Try to stay awake. This post is about RRSPs. And this week is your last chance.
Hopefully you already know a contribution has to be made by Wednesday to apply to your 2016 taxes. Up to 18% of what you earned, to a max of $25,370, can be chunked in then deducted from taxable income. The more you earn, the more an RRSP benefits you. Don’t tell Justin.
So RRSPs have dropped in popularity recently for two reasons. The TFSA is apparently sexier since all withdrawals are taxless. And (mostly) real estate has sucked off so much family cash flow that saving for retirement has taken a back seat to the conspicuous display of wealth called a house. Lots of people will regret this, but life’s all about choices.
Well RRSPs are still cool, shifting taxes around during your life as well saving for the future in a far more aggressive way than with a TFSA. Just make sure you put the right stuff inside – a nice collection of ETFs plus the fixed-income portion of your balanced portfolio.
Here are four of this pathetic blog’s fav ways to use the registered retirement savings plan.
Move assets and flip the refund
Actual money is not required to contribute to an RRSP or to reduce your tax bill. The rules allow almost any financial asset you might already own to be used for a ‘contribution in kind.’ That could be anything from a GIC to a junior gold mining stock. So if you already have some non-registered investments, move them into your RRSP and the government will send you money for selling yourself stuff you already owned. Take that refund and put it into your TFSA. Rub tummy.
How to profit from having a baby
Seriously. You might as well get some value out of the kid right off the bat, like reducing the overall family tax bill through income-splitting. If you and your squeeze earn different levels of income, then a spousal plan’s probably for you. Contribute to your partner’s plan up to your own limit and still claim it all as a deduction from your income. If the money’s left untouched in the spousal plan for three years it becomes the property of the other person who’s in the lower tax bracket. So now you know when to get pregnant! Take the money out of the spousal plan during a maternity leave and it’ll finance that year with the kid at little or no tax – while the contributing partner already got the big deduction. You can name him Dodger.
Save that room for the big event
Regular readers will know why it makes sense to commute a pension if you get the chance. By taking a lump sum payment instead of monthly cheques you gain control of your own retirement capital, reducing the risk of your plan going bust or squeezing benefits when you’re a geezer. You can probably pay less tax by controlling your annual income. There’s a good chance you can achieve better returns than the guys running the pension. And if you croak (happens) your family, spouse, girlfriend (or both) can get the money instead of having it fall back into the plan. Typically a commuted pension comes in an amount that’s protected inside a shelter and a hunk that’s added to your taxable income in the year you receive it. Bummer. But if you save up RRSP room for a few years prior to the big event, it can be used to effectively offset Ottawa’s hit on the cash portion.
Refunds are for losers. Do this instead.
So you make an RRSP contribution for 2016 by Wednesday, then receive a big refund cheque in April or May for having done so. You feel brilliant. But you’re not. It means you overpaid on your taxes and the government got to use your money for a full year. So, there’s a better way. Contribute monthly, and get a refund on every paycheque. It’s simple – arrange to make those regular contributions through your bank or advisor, then go to the CRA website and download Form T1213. Fill it out, attach a copy of the RRSP contribution document and send it to the Client Service Division of the local tax office. The CRA dudes will review it, send you a response and notify your employer of the amount your taxes can be reduced on each paycheque. If you live in Quebec, where everything takes longer, you also need to tell the Ministère du Revenu. The extra money you get as income can be used to top up your TFSA or, of course, buy dog food.
Or, you can just pay all your taxes, and feel good that you made up for Kevin O’Leary.
131 comments ↓
So you make an RRSP contribution for 2016 by Wednesday, then receive a big refund cheque in April or May for having done so. You feel brilliant. – GT
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Now i dont. Did my taxes yesterday, “HUGE” to me, rebate chq, in mail i guess…
Thanks for the reminders Garth. Would you recommend the same RRSP melting strategy for a spouse that’s no longer working (not retired and no income) up to a certain $ limit?
Great info & easy to understand & implement. However, people will research paint colours more than their RRSP options, to their peril. Just watch the line-ups at financial institutions in the next few days, as the [email protected] “advises” clients to lock their money in to GIC’s, “to be safe”… Sad.
ANOTHER timely, informative( and very early) blog post….
Whats going on in Turnerville?
Has Garth gone for a ride on the Harley and left the robots in charge?
I heard that — Garth
#1 NoName….
“in mail”??? How quaint.
Wow. Just download realtor app.
Jesus, nothing in Shlong Branch under a million.
Rediculos. So I go look at other areas of interest from years ago way out in the bonnies. Insane prices. Bidding wars. Never saw that one coming.
Sell and go where.
I checked out rentals. Rediculos 4k month 4 a shit bungee.
This is total madness. And it’s just going to get crazier.
And remember with the form T1213, you gotta send it to them by November (or earlier), it’s helpful to add some evidence (perhaps last year’s bank statement for your self-directed RRSP) that you’re contributing annually/monthly. If you send it in December, you’ll get the letter in February after your first (smaller) paycheques of the year arrive. Once your payroll administrator executes the CRA letter, your paycheques will get fatter and your refund next year will be smaller. Why let T2&Morneau hold onto your money all year long??? “It’s my money, and I want it now!” as the zany “structured settlement” TV commercial says…
You can use your RRSP to fund the purchase of this lovely little bungalow in the suburbs .It’s only 1.3 million . Look like Toronto is about to hit the wall like Vancouver .Where is government . Its going to get interesting. https://byjesseandjoe.com/listings/N3712488/396-Bent-Crescent-Richmond-Hill.html
Canada needs a leader who will make some hard decisions. For instance Amniocentesis should be mandatory. If there is anything wrong with the embryo you would have two choices, you can take financial responsibility for the rest of that childs life or abort. There are many instances like this in Canada and taking good care of everyone is UNSUSTAINABLE. We don’t have enough doctors to service the people we have now let alone all the new people coming to the country. Canada cannot attract new doctors because of the tax structure and poor pay. Our clinics out here in BC put signs on their doors on Saturdays and Sundays “CLOSED DUE TO LACK OF DOCTORS” leaving the burden on the emergency ward at the hospital. 6 hour waits there. If you do not feed your child breakfast before they go to school your child will be taken away from you for one year with visitation rights once a moth. And I could go on and on. But the point is as with Real estate Canada needs some drastic action.
Millennials have been taught that saving money is hording funds in a selfish manner not for the greater good. They therefore should hand over excess funds to the Central Authority which will guarantee a minimum income for all. And to fund climate change [sic] action.
I wish I were joking.
Down with the bourgeois.
Isn’t it the case that after I set up a spousal RRSP, I can’t contribute to/withdraw from ANY of my RRSP accounts for 3 years before the money switches over to my spouse?
Garth:
For financial planning purposes you state:
“So now you know when to get pregnant!”
This holds true for planning for the success of children in a hockey career. Children born in the first half of a year perform better than those born in the second half for simple reasons. They are older, bigger and more mature when hockey season commences in the Fall.
Leafs – 69.5% born in the first half of the year.
Oilers – 61.5% ” “.
Flames – 66.6% ” “.
Plan accordingly. It could affect your financial future.
“Fireworks” so to speak, on the May long weekend should help.
This oversexed weblog just taught us the Withdrawal Method.
Further to some of your points, Garth, I have not seen line ups at banks during the final days of RRSP season for a few years. Mine (RBC and TD) has not even extended hours as they once did at our local branches. And where you could once apply for an ‘on-the-spot’ RRSP loan online and get overnight confirmation or even sooner, you now have to come in to do this in person. (Apparently due to increased credit issues for too many, my manager told me)
So the banks know something is up and pulling in their wings, it appears, when it comes to RRSPs. Fewer ads being aired, more risk involved with debt-addled households etc…
I bet it will be a pretty quiet week at your local banks.
Anyone else have observations on this?
#12 WUL on 02.26.17 at 12:21 pm
This holds true for planning for the success of children in a hockey career. Children born in the first half of a year perform better than those born in the second half for simple reasons. They are older, bigger and more mature when hockey season commences in the Fall.
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Born on feb 29, how about kids that are, older or younger are they, when hockey season starts in fall, hmm?
Ever wondered what $20 million hidden under a mattress looks like? Well, the US Attorney’s Office in Boston has you covered.
Federal officials posted a picture of the jaw-dropping scene on Twitter Monday, just weeks after uncovering the cash during a money-laundering bust related to TelexFree Inc.’s $3 billion global fraud case.
https://www.bostonglobe.com/metro/2017/01/06/million-seized-marlborough-man-arrested-connection-with-telexfree-fraud-case/sSXgbeiJx0rjrgM7o2XhNO/story.html
https://www.fbi.gov/contact-us/field-offices/boston/news/press-releases/owners-of-telexfree-charged-in-1-billion-pyramid-scheme
#14 Dominoes Lining Up on 02.26.17 at 12:34 pm
Further to some of your points, Garth, I have not seen line ups at banks during the final days of RRSP season for a few years. Mine (RBC and TD) has not even extended hours as they once did at our local branches. And where you could once apply for an ‘on-the-spot’ RRSP loan online and get overnight confirmation or even sooner, you now have to come in to do this in person. (Apparently due to increased credit issues for too many, my manager told me)
So the banks know something is up and pulling in their wings, it appears, when it comes to RRSPs. Fewer ads being aired, more risk involved with debt-addled households etc…
I bet it will be a pretty quiet week at your local banks.
Anyone else have observations on this?
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I think the reason they want you to show up at the bank rather than approve over the phone is to sell you mutuals fund products while you are with them.
They will certainly ask you what you intend to buy with your RRSP loan and guide you to their products.
Just a hunch.
Why (and how) conservatives should buy RRSPs.
http://www.poletical.com/conservatives-should-buy-rrsp-rrsp.php
Hey Garth,
With bond yields so low does it still make sense to shelter them in an RRSP? Would it make more sense to keep most of your fixed income in a non-registered account using a tax efficient ETF (BMOs ZDB for example) for those of us that forego preferred shares in their portfolio?
@#9 Cherry Bombed
“Amniocentesis should be mandatory. If there is anything wrong with the embryo you would have two choices, you can take financial responsibility for the rest of that childs life or abort.”
*******************************************
I think they tried that in 1920’s Alberta and dubbed it “eugenics”.
State sanctioned “birth control” ,which in fiscal theory may be a good idea but when you toss in a few nutjob religious fanatics and the power of the Courts…voila!
Albertan birth control.
http://www.google.ca/url?url=http://historyofrights.ca/encyclopaedia/main-events/eugenics/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwijw_rEr67SAhVBTmMKHbzOA1EQFgg4MAU&usg=AFQjCNFwFTECJK4egN10RtQUufmcebAHSQ
Where the mentally retarded or “fallen women” of “ill repute” were sterilized…….
Or the “ButterBox babies” of Nova Scotia.
http://www.google.ca/url?url=http://canadiancrc.com/Butterbox-Babies_Killers-Child-Trafficking-Canada/Butterbox-Babies-Baby-killers-child-trafficking-selling-babies-Canada-adoption-story.aspx&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiGwdLwr67SAhUM7WMKHQsLCjgQFggkMAI&usg=AFQjCNEXx57osp-IpclWp3dwqaKQQt-byQ
Or the “Orphanages” of Quebec where the mentally retarded or “fallen women” having babies out of wedlock were essentially imprisoned to provide slave labour for the church and state…
https://www.google.ca/url?url=https://en.wikipedia.org/wiki/Duplessis_Orphans&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwifm9LosK7SAhVD-GMKHYQbAo0QFggUMAA&usg=AFQjCNHEqp21Tby0hgt_kA5VIbUUWMuP1A
nah, our system aint perfect but its better than what came before it……..
And, correct me if I’m wrong but….. this is a personal finances blog……isnt it?
So if a contribution is made to rrsp, does this reduce total income for child tax benefit calculation?
“Stranger than fiction”
February 21, 2017
Financial Fraud with a Sci-Fi Twist
$26 Million Fraud Scheme
Outrageous Scheme Included Impersonating a Canadian Health Official
https://www.fbi.gov/news/stories/financial-fraud-with-a-sci-fi-twist
Hi Garth
My pension plan has a vested date at 48. That means once I pass that age I can no longer commute the pension unless I’m terminally ill. Is this legal and can I get around this and commute my pension?
Arbitrary greenbelt restrictions causing increase home prices b/c there’s no more land despite seeing plenty of land
https://www.fraserinstitute.org/article/collateral-damage-ontario’s-greenbelt
#8 jay on 02.26.17 at 11:06 am
Where is government . Its going to get interesting.
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Where are they? Coming for your taxes.
…………………………..
#9 CHERRY BLOSSOM
The state of health care is very, very bad, worse than some 3rd world countries, still arguably better than some African countries (yay!)
– shortage of doctors
– long wait times
– increased number of mentally challanged children (nobody investigates the reasons for it, as nobody cares)
– rental of dangerous basement appartments with many cases of radon gas poisoning (nobody cares, nobody pays taxes on the ‘rental basement sutes’)
– sh..ty food
– skyrocketing cancer rates despite better early detection
– expensive medications, no national drug plan.
– no dental coverage.
– no electronic health record.
– single provider system, you are pretty much at the mercy of your family doctor to be send to specialist.
If you have serious condition and your doctor diasgrees and does not send you to a specialist, you only choice is US or in same case death.
I spent 5 digits in USD going to the states on multiple ocassions despite paying taxes + paying (both myself and my employer at the time) for additional ‘health insurance”
The whole thing is piece of crap to make you beelive you have a ‘free’health system. It is not health system and is not free, some people will find this but too late.
Whoever is healthy does not care, how Canadian!
Businessman from China investing in Vancouver real estate ordered to repay millions
http://www.cbc.ca/news/canada/british-columbia/chinese-real-estate-investor-to-repay-millions-1.3998380
#9
wow.
Might as well just put down people when they hit 60 and working age men with a knee injuries.
And you do know Amnios are on the way out right? Too unreliable for most diagnosis. Ultrasounds are getting better, but still not definitive.
#20 – Thanks for some factual historic understanding of the issue. I only recently learned of the Alberta debacle…was a baffling time.
Thanks for the info on the income splitting/spousal RRSP’s. Seems like a perfect long term solution to those with low income or stay at home spouses.
I would assume the 3 year term could be “laddered” indefinitely?
@ BH
“So if a contribution is made to rrsp, does this reduce total income for child tax benefit calculation?”
I had asked my accountant this very same question, and his answer was there are two forms of income as far as the government is concerned:
i) Net income after expenses
ii) Income for tax purposes
I believe the child tax credit is calculated on i), so you can’t duck into a lower bracket to get the credit, because you are rich already.
If you want to get the most benefit of RRSP’s and have your future tax effectively paid for, do you not need to immediately reinvest your refund back into your RRSP?
This is your future tax payment, which then grows untaxed to provide the part that will eventually pay the tax when you take money out of the RRSP?
As for lineups at banks, who goes to banks anymore?? Most people do 95% of banking online?
The S&P500 will likely double over the next 5 years. We’re in an echo tech boom. Better get long folks.
I recommend VFV and VUN in $CAD. QQQ and/or any Vanguard S&P500, growth or technology ETF (i.e. VGT, VUG, VOO). Buy some small & mid caps also (i.e. VXF, VB, VO). Do this immediately. We’re going much higher than analysts are anticipating. Global markets will also join in soon (VEU, VWO) but this bull market will continue to be lead by the US for some time.
Sell your overvalued Canadian real estate ASAP.
Let say i have a spousal RRSP with 2 different banks, would the 3 year rule apply to both plans (as one) or individually? Meanning my wife could withraw from one plan even though i have contributed to the other one in the last 3 years?
They are treated individually. — Garth
The dog in the picture looks like he has far more intelligence than anyone in the federal Liberal caucus.
When making a ‘contribution in kind’ – and moving ETF units from a non-registered account to an RRSP – should we be using the book value or the market value of the ETF units in our calculations?
Market value. — Garth
http://www.investmentu.com/article/detail/53712/new-housing-bubble#.WLNYlmlyjqA
I’ve always paid my taxes. Over paid really after that crushing audit in the 90s.
CRA was on me like Flys are to freash turd.
Screw the bastards is what I’m thinking with Justin and the avengers re wrighting the rules.
I’m done with consulting…. there is way in China I’m paying 53% in tax. If I can’t legally split my income.
I’m going back to a cash business till these thieving mental cases are tossed under the bus in the next election..
My long track record at Senica gives me great cover.
Wow I’m here again……
RRSPs are for losers. Imagine putting money away to be taxed at higher rate in the future.
Now that you’ve crapped on everything, go and read the article. Some days I wonder… — Garth
Smoking Man #36:
Welcome home!
The dog in the picture bears a striking resemblance to Nigel Farage.
http://i.dailymail.co.uk/i/pix/2014/09/06/1409965807387_wps_47_Nigel_Farage_Leader_of_UK.jpg
@#37 not 1st
“RRSPs are for losers….”
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Sage advice from a “loser” who admits they never came 1st?
Can we call you “Always 2nd”?
@#39 Sydneysider
“The dog in the picture bears a striking resemblance to Nigel Farage….”
*******************************************
All similarities end there.
Nigel has more teeth than the PitBull and less intelligence.
#36 Smoking Man on 02.26.17 at 5:55 pm
I’ve always paid my taxes. Over paid really after that crushing audit in the 90s.
CRA was on me like Flys are to freash turd.
Screw the bastards is what I’m thinking with Justin and the avengers re wrighting the rules.
I’m done with consulting…. there is way in China I’m paying 53% in tax. If I can’t legally split my income.
I’m going back to a cash business till these thieving mental cases are tossed under the bus in the next election..
My long track record at Senica gives me great cover.
Wow I’m here again……
..
I thought you moved to Ecuador… so you could spend your billions of off-shored forex winnings on heli-pads and womyn
Self destruction is so under rated.
It feels good to fly… so your going down fast.. with the right mix of mind altering substances . It makes the trip spectacular. .
The trick my dogs is bight it with nothing left. Timing is always everything.
Now that you’ve crapped on everything, go and read the article. Some days I wonder… — Garth
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Manufacturing a little refund to invest is going to be cold comfort when taxes are through the roof in 20 yrs.
Pink Snow falling in in Burnaby .
I have featured these guys before,but they were unable to offload this 40y.o condo and were forced to take another 10k off ,all but making certain that they take a loss.
They purchased it for 333k in June of 2016 and have had multiple reductions until it’s down to basically what they bought it for .
Worse for them it’s 2016 assessment only came in at 283k ,which they would not of found out until after buying the place.
In the Toronto and Vancouver markets this amount of money might not seem like that much,but I’m pretty sure the people in the Prairies and Maritimes probably appreciate how much of a setback this could be to these people and what could have been purchased with this money…
M42BC
223-7055 Wilma Street, Burnaby
Nov 8:$350,000
Feb 25: $340,000
Change:10,000 -3%
https://www.estateblock.com/burnaby-real-estate/223-7055-wilma-st-burnaby-bc-v5e-4b1-mls-r2141492-1
https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAzV0Q3OQ==
Here’s a sort of man-bites-dog story – a professor of the school of public health who says there is little reason to believe that burning coal is a significant health hazard.
“They keep saying shutting down coal will make us healthier, so how come there’s no evidence of it?”
http://business.financialpost.com/fp-comment/they-keep-saying-shutting-down-coal-will-make-us-healthier-so-how-come-theres-no-evidence-of-it
#10 TurnerNation on 02.26.17 at 11:20 am
Not entirely. Wages are low..too low to buy anything our parents bought to start their families in, and that we grew up in.
Debt is making up the difference because it has to.
MF
Some people still think that only old people and civil servants live in Victoria.
“The tech sector in Victoria is on its way as it has grown to include more than 880 businesses and employs more than 15,000 directly. It also counts another 3,000 consultants and 5,000 others who work in tech jobs within larger firms and government. VIATEC’s own membership has doubled to 526 members over the last two years.”
http://www.timescolonist.com/business/victoria-tech-sector-aims-high-10-billion-in-revenues-by-2030-1.10337663#sthash.vhC11Nsl.dpuf
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it IS THREE more days until our Highness Stephen S. Poloz will talk down the Canadian dollar to boost exports.
I’m looking forward to a 70 cents Loonie this week. We need our dollar to be lower to boost exports, create jobs, bring back manufacturing into Canada, hire more refugees to improve their living standard and turn Canada into a greater country than America.
America is a racist country built on hatred, xenophobia, misogyny, sexism, homophobia, anti-teacherism, anti-communism and anti-black racism.
Once Poloz lowers our dollars to 60 cents by this Summer, our economy in Ontario will grow. We will be constructing over thousands of 70-floor and higher skyscrapers from Toronto to Pickering to Markham. We will become the manufacturing hub of North America.
We need a lower Loonie I’m telling you. Poloz will lower the loonie to 60 cents, but I prefer a 50 cent Loonie to boost exports.
If we really want to be competitive, we should lower the Loonie to 1 cent! This will make us more competitive than Japan.
1 USDOLLAR= 100 Canadian dollars under a 0.01 Loonie. That will increase our Canadian dollars when we boost exports!
I will tell Poloz to talk down the Loonie this week. I’ve left his office over 100 voicemail to talk down the Loonie. I texted Poloz 5 minutes ago to encourage him to talk down the Loonie. I will even become Poloz’s sex slave if he talks down the Loonie to 60 cents this week.
Even if you’re watching the current FOREX rates, the Loonie is already down from 76.4 cents to 76.19 cents. We need a lower loonie to boost exports in Canada.
Pink Snow falling in Vancouver.
Just like the last guys,not a huge amount of money, but I will share this because it is another good example as to why a lot of people are still on notice with this correction even though they bought in 2015.
In late 2015 they paid 375k for this 83 build condo when for that year it was only assessed at 261k.
In the meantime the assessment has come up to 342k ,but nowhere near what they paid for it and they will be hoping this latest 20k price drop will let them walk away with their dignity intact…
M42BC
101-1296 w 70th Ave Vancouver
Dec 6:$408,000
Feb 25: $388,000
Change: – 20000.00 -5%
https://www.estateblock.com/vancouver-real-estate/101-1296-w-70th-ave-vancouver-bc-v6p-2y5-mls-r2141380-1
https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMUczOA==
Hey, Garth.
Some market watchers reckon that the U.S. Stock Market is peaking –if you’re thinking about doing a re-balancing.
How I think of me. Myself
https://www.youtube.com/shared?ci=u67uBlEGTMU
The extra money you get as income (from paying monthly into RRSP) can be used to top up your TFSA or …
– Garth
Would that difference only be reflected in the change in the new gross pay from that of your previous typical pays? Or would the savings also be on the paystub on its own line?
What difference does that make? — Garth
You’re forgetting about the time value of money, the idea that a dollar today is worth more than a dollar in the future.
Let’s say your real* rate of return is 5% with annual compounding, and you’ll be converting your RRSP to a RRIF in 40 years. In this case, a dollar in 2017 is worth 14 cents in 2057.
Do you now see why it’s so much better to defer your taxes? The tax savings from your RRSP contributions are worth much more than the future taxes payable from your RRIF withdrawals.
The time value of money is a core principle of finance, and states that, provided money can earn a return, any amount of money is worth more the sooner it is received.
*net of inflation
When your a man of love and no one can figure it out..
There is always to bottom of a Jack Daniels to think about shit.
It’s worth noting that form T1213 is also useful for avoiding taxes on costs that you deduct from your taxes anyway, like childcare or spousal support. These are especially easy to do because you generally know what the costs will be ahead of time.
Also, if you submit your T1213 and don’t get the letter back from CRA until sometime later in the year, the reduction applied to your pay is increased, if you’ve already had some taxes deducted.
Feb 26, 2017 Daily Video Review of Vancouver Real Estate Housing Bubble news and items from Twitter #VanRE https://youtu.be/Qj8_3F_aZ3c
Is there an S&P/TSX inverse real estate ETF? (Tempting.)
Don’t be too tempted. Bad idea. — Garth
I made the mistake earlier this year of selling an ETF position that had an unrealized loss and immediately rebuying the same ETF in my RRSP. I believe that is a permanently denied loss. Oh well, it was an inexpensive lesson/forgetfulness as it would’ve only reduced my tax owing by <$100.
#40 crowdedelevatorfartz on 02.26.17 at 6:25 pm
Sage advice from a “loser” who admits they never came 1st?
Can we call you “Always 2nd”?
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Sure man whatever suits you. You keep right on playing with those govt products. T2 will love you next term.
Me and the rest of the smart money are busy sheltering our gains properly and it aint with no RRSP or TFSA.
When moving financial assets from a non-registered to a registered account is this considered a deemed disposition (and thus gains are taxed)?
Yes, if a gain has been made. But all further gains will be untaxed while in the plan. — Garth
#48 Andrew Woburn on 02.26.17 at 6:58 pm
Some people still think that only old people and civil servants live in Victoria.
“The tech sector in Victoria is on its way as it has grown to include more than 880 businesses and employs more than 15,000 directly. It also counts another 3,000 consultants and 5,000 others who work in tech jobs within larger firms and government. VIATEC’s own membership has doubled to 526 members over the last two years.”
http://www.timescolonist.com/business/victoria-tech-sector-aims-high-10-billion-in-revenues-by-2030-1.10337663#sthash.vhC11Nsl.dpuf
5% of the population…woooopeeeee
“Lots of people will regret this, but life’s all about choices.”
No, they won’t. Very few people can associate the decisions they made with the negative outcomes that result. A positive outcome, ya sure they seem to know exactly how great they were in buying that particular lottery ticket. All the tickets they bought that didn’t pay out? No connection.
People are really good a critiquing others, but almost completely unable to critique themselves, with a few rare exceptions and even then only in limited space.
You can see this even in youth sports. Parents will move their kid to a different club because the team wasn’t winning, when it was in fact their own child that was causing the losses.
People generally can’t see what they are doing wrong. They need someone else to tell them. But even then they don’t tend to listen.
Rrsp’s yeah, yeah, yeah.
That collar looks a bit tight….
Hey WULLY…
Things are still out of control in Vancouver.
I don’t see it getting better for mumps…
M42BC
#14 Dominoes Lining Up on 02.26.17 at 12:34 pm
did mine online at 7PM last February 29
I’ll try to offer a germane comment to today’s deplorable blog topic of RRSP’s below but first a response to my friend FLOP.
I would happily suffer the Mumps in preference to the Trumps (Donald and the Tiny Trumps – O’Leary and Leitch*).
On RRSP’s. It is interesting that a young person would decline using an RRSP on the basis that their tax rates will be higher thirty years from now. Right. There will be no periods of unemployment, illness, disability, divorce, dislocation and a sojourn to find yourself in Tierra del Fuego.
* Dr. Kelly (some healer!) moved with her family from Manitoba to Ft. Mac at about the age of 3. It is said that her father’s construction company built this town. Hope she wins the leadership. Would consign the Reformers to a long slog in the Taiga on shoddy snowshoes.
While godless and miserly Canadians chatter away about such things as RRSPs, a great spiritual war is raging in the United States of America.
The Mainstream Media has been utterly unable to find any respectable people anywhere who have anything bad at all to say about President Donald J. Trump and the smooth and successful roll-out of his new administration with its many wise policies to do what is right and just and fair. So, the Mainstream Mess turned to bad people and asked them what evil thoughts they had about it. Witches all across the USA suddenly became totally unhinged and started to cackle with fiendish delight about how they were plotting to cast “a spell to bind Donald Trump and all those who abet him.” The plan reportedly drew a global response from witches, traditional African spiritual groups, practitioners of hoodoo, voodoo and santeria, and even so-called “christian” folk magicians. Participants are supposed to repeat the spell during every waning crescent moon — i.e., March 26, April 24, May 23, June 21, July 21, Aug. 19 and so on — until President Trump is booted from office.
To be opposed by witches everywhere, President Trump obviously must be doing something right. In defence of their president, the Christian Nationalist Alliance is mobilizing “all Christian soldiers” to read from the 23rd Psalm in the Bible during each of the crescent moon rituals to counter all the bippity-boppity-boo types and their hocus-pocus. While this might be the nice, thoughtful, and patriotic thing to do, it probably is not necessary. The witches’ plan to use such things as “an unflattering photo of Donald Trump,” a candle with which to burn it, plus various other pagan junk in their silly and superstitious rituals, guarantees that their wicked plan is doomed to fail right from the very start.
Again, notice that the witches’ plan calls for the use of “an unflattering photo of Donald Trump.” Now where have you ever seen an “unflattering” photo of Donald Trump? That’s right. They do not exist. The Donald is so very photogenic that every picture ever taken of him looks good. Oh, sure, someone could attempt to photo-shop a picture of Donald Trump to try to make him look bad, but it is highly unlikely that they could ever succeed. Photo-shop does not have the advanced technical capability that would be necessary to make Donald Trump look bad. Yes, folks, he really is that photogenic. The conspirators would have to use a totally different picture of someone else entirely. This would be cheating, but it would not be beneath the unscrupulous types who hate good government.
Once again, we see the great contrast between a hard-working, productive, intelligent man like Donald J. Trump (who builds sensational skyscrapers and wonderful walls of defence), and all the useless, unproductive, superstitious types like witches, economists, psychologists, and politicians (who just chirp and mutter all the time).
With a low enough CAD $ basically all of Canada’s financial challenges go away.
In Spain, Greece & friends their debts and their government labour contracts were all in Euros. A currency they did not have control of the value of.
But Canada’s debts and our government labour contracts are in CAD $. A currency that the federal government does control the value of.
63 Cheap Houses on 02.26.17 at 8:55 pm
#48 Andrew Woburn on 02.26.17 at 6:58 pm
Some people still think that only old people and civil servants live in Victoria.
5% of the population…woooopeeeee
=================
Sheesh. Some people are hard to please. That means somewhere between 10-15% of Victoria’s actual workforce is in high tech and the number is still growing. It probably rivals employment in government. Tell me which mayor of any other Canadian small city who wouldn’t be green with envy.
#63 Cheap Houses on 02.26.17 at 8:55 pm
#48 Andrew Woburn on 02.26.17 at 6:58 pm
Some people still think that only old people and civil servants live in Victoria.
“The tech sector in Victoria is on its way as it has grown to include more than 880 businesses and employs more than 15,000 directly. It also counts another 3,000 consultants and 5,000 others who work in tech jobs within larger firms and government. VIATEC’s own membership has doubled to 526 members over the last two years.”
http://www.timescolonist.com/business/victoria-tech-sector-aims-high-10-billion-in-revenues-by-2030-1.10337663#sthash.vhC11Nsl.dpuf
5% of the population…woooopeeeee
***************************
IT’s election time, expect to see more of this. Most of the consultants work for gov. Yet we don’t see the job advertisements outside of a government trying to produce them.
2 trilion, those people are in some sirous delusion…
The $2 trillion estimate was initially put forward by Deputy Crown Prince Mohammed bin Salman last March. There are two key issues, according to interviews with a dozen industry analysts, investors and executives, who asked not to be named because of the sensitivity of the matter.
one
“I didn’t know that the value of an oil company was a multiplicator of the reserves of the company,” Total SA chief executive officer, Patrick Pouyanne, told investors on a Feb. 9 conference call. Several factors should be “discounted” before “we’ll see what will be the real value of” Aramco, he said.
two
Aramco, formally known as Saudi Arabian Oil Co., pays a 20 percent royalty on revenues and an 85 percent income tax.
https://www.bloomberg.com/news/articles/2017-02-23/saudi-arabia-2-trillion-aramco-vision-runs-into-market-reality
I got extremely lucky, turns out I overpaid into my old pension when I asked to transfer it and I was able to max out my RRSP contributions with the extra and got a nice fat 7,000 coming my way.
I never realized you can request mini-refunds in advanced, good to know!
This is probably a silly question with the answer obvious to many on this blog, but how do I know how much to contribute to an RRSP to put myself in a lower tax bracket? I foresee a time in my future where my income will be lower for a few years, so contributing some money into an RRSP now to lower my tax bracket this year could be a great idea. However, I don’t even know how to figure out what tax bracket I’m in!
I’m in Manitoba – do I look at both federal and provincial taxes??
Shouldn’t they teach this stuff in grade school? I aced calculus, but this would be MUCH more useful!
Tax brackets are determined by earned income. An RRSP contribution allows you to deduct that amount from your taxable income, but it does not put you in a lower bracket. This might help. — Garth
For those not getting the reference to Mumps, see Medicine Hat Tigers and Vancouver Canucks – or just Google “hockey mumps saliva dressing rooms arenas Auston Keon 1967 Cup”.
#70 aa3 on 02.26.17 at 10:25 pm
With a low enough CAD $ basically all of Canada’s financial challenges go away.
—————-
lol, idiot
https://i.imgur.com/CwxjfZZ.jpg
^ exchange it for real money while you have the chance.
https://canadianpmx.com/product-category/silver/
RE #75 Waiting:
The amount you can contribute to your RRSP for this year – if you are in the same job as last year with a similar salary – will be posted on your 2015 CRA assessment, near the bottom.
Dig out last year’s assessment and have a look… I think it will also state any room you have available from previous years
#72 DON on 02.26.17 at 10:37 pm
#63 Cheap Houses on 02.26.17 at 8:55 pm
#48 Andrew Woburn on 02.26.17 at 6:58 pm
Some people still think that only old people and civil servants live in Victoria.
“The tech sector in Victoria is on its way as it has grown to include more than 880 businesses and employs more than 15,000 directly. It also counts another 3,000 consultants and 5,000 others who work in tech jobs within larger firms and government. VIATEC’s own membership has doubled to 526 members over the last two years.”
http://www.timescolonist.com/business/victoria-tech-sector-aims-high-10-billion-in-revenues-by-2030-1.10337663#sthash.vhC11Nsl.dpuf
5% of the population…woooopeeeee
***************************
IT’s election time, expect to see more of this. Most of the consultants work for gov. Yet we don’t see the job advertisements outside of a government trying to produce them.
****************************
Exactly. Many many of these so called “IT jobs” are in fact govt jobs. Tell us how this benefits the population when tax dollars are required to pay for those these bearded four eyed geeks (I say this with respect)?
75 waiting – here is another tax calulator.
http://www.ey.com/ca/en/services/tax/tax-calculators-2016-personal-tax
Just punch in your income and check your province to
find your marginal rate. Then drop your income in chunks and see if the rate drops. For example, in Man
the rate changes from over 33% to less than 28% at
about $45k p/a.
Good topic today Garth. Thanks
#32 Mooudit on 02.26.17 at 4:37 pm
Let say i have a spousal RRSP with 2 different banks, would the 3 year rule apply to both plans (as one) or individually? Meanning my wife could withraw from one plan even though i have contributed to the other one in the last 3 years?
They are treated individually. — Garth
————————————————————–
The CRA website says “If you contributed to any spousal or common-law partner RRSP or your spouse’s account under an SPP in 2014, 2015 or 2016, you may have to include in your 2016 income all or part of …”
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/wthdrwls/spsl-eng.html
The word “any” seems to mean that spousal RRSP accounts at different institutions are not treated individually. Can you please clarify, as this has significant impact on income splitting strategies through a spousal RRSP. Thanks!
RRSP accounts are separately registered and treated individually. — Garth
David Stockman – Everything Will Grind to a Halt in 2017
Great interview. On the markets and the economy:
Hunter: “How long can this go on for, I mean everyone is thinking the whole economy will turn around and shoot up like a rocket, is that what you think?”
Stockman: “This is delusional, this this the greatest suckers rally of all time, it is based on pure hopium”
https://www.youtube.com/watch?time_continue=36&v=7xgNncFHAng
#81 Vampire studies GMST 454 on 02.27.17 at 1:40 am
75 waiting – here is another tax calulator.
***
Why are people so hung up about their marginal tax rate bracket? It’s your average tax rate that you actually have pay… So any contribution will lower your average rate unless you are already in the lowest bracket.
I overheard some guys the other day (maybe in their mid 20s) talking about investing in insurance retirement plans (IRP) so I looked them up out of curiosity. Apparently they involve using a life insurance policy as collateral for a loan in retirement, which effectively acts as a tax shelter.
I still can’t wrap my head around why a young person would be willing to accept interest rate risk and bank policy uncertainty over the next 35-45 years.
IRPs = the reason insurance salesguys drive Porsches. — Garth
#83 When Will They Raise Rates?
Of course Stockman has been like that for years (it’s gonna crash!), here is another gem from him cira 2012:
http://www.businessinsider.com/david-stockman-youd-be-a-fool-to-hold-anything-but-cash-now-2012-3
#50 I’m NOT Poloz on 02.26.17 at 7:01 pm
———————————–
A low looney is a tax on every import
most manufactured goods in this country utilise imported components. Not much of anything is made here anymore from alloys to controls to rubber products, yada yada.
If we aren’t making stuff, why pay that tax on what we do use?
@#61 Always 2nd
“Me and the rest of the smart money are busy sheltering our gains properly and it aint with no RRSP or TFSA”
*******************************************
Links?
Or is it just in such highly effective “tax shelters” as a hole in the ground full of gold coins…….
@#50 Im not educated
“anti-teacherism”
*******************************************
Well, I’ve seen it all.
The uneducated can type.
Or was it one of 10,000 monkeys typing………
Less money injected into North America ?
—————————————————————–
http://www.msn.com/en-ca/money/topstories/china-arrests-800-in-crackdown-on-underground-banking/ar-AAnuBNh?li=AA54rW&ocid=spartanntp
I meant to write, “In this case, a dollar in 2057 is worth 14 cents in 2017.”
Garth needs to do a little more research. Already talk of tinkering with these programs.
http://www.cbc.ca/news/business/rrsp-rfsa-mortgage-retirement-pensions-1.3996098
Buffet takeaway ” You have to be stupid to buy bonds. And ” advisor fees are unnecessary , a waste of money”.
That’s a smack down if I ever heard one.
84 Dumpster
“Why are people so hung up about their marginal tax rate bracket?”
Do the math. It’s good tax planning.
#9 Cherry Blossom is a prime example of what happens to people in a society where some people are forced to pay for the often idiotic behaviour of others.
Resentment grows as it’s an unsustainable system (see Venezuela for only the most recent example) and everyone is concerned with what their neighbours are doing, as it affects them financially.
The worst part is you get ‘solutions’ like this poster suggests, even more idiotic government interference to ‘solve’ problems that government created.
We’re all doomed I tell you.
@Tony
“Re: #12 TraderJim on 02.25.17 at 2:57 pm
Trading currency ETF’s is like placing a show bet on a racehorse that has never finished out of the money in his lifetime. They need at least 10X leveraged currency ETF’s.”
Not that I am recommending it but you can buy call options on currency ETFs such as FXA, FXC, FXE that allow you to have exposure to, for example, $1M in any of those currencies for a miserly outlay of $5k to $10k.
It’s a pretty decent option (excuse the pun) for punters with no money to lose the little they have.
The main problem with these options is the lack of liquidity. I think I’m the only guy trading them most of the time.
@Tony Currency ETF option example
Here’s a brief example using current call prices:
You could buy 10 FXC March calls giving you exposure to approx. $75k CAD for :
71 strike, deep in the money, very little premium: $4,400
75 strike, just out of the money, about $700
76 strike, out of the money, $100.
(FXC does not exactly equal the current exchange rate, but follows it closely)
Those are all cheap enough to be dangerous.
p.s. Of course I should add, if I had ‘Smoking Man’ bucks, I’d trade real currency options, or more likely directly in the ‘interbank’ market.
Sitting here overlooking the Pacific Ocean in Laguna Beach. Told you guys to buy in 2010 (search my past posts).
And when you going to get me that 7 figure job on Bay Street? Predictions have been bang on.
Next up is skyrocketing Vancouver and Toronto detached prices this spring. And btw, Vancouver isn’t crashing, just the sales mix has changed lowering avaerage prices.
Anyways. Prices here in Laguna up 100% since 2010. Same for most of eastern Orange County.
I’m not knowledgeable about RRSP’s, since I decided long ago that increasing equity in real estate will pay for my retirement and this is where I should concentrate my resources (pat on the back).. so let me ask this:
Is my understanding correct that the deduction you get for making a contribution is calculated at the lowest tax bracket WHILE any withdrawal is added to your top line and taxed at your (higher) marginal rate?
Incorrect. Tax refunds or RRSP withdrawals are determined by that year’s taxable income. — Garth
Article on cbc – you can’t win – house makes the rules, players get all the risk
Q: What’s the difference between Kathleen Wynne and a dumpster fire?
A: At least a dumpster fire provides affordable light and heat…
https://ca.finance.yahoo.com/news/portfolio-survive-toronto-real-estate-135959504.html
Uh-oh, blog doggies. The last paragraph in particular tightened my gut a bit:
http://www.cbc.ca/news/business/rrsp-rfsa-mortgage-retirement-pensions-1.3996098
Incorrect. Tax refunds or RRSP withdrawals are determined by that year’s taxable income. — Garth
That I know, but deductions are calculated based on the fixed formula for federal tax (17%) – which is the lowest tax bracket. That’s how it was when I last looked at it.
Any withdrawal is added to taxable income, which, if one were as astute an investor/saver as you want your readers to be, should put them in a higher tax bracket at retirement.
Apparently, one of the framers of the TFSA, Rhys Kesselman, is having second thoughts about it’s usefulness in encouraging Canadians to save.
Here’s Kesselman…
“One change that is almost certainly coming, he says, is the provision that allows people to accumulate huge tax-free savings accounts, but still be eligible for benefits intended for lower-income seniors….
….I’m sure the day of reckoning will come when governments do start to somehow factor it in, when more people have TFSAs in the hundreds of thousands and the millions.”
The punishment of savers will only grow worse…
http://www.cbc.ca/news/business/rrsp-rfsa-mortgage-retirement-pensions-1.3996098
Rank speculation. Unwise to allow that to impact on current investment decisions. — Garth
Another twist on taxation of basement rental apartments: suppose you have nanny quarters in your home. When you hire a nanny, part of the compensation is the accommodation you provide for her. Not only should a fair amount be declared and taxed as income by both parties – , but the portion of the house dedicated to such purpose should be taxed for capital gains. No?
I’m looking forward to my tax return this year. RRSP contributions were significantly up in 2016. I have two kids in two different private schools, this will provide a much larger deduction (more than double) compared to two kids in one like it was 15/16. We’ve saved every receipt possible towards deductions for my wife’s contract position. Charitable donations look to be par to the year before.
Efforts last year to reduce my exposure to government and expenses in general, plus the sale of several “collectables” have put us in a surplus compared to normal for this time of year – and have also put a sweet “like new” (but used) 2010 Yamaha Raptor 700R in the garage.
***For 2017:***
1. Several more “collectables” will be going on the block, completing efforts at downsizing.
2. Near elimination of my 2017 heating bill.
3. Building project for the house – all materials will be sourced from the Rez – always the best price + tax free and they deliver!
4. More household needs will be sourced from Kijiji “like new” but used for half price and no tax.
5. Demolish old and build new Outbuilding plan has changed to old Outbuilding refurbishment “while standing” to avoid a slew of fees/permits/costs. This will literally save thousands.
6. Gasification carbonizer build to allow smokeless and odourless incineration of waste for which I have no other choice but to rent a truck, haul 1/2 hr away, and then pay 105.00+ tax PER TON to dispose of at a privately owned for profit “waste management company”. Savings 500.00+/yr
7. Changing insurance companies, same coverage, less money, less tax.
8. Buying out rental water heater for 250.00. It’s 3 years old, rental is over 150.00/yr, last one went over 20 years without a hitch.
9. Supplemental home generated electrical power – it will be played with starting late 2017
10. Elimination of mainstream motor fuels – moving from theoretical to realistic possibility.
Garth once mused here that people with million dollar TFSA portfolios will also be collecting CPP/OAS/GIS in their old age. So much for that one.
It is currently the law and I expect it will remain so, unless Trudeau is still PM in 2037. — Garth
Can I cherry pick ?
1961-1981
A span of a whopping TWENTY years, $10,000 invested in the us market would have shrunk to $6600 (including dividends )
Folks who think the market is a safe place are delusional . You are at the the mercy of the time period
Half a century ago? Who cares? Totally different economy, society, regulatory environment and globe. — Garth
#93 Vampire studies GMST 454 on 02.27.17 at 10:03 am
Do the math. It’s good tax planning.
***
My point is that it’s silly to target a specific bracket when any contribution will lower how much tax you pay now. Unless you have a short time frame, you’ll get the best result if you contribute as much as you can.
I think that some people just misunderstand marginal tax brackets (I’m not saying you do). My friend’s co-worker apparently refused a raise because it would “put them into a higher bracket”. They seem to think that their entire income will be taxed at the higher rate instead of only the portion of income that is in that bracket. It’s a head-scratcher.
um, so we don’t use historical data anymore? or rather when its convenient?
neither you or ANYONE has a clue as to returns for the next 20 yrs.
just so we are clear- because society has ‘progressed’ we are immune to such returns in the future?
The reluctance to make a higher income would make sense if you lose benefits by being in a higher bracket, but I don’t think that was the case in my example.
#98- Typical realtor spin…….lies
RE: #109 Market returns on 02.27.17 at 11:50 am
“A span of a whopping TWENTY years, $10,000 invested in the us market would have shrunk to $6600 (including dividends )”
These were the oil shock years and the ultra high interest rate years.
People investing right now have a rather different problem than did those trying to make money in the 20 year period from 1961 to 1981. If you wanted to make serious cash in this period (’61 to ’81) you would have just put your money in a savings account (it would have gained double digits) .
The problem we all face now, which Garth keeps pointing out (but no one seems to listen) is high taxes. Our provincial and federal governments in Canada are broke. They can’t even fund all the programs they want to, because there is literally no more money and they can’t borrow any more. They are going to want to tax the crap out of us.
There is an “eat the rich” mentality combined with a weird ultra nationalistic, racist “alt-white” movement in politics right now which is polarizing everything.
An investor faced with the current situation is not thinking “where do I get the best returns?” that investor is thinking “how do I avoid getting taxed to death?” That is the serious problem that is facing anyone with net worth or income right now.
The way to avoid tax, legally, that is the most successful continues to be “do as the ultra wealthy do”, simply because for the most part their children run our governments. These people, however much they may want to tax us to death, will avoid reducing their own net worth. So investment behaviour to avoid excessive taxation must mirror the investment and income earning behaviour of the ultra rich.
B#6 Smoking Man on 02.26.17 at 10:50 am
Wow. Just download realtor app.
Jesus, nothing in Shlong Branch under a million.
Rediculos. So I go look at other areas of interest from years ago way out in the bonnies. Insane prices. Bidding wars. Never saw that one coming.
Sell and go where.
I checked out rentals. Rediculos 4k month 4 a shit bungee.
This is total madness. And it’s just going to get crazier.
…………………………………………………………………
Smoking man you are a tech virgin. Just discovered a realtor app? Wow what year were you born old man?
Here ya go old man, just under a million. this is an income property so it is definitely worth the money.
FYI all of these million plus homes are updated or re-builds with many amenities. All minimum 3-4 bedrooms with minimum 2 + bathrooms. Some close to the lake. Most could be nice rental props. These are no tear down 1 bedroom shacks. you should define your parameters before you yo-hoo yourself old man. My sister was in real estate and is now taking her millions and retiring. She said Longbranch has a ways to go before its “the place to purchase.” But then again you liked it for the low life drunks.
https://www.realtor.ca/Residential/Single-Family/17824617/31-LONG-BRANCH-Avenue-Toronto-Ontario-M8W3H8-Long-Branch
Oh yes here is a another great app for you to discover.
https://play.google.com/store/apps/details?id=com.rogerscenter.LearnReadWriteSpell&hl=en
RE: #102 Euro Observer on 02.27.17 at 11:19 am
https://ca.finance.yahoo.com/news/portfolio-survive-toronto-real-estate-135959504.html
Here’s what’s going to happen: The USA will be able to raise its interest rates (albeit, slowly). This will make the USA a more attractive place for investing, and will put pressure on Canada to follow along.
Canada cannot raise its interest rates. Doing so will bankrupt the Province of Ontario, and cause the Federal government to enter into a debt crisis. So Canadian rates will remain artificially low. This will crush our dollar, putting us into the curious position of being a very affordable place for foreign investment (as our stuff is really cheap).
Our government will do the only thing it can do, in this sort of situation, which will be to open up the printing presses and engage in “quantative easing”, otherwise known as money printing. This will permanently lower the value of the Canadian dollar.
Anyone in cash at this point is screwed (but you are already screwed if you are in cash, your investment is not keeping up with the rate of inflation, which is more than you can earn by holding cash – this should tell everyone something, but apparently no one is listening).
Anyone in real estate will discover that their over priced house is now priced moderately, as the currency is worth less. Interest rates will normalize, as the government paid off its debt by printing more money. What used to be an over priced house will now be affordable again.
And we will have gone through the “great inflationary” event of the 20th century.
This is what happens when governments borrow too much. The IMF always advises them, just print money, let your currency devalue, and then start over. There is nothing else you can do.
Right now T2 and his government are faced with the above, and their solution is to find new ways to tax all of us to try to keep up. It won’t work. They can’t collect enough tax. We are hearing about our big cities, such as Toronto, having an “income tax”. Again, it won’t work. There just isn’t enough money being earned by working people, to support all these new taxes. There is nothing left to tax.
Only solution is, let the currency devalue, and start fresh. It happens to every government……
It is currently the law and I expect it will remain so, unless Trudeau is still PM in 2037. — Garth
—
Well PET’s shenanigans lasted more that a generation after he left office so I have strong feeling that will happen again under T2. Doesnt really matter if he isnt still in office if the country is trying to pay off $1.5 trill in debt.
The only way to shelter is through a corporation. Then you have the big boys lobbying the govt. on your behalf The wage slave takes all the tax increases and govt tweaking.
#82 Tulips on 02.27.17 at 2:22 am
RRSP accounts are separately registered and treated individually. — Garth
————————————————————————-
Just to be sure I’m not misstating or misinterpreting anything, are you saying this would be a legitimate way of income shifting with spousal RRSP’s then:
2016 – Contribute $10K to spousal RRSP at BankA
2017 – Contribute $10K to spousal RRSP at BankB
2018 – Contribute $10K to spousal RRSP at BankC
2019 – Contribute $10K to spousal RRSP at BankD and withdraw $10K from spousal RRSP at BankA
2020 – Contribute $10K to spousal RRSP at BankA and withdraw $10K from spousal RRSP at BankB
2021 – Contribute $10K to spousal RRSP at BankB and withdraw $10K from spousal RRSP at BankC
2022 – Contribute $10K to spousal RRSP at BankC and withdraw $10K from spousal RRSP at BankD
2023 – Contribute $10K to spousal RRSP at BankD and withdraw $10K from spousal RRSP at BankA
…
and so on until we retire, with all of the withdrawls added to my spouses income while I get the refunds for contributions?
I always thought this was not possible as I figured CRA would know about all of the RRSP accounts registered in my name and consider them together. The folks who were discussing this elsewhere seem to think that way as well: http://forums.redflagdeals.com/spousal-rrsp-contributions-attribution-1039189/
I would hope they’re wrong, but I fear they’re not.
The govts following PET gave us the GST in the 1980s and a decade of austerity and tax increases in the 1990s. The monster lives on until only drastic measures tames it. Like what will happen in 2037 and sooner.
Chair Of House Intel Committee: No Evidence Of Contact Between Trump Campaign, Russia
The chairman of the House Intelligence Committee said on Monday he has seen no evidence of contact between Donald Trump’s campaign and the Russian government during the 2016 presidential election. Nunes said he had been briefed on a transcript of a phone call that Michael Flynn had with a Russian envoy after the election and said he did not hear anything worrisome about that call.
http://www.zerohedge.com/news/2017-02-27/chair-house-intel-committee-no-evidence-contact-between-trump-campaign-russia
#fakenews
#108 not 1st on 02.27.17 at 11:44 am
Garth once mused here that people with million dollar TFSA portfolios will also be collecting CPP/OAS/GIS in their old age. So much for that one.
It is currently the law and I expect it will remain so, unless Trudeau is still PM in 2037. — Garth
I can easily see a time when withdraws from TFSA will count as income when it applies to qualifying for OAS and GIS. He who thinks this will not happen is quite the optimist.
He who does not and invests accordingly is quite the gambler. — Garth
contribute to RRSP now
get fat tax refund in Apr
all in bitcoin etfs
profit !
pay fine / neither confirm nor deny/ name is kept secret
rinse lather repeat …
rule in place since 2002
failure to report the 1,174 international wire transfers of $10,000 or more involving other clients, as well as its lack of anti-money-laundering safeguards and policies.
http://www.cbc.ca/news/business/fintrac-fine-name-secret-1.3999156
Garth I no you’d advise not to use your rrsp or tfsa for a down payment on a house, but that’s where all my money is.
I can easily see a time when withdraws from TFSA will count as income when it applies to qualifying for OAS and GIS. He who thinks this will not happen is quite the optimist.
He who does not and invests accordingly is quite the gambler. — Garth
I invest in my TFSA with the knowledge that the rules CAN change. I never said that I thought it would be taxable in the future, just that withdrawals over a certain amount in any taxation year may disqualify you for OAS and GIS.
Idle speculation. — Garth
#116 Ace Goodheart
Only solution is, let the currency devalue, and start fresh. It happens to every government……
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Hanging out cash to overeleveraged borrowers selectively so they can pay their mortgages will never happen. This is not how the system works.
Of course CAD will get creamed. But for different reasons – the inability to raise rates and the deficits – budget and due to CMHC losses.
The inflation will abolutely wipe out savers and retirees.
Let’s be clear here – what you are proposing, any attempt to workout things without real estate crash will only lead to a bigger bubble and at the end there will be no inflation, no there will be 5 million dollar homes first and then hyperinflation.
#116, I agree with your analysis. I also don’t think the federal Liberals will raise taxes.
A long, long, long time ago in Canada raising taxes was a way to increase government revenues. Today taxes in Canada are already past the min/max point on the Laffer curve. Thus when Canadian provinces have tried tax rate increases over the last decade, those tax increases have not increased revenues – in fact a case can be made that those tax increases, ended up decreasing provincial government revenues.
The increase in the top marginal rate by the federal Liberals when they first came in, was offset by a decrease in the rates for middle class Canadians.
In fact, implementation of the new tax bracket resulted in a -$4 billion hole in government finances because (of course) there were not enough rich people to finance the modest middle-class cut. — Garth
Housing up good? No. Canadians, not caring for other Canadians…
About 4000 need housing in Metro Vancouver as homeless camps grow: study
The Globe and Mail – 25 minutes ago
A task force says there are more than 70 homeless camps in Metro Vancouver, as it estimates about 4,000 people are in immediate need of housing.
The dog at the bar…. a metaphor for our “watchdogs”
http://www.cbc.ca/news/business/fintrac-real-estate-money-laundering-1.3761343
..”The federal anti-money laundering watchdog found “significant” deficiencies with the anti-money laundering and anti-terrorist financing controls at 468 of those companies, while 28 companies had “very significant” deficiencies….”
#121 Penny Henny
”I can easily see a time when withdraws from TFSA will count as income when it applies to qualifying for OAS and GIS. He who thinks this will not happen is quite the optimist.”
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As with RRSP’s, the TFSA is available to every taxpayer elligible. GIS is a supplement for low income earners.
The whole intent of the TFSA was to level the playing field whereby low income earners who qualified for the GIS were being penalized at least 50 and up to 100% if they withdrew funds from their RSP’s or had other income.
RSP’s for lower income earners and those ending up in retirement in a low income situation were/are being penalized with clawbacks from their GIS at the rate of 50 cents for every dollar of income from withdrawal of RSP’s and from other income earned or otherwise.
There is a limit to how much a senior can have of ‘earned’ income without clawback which is about $3500 per year. Unfortunately, those unable to work due to illness or other problems have to suffer the consequences. This does not seem quite fair.
I sometimes wonder how many geezers who are working at Home Depot and Walmart are entitled to GIS but not aware of it. I once talked to a senior lady living in a condo project where I once owned a rental unit and she told me that her husband who was near 80 was working at odd jobs to subsidize their OAS and little CPP they were getting. He had no other pension. She had not worked and therefore was only getting the OAS.
I brought up the GIS topic but she was not aware of this benefit. I suggested that she look into it as it would be fairly substantial and her husband may not have to work. She replied that he would never go for it as that is “welfare”. I tried.
Other means tested benefits can also be reduced or eliminated in this case resulting in an effective clawback up to 100%. This is one of the reasons that RSP’s are not for everyone. The TFSA however was intended to prevent the above clawbacks and allowing low income earners to be able to save via a TFSA (after tax) and enable them to withdraw needed funds tax free without the clawback of their means tested benefits.
The problem for a lot of low income seniors who diligently invested in RSP’s and maybe ended up with $100,000 or so refuse to draw them out until forced to do so when they are required once reaching age 71. The reason RSP’s are a tax trap for these people.
Drawing them out prior to that would have resulted in the clawbacks mentioned previously. Many seniors in the past were not aware that they qualified for the GIS and as a result the government saved many millions of dollars. It was not retroactibe. Seniors were required to apply for the GIS as it was not paid automatically.
Today however, when a person applies for OAS there is a question on the form and a check box whereby it asks if you are applying for the GIS. Once you check this, each year the CRA reviews previous years income and determines if you still qualify or if there is a clawback to your benefits.
The other thing with the TFSA that is a great benefