whether it’s T-series funds or another method of creating the retirement income stream, ROC is ROC and non-taxable. Taking it that way will reduce the ACB and eventually capital gains will be payable. You can defer the taxman but you can’t avoid him forever.

Wrong, actually. People can take income as ROC from portfolios without reducing the ACB or reporting the cash flow. — Garth

#137 AB Boxster on 08.24.16 at 11:09 am

Good article in financial post today:

http://business.financialpost.com/midas-letter/george-orwells-negative-yield-doublespeak-portends-another-financial-crisis-brewing

Central bank policies are beggaring savers in the screwed up financial system and have rewarded massive amounts of individual debt while penalizing savers.
As the currencies continue to be devalued by these criminal policies, the idiots believe that ‘negative yield’ actually provides a ‘yield’ of any sort, when in fact a ‘negative yield’ is just another term for a loss.
Funny how prophetic and commonly accepted Orwell’s doublespeak has become.

As the article states:

‘That we are apparently incapable of calling “Bulls–t!” on our central bankers and governments’ perfidy is evidence of either a collective ignorance of such arcane financial concepts, or perhaps the absence of an accurate portrayal by mainstream media of what the reality of such circumstances are. In either case, the advent of negative yields as a legitimate monetary strategy is dangerous at least, and more probably heralds the onset of a complete collapse of the financial system as it exists.’

But in today’s ‘progressive world’ there are really only 2 options to achieve a possible yield:
One is to pursue the balanced and diversified portfolio described by Garth in his blog. The other is to pursue the leveraged purchase of tangible real estate assets.

It is no wonder why the masses continue to pursue the one asset strategy of home ownership.

As most citizens have employment income, but little savings, the leveraged asset option is seen as their best (and maybe only) investment option. It’s hard to argue with this strategy over the last 30 years of real estate growth.

And, because ‘math is hard’, those with some assets but who do not understand (or trust) the financial instruments that make up a balanced and diversified portfolio, real estate is their only option. So they continue to ‘invest’ regardless of the massively inflated price of the asset, and regardless of the warnings.

But what is the alternative?

Yes, a balanced and diversified portfolio is certainly a better investment alternative than the massively overpriced OSB and MDF boxes.

But it is still a forced participation in the financial system mess that is being created by central bankers in the world. It is a forced participation in a system that is being badly mismanaged by central bankers, and which increasingly looks to become unsustainable in the long term.

As the article mentions:

“Putting aside for a moment the alarmist timbre of such an idea, we see now that government debt levels have reached such monstrous proportions that there is a requirement for the ongoing fabrication of money from thin air just to support the math of the entire concept of interest paid on money. Can a system of value and commerce underlaid by such an unsustainable mathematical equation be considered legitimate?
Or is it, in actuality, a criminal fraud being perpetuated against citizens by central banks and complicit governments?

Hardly inspires confidence, unless you just ignore such concerns.

So, yes, I agree with Garth 100%.
A balanced and diversified portfolio, in today’s mess of a financial system, is the best way to ensure that you may achieve any yield.

But, being ‘forced’ by central banks to participate in this system in order to achieve any sort of yield at all,
may ultimately turn out to be a bigger mistake, than investing in over inflated real estate.

It is, unfortunately, the only way to succeed today.

Oh, and buy real gold bullion as a hedge, for when it all goes south.

#138 TurnerNation on 08.24.16 at 11:18 am

Dollarama stock just hit $100. Our new economy. ..Timmies and T2 Dollar stores. :-(

Actor for a PM in most countries. Bread and circuses.

#139 Income Streamer on 08.24.16 at 11:24 am

Re #136 Wrong, actually. People can take income as ROC from portfolios without reducing the ACB or reporting the cash flow. — Garth

Interesting/intriguing. Would be very interested if you wrote more or elaborated on how to do that. Thank you.

#140 Victor V on 08.24.16 at 11:24 am

Royal Bank of Canada hikes dividend as $2.7 billion profit beats expectations

http://business.financialpost.com/investing/market-moves/royal-bank-of-canada-hikes-dividend-as-2-7-billion-profit-beats-expectations

#141 Vamanos Pest on 08.24.16 at 11:31 am

I used a few of these strategies to benefit from the Trudeau tax cuts. Actually, the maximum benefit a family could receive mathematically. And I’m way, way into the 1%.

Simply, my company pays my wife and I 90k each. All we have to do is find a way to live off 15k a month, enjoy the tax breaks, while the rest stays in the company, where the taxes were unchanged.

I can’t believe I didn’t vote for this guy. He did more to reduce my taxes than Harper ever did.

And the 30 billion dollar deficit? Sounds good to me (since I don’t have kids). High priced government programs, low taxes, and YOUR KIDS pick up the tab?

LONG LIVE T2!!!

#142 Damifino on 08.24.16 at 11:44 am

#121 Pepito

I take it you’d prefer a communist system where everyone shares equally except top party officials.

#143 For those about to flop... on 08.24.16 at 12:12 pm

#111 NoName on 08.24.16 at 12:50 am
#62 For those about to flop…on 08.23.16 at 9:10 pm

There was a time when no self respecting FA wouldn’t consider touching ours portfolio light with ten foot pole, trust me. So finally we get to met this guy, who tells me lets sit down and see can we make any sense out of all your nonsense. So we did.
It felt like he took up a challenge to make something out of lots of nothing…
So i have to stick with him just for that reason alone, and not to mention all those unimportant mickey mouse attributes that person can possess, like honesty, integrity truthfulness, straightforwardness. no one cares about those now days anyways.
Now you know why i cant leave my guy.

////////////////////////////////

Hey NoName,sounds complicated but like I said you gotta do what’s best for you.

I still don’t understand why you can’t get a Tfsa and stay with the same guy but I think some of the story is lost in translation.
——————————————-
On another note Crowdie I believe the Metrosexual Messiah is a Gen X not a Millennial as ” the kid” is older than me ,I think with about the same maturity but I just don’t get to give billions of dollars away.

Not that I’m claiming him if the Millys want him they can have him, he seems to have more in common with a lot of them.I know him and MF are besties.

:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

I think I have determined why InLewnza and Robax have been getting a good stirring from me.

Before the Fort Mac fires WULLY and I used to run Count of Caledon Karaoke…Unusual Posts or Cock Up for short on Saturday nights to keep interest in the blog on Saturdays and to get some non mainstream subjects off our chests ,like money in sport and the like.

Well ,there is no need for that anymore and I must admit it is an upgrade to have InLewnza and Robax but it will take a while to get over being fired by text…

M42BC

#144 When you work for yourself - one more thing on 08.24.16 at 12:20 pm

Also if you’re paying yourself by dividends, move some of your stock into a TFSA, make sure the price of the stock is ridiculously low. The dividends become tax free, also when you sell the company you’ll receive the true value of the stock and it’s tax free too.

#145 Ace Goodheart on 08.24.16 at 12:41 pm

RE: #137 AB Boxster

What I’ve been saying for years. Massive government debt combined with ultra low interest rates is really just delayed currency devaluation.

The real devaluation comes if interest rates ever rise. At that point the money printing (which has already been accomplished in theory), now is accomplished in fact.

#146 Victor V on 08.24.16 at 12:50 pm

Vancouver region home sales continue to slide after foreign-buyer tax

http://www.theglobeandmail.com/news/british-columbia/vancouver-region-home-sales-continue-to-slide-after-foreign-buyer-tax/article31528523/

#147 Bat Flipper on 08.24.16 at 1:27 pm

Well, Vancouver is losing it. Sales down 65.77% in the first 2 weeks of August. The tax went into effect on Aug 2. Of course deals are usually written 60-90 days in advance, so August should have been written well before the tax, so what happened? Well, the Gov wants their money, so buyers pulled out and a chain reaction occurred. Wait! I thought foreign buyers were only a small percentage of the market? Well, if a few hundred deals fall through, it has a cascading effect through the entire market. If you can’t sell, then you can’t buy your new home.

5%-10% seems like a very small amount of buyers, but this small amount can have a serious impact on the amount of sales and the price. If you shoot 2 arrows 5 degrees in different directions, they start out close, but over time, it makes a huge difference.

http://www.theglobeandmail.com/news/british-columbia/vancouver-region-home-sales-continue-to-slide-after-foreign-buyer-tax/article31528523/

#148 Julia on 08.24.16 at 1:52 pm

#73 Mark

Expensive money is not just in oil and gas. Equity, subordinated debt, mezzanine debt etc.. is costly in all markets. It’s not just that it’s unsecured it’s that it’s at the back of the bus. 18% is not uncommon.

#149 WalMark of Sadkatoon on 08.24.16 at 2:00 pm

Dollarama stock just hit $100. Our new economy. ..Timmies and T2 Dollar stores.

And giant money making banks

#150 Interstellar Star Stuff on 08.24.16 at 2:10 pm

Hey crazy alien smoker dude… a planet that is only 4 light years away..
What say you? Worth a trip? Got any cousins or Uncles there?

http://www.dailymail.co.uk/sciencetech/article-3756479/The-second-Earth-visit-lifetime-Planet-discovered-just-four-light-years-away-scientists-say-liquid-water-alien-life.html#comments

#151 IHCTD9 on 08.24.16 at 2:17 pm

#141 Vamanos Pest on 08.24.16 at 11:31 am

…And the 30 billion dollar deficit? Sounds good to me (since I don’t have kids). High priced government programs, low taxes, and YOUR KIDS pick up the tab?

LONG LIVE T2!!!
______________________________________

He’s even good if you have kids, our CCB went thru the roof lol!

Obviously I’m going to have to coach my kids on the virtues of tax avoidance…

#152 Real Muskoka guy on 08.24.16 at 2:25 pm

#115 Love My Kia on 08.24.16 at 1:47 am

#79 Smoking Man on 08.23.16 at 10:01 pm
I’ve just submitted your email address and IP addy. They’re coming. — Garth
There you go lefty phycos. Rat out fiction writer Alien smoking Man…
Book release soon.. Under an assumed name if a Forex, shit I ment foreign country..
Bring it.. Let’s have fun.. Smokey lives on the south west corner of 38 street and James… In long branch… Bring your cameras….
===========================
I see no Ford Ranger in the driveway.
I guess you werent aware of Google maps Smokey.
…………………………………………………………………….
Your still a bullshitter Smoking guy and even more an asshole for divulging your address. By the way it is spelled “psycho” not phycos but don’t worry when they come a knocking you will learn how to spell it. Also I know every dock on Lake Joe, none match your description. “PS yeah I paid 90k for the dock and. Solar powered boat lift. Granet stone steps, Gazibo, and a wrap around deck.. The door knocker got me on a wasted night.. Good for him if I over paid…”
But a good try bullshitter.

#153 TurnerNation on 08.24.16 at 2:28 pm

Sell it all here boys cept for USD / CAD and Treasury Blondes.

#154 Context on 08.24.16 at 2:29 pm

#133 Renter’s Revenge:- I looked for rentals last night for the first time using the MLS system. There must be a shortage of rentals in Toronto especially throughout the greater cottage country. The taxman is sleeping as the rental market is out of control losing legal tax dollars by the millions or more. The apparent corruption taking place goes beyond the pale.

#155 Ace Goodheart on 08.24.16 at 2:33 pm

RE: #147 Bat Flipper

“Wait! I thought foreign buyers were only a small percentage of the market? Well, if a few hundred deals fall through, it has a cascading effect through the entire market. If you can’t sell, then you can’t buy your new home.”

This may be true. However, the large drop off in sales may also signal that Vancouver was primarily a speculative market (ie, people were not buying houses to live in, they were buying them as investments for re-sale). That would explain why the purchases at the current price level dropped off. No one buys into a speculative market where a major event has occurred that is likely to have a downward effect on prices.

I am not saying that the Vancouver “Chinese buyer tax” would actually have such a downward effect on the real estate market there. What I am saying is that this tax may have scared off the speculators, and we are now left only with the people who can actually afford to purchase the average rotting, decrepit, uninhabitable Vancouver multi million dollar home, AND who want to live in such a home once purchased.

Those individuals may be few and far between. There may in fact be no one who wants to purchase these houses, to live in.

After all, they are building all of these beautiful, brand new condos, with all the usual perks (granite, super-bathrooms, bells, whistles and hardwood). Why would someone instead choose to live in a rotten, run down dump? Because they want a backyard?

#156 Context on 08.24.16 at 2:44 pm

The other trend that caught my eye is traditional housing throughout the greater Toronto area has constructed basement apartments which are modern and very nice looking to be rented out. These are not small so what happened to the building permit and the local by-laws? How many are there, hundreds or thousands?

#157 Context on 08.24.16 at 3:05 pm

#152 Real Muskoka Guy: That is quite a statement of knowing every dock on Lake Joseph. Can I assume you boat from dock to dock checking out the young women on a daily basis who are sunbathing on deck and give a little wave. I did the same when I was 12 years old as on occasion was invited over to dock my boat.

#158 Chris in Nanaimo on 08.24.16 at 3:06 pm

DELETED

#159 Victor V on 08.24.16 at 3:14 pm

Anti-home ownership retirement plan fuels debate in Montreal

http://www.cbc.ca/news/canada/montreal/home-ownership-montreal-millennial-retirement-savings-1.3730356

#160 Brazil ex-pat on 08.24.16 at 3:24 pm

So apparently the local buying in Vancouver has fallen off a cliff….since the 15% foreign buyers tax has come in.

#161 Brazil ex-pat on 08.24.16 at 3:27 pm

#77 TRT on 08.23.16 at 9:48 pm
Show me who pays taxes or declares rental income from Surrey’s 60,000 basement suite. Trudeau knows not to mess with his voters.

Most have 2 suites and get $20,000 a year tax free.

I’ve just submitted your email address and IP addy. They’re coming. — Garth

++++++++++++++++++++++++++++++++++++

The reason that is NOT true is because most use a Govt Residential Tenancy Agreement form. This protects both parties….

#162 TurnerNation on 08.24.16 at 3:40 pm

We have archival footage of Context in his Muskoka days:

http://www.greaterfool.ca/2013/04/05/silent-spring-2/#comment-234264

#163 Metaxa on 08.24.16 at 4:16 pm

Other than various business investments my “portfolio” prior to arriving here was basically all in real estate rentals.

Back just after the big dot.com melt down my brother and I pooled some money and began by buying a couple of mobile homes in a scummy trailer park.

It was really tough in the early days but fast forward 30+ years and we have 6 houses, two commercial units and a proper operating business held by a holding company within one of the old family trusts that they changed all the rules on.

Two of the houses are what you’d call executive rentals, on retainer to the University of Calgary, they put visiting bigwigs into them whose stay was too long for a hotel suite but too short for a lease or purchase.
Those paid a lot of freight let me tell you.

Anyway, small beans but my point is the only way we made money in the early days was through equity appreciation, its only when we became large enough to incorporate and run the fleet like a true business that cash flow became a thing.

My brother passed, I ended up selling the business to a Calgary company for so close to retail I still can’t believe it, my tussle with CRA is almost over and at my age I invested like you are supposed to…with a balanced and diversified advisor at one of the old time wealth management companies.

So, while I stick around learning the lingo, I do know what it means to make a living via rentals…here is the most important thing:

You rent to people…you may not want them as neighbours but at least rent them a home, not a crap shack. The kids beat up the drywall, the dogs screw up the yard, so be it. Fix it. Its all deductible.

#164 Penny Henny on 08.24.16 at 4:37 pm

#115 Love My Kia on 08.24.16 at 1:47 am
#79 Smoking Man on 08.23.16 at 10:01 pm

I’ve just submitted your email address and IP addy. They’re coming. — Garth

There you go lefty phycos. Rat out fiction writer Alien smoking Man…

Book release soon.. Under an assumed name if a Forex, shit I ment foreign country..

Bring it.. Let’s have fun.. Smokey lives on the south west corner of 38 street and James… In long branch… Bring your cameras….
===========================
I see no Ford Ranger in the driveway.

I guess you werent aware of Google maps Smokey.

///////////////////////////////////////////

look a few doors down the street. Red ford Ranger

#165 Smoking Man on 08.24.16 at 4:49 pm

#162 TurnerNation on 08.24.16 at 3:40 pm
We have archival footage of Context in his Muskoka days:

http://www.greaterfool.ca/2013/04/05/silent-spring-2/#comment-234264
…….

Wow, I was reading some of my post from the link, I didn’t understand some of the stuff I typed.

What a difference repetition and writing every day makes. You have to admit my writing in the daytime is pretty good.

Night time doesn’t count.

#166 WalMark of Sadkatoon on 08.24.16 at 5:05 pm

You rent to people…you may not want them as neighbours but at least rent them a home, not a crap shack. The kids beat up the drywall, the dogs screw up the yard, so be it. Fix it. Its all deductible.

Bingo. This guy gets it

Read and learn wage slaves

#167 Cici on 08.24.16 at 5:12 pm

#38 Vancouverless

That doesn’t happen in my province, because landlords must submit an official annual tax slip to their renters, which is used to determine eligibility for the provincial rental tax credit.

Tenants get a small break, and the government gets better transparency.

#168 Context on 08.24.16 at 5:19 pm

Well if that is the house with the Red Ford am looking at $1 million easy as its called a superior which would make his neighbours happy. This is definitely one nice home that would fetch a higher price near Forest Hill or even in Moore Park.

#169 Smoking Man on 08.24.16 at 5:53 pm

#164 Penny Henny on 08.24.16 at 4:37 pm
#115 Love My Kia on 08.24.16 at 1:47 am
#79 Smoking Man on 08.23.16 at 10:01 pm

I’ve just submitted your email address and IP addy. They’re coming. — Garth

There you go lefty phycos. Rat out fiction writer Alien smoking Man…

Book release soon.. Under an assumed name if a Forex, shit I ment foreign country..

Bring it.. Let’s have fun.. Smokey lives on the south west corner of 38 street and James… In long branch… Bring your cameras….
===========================
I see no Ford Ranger in the driveway.

I guess you werent aware of Google maps Smokey.

///////////////////////////////////////////

look a few doors down the street. Red ford Ranger
……

You actually took the time to look. Ha.

How many times do I have to state that I’m a truly disturbed serial liar? Ha

It’s what Fiction writers do…….

#170 Mark on 08.24.16 at 5:57 pm

“Also if you’re paying yourself by dividends, move some of your stock into a TFSA, make sure the price of the stock is ridiculously low. The dividends become tax free, also when you sell the company you’ll receive the true value of the stock and it’s tax free too.”

Nice theory, but there are restrictions on putting private company stock into a RRSP or TFSA. In a nutshell, short of obtaining a special registration with the securities regulators in your province, you can’t.

#171 maxx on 08.24.16 at 7:53 pm

#41 Focus on 08.23.16 at 7:56 pm

“Don’t focus on what you make. Obsess about what you keep.

——

Sounds really anti-growth, anti-productivity, paper-pusher friendly system, placing tax experts, tax lawyers in star role, though they create zero real economic value.”

Oh yes. Spray the seeds of wealth creation around on crap mostly from overseas, esp. China.
The major reason planet earth is in such awful economic shape is that we have all forgotten the value of money.
It is not just about what you earn, it’s absolutely about what you manage to keep. As time progresses, this will become increasingly difficult.
Those who’ve learned to habitually get up to 95% off retail and minimize their taxes legally contribute to making the country truly wealthy and growing.
Buycotting greedy retailers promotes competition which makes for a healthy economy.

#172 Balmuto on 08.25.16 at 12:16 am

Mortgage rates keep grinding lower. Ratespy now advertising a 1.99% 5 year fixed in Ontario. I’ve been watching that site closely and that’s the lowest rate I’ve ever seen in that site for a 5 year fixed. Previous low was 2.06%. It’s only a matter of time before sub-2% mortgages become the norm.

#173 Victoria Real Estate Update on 08.25.16 at 1:24 am

do not post

Area. . . . . . . . % Difference (2015). . . . % Difference (2016)
Victoria. . . . . . . . . . – 33 %. . . . . . . . . . . . – 42 %.
Oak Bay. . . . . . . . . .- 13 %. . . . . . . . . . . . – 67 %
Saanich East. . . . . . .- 14 %. . . . . . . . . . . . – 35 %
Saanich West. . . . . . .+ 8 %. . . . . . . . . . . . – 35 %
North Saanich. . . . . . + 21 %. . . . . . . . . . . . – 15 %

(Source: Victoria’s R/E board)

The results are shocking and quite telling – something happened in Greater Victoria after April of this year. Sales of detached houses have fallen off a cliff.

Most recent “buyers” are completely unaware that the market warning sign is flashing red and that we will likely soon see falling prices again.

#174 TrucMuce on 08.25.16 at 2:11 pm

Maybe, just maybe, this is the turning point for canadian house buyers’ animal spirits.

With this turn of sentiment, suddenly, our REITs and bank stocks look like competitive places to put our savings…

…If only I had put the size of a mortgage in them… (bad idea of course)

#175 Rexx Rock on 08.25.16 at 4:31 pm

Many people are waiting until next year to sell their houses in Victoria for another 10% to 15% price appreciation.Easy money and always a endless supply of buyers in the best retirement city in Canada.

#176 Randyman on 08.25.16 at 4:33 pm

Hey Garth, can’t say I agree with you. I can buy a rental property, and not pay ANY taxes UNTIL I write off my expenses, taxes, insurance, strata fee’s, mort. interest, maintenance repairs etc. and I get to claim depreciation on the building ( even though they tend to go up ) and only after this I pay my share. When you buy an ETF and it goes up, your only recourse to receive a chunk of cash is to sell all or a portion, then pay tax at your favourable rate of 50%. This is counter-intuitive as you now only own a portion or none of that asset. On the other hand, I can take my rental property I bought in 2006 (2 bed condo Courtenay BC) for $56,000 which is now worth $147,000 and take out 75% with a re-fi = $110,000 TAX FREE ! I think certain markets are heated BUT there are still deals that cash flow and I am still in the RE camp.

#177 Randyman on 08.25.16 at 4:34 pm

Just going to add to my comment above, and in my example I still keep all of and control the entire asset.

#178 Med on 08.26.16 at 10:24 am

Gath quoted: “Many investments (such as preferred shares, stocks or some ETFs) pay through dividends, which come with the dividend tax credit. This complicated little break results in a lower tax rate, and can result in a $50,000 tax-free income.”

Any one can explain me that please.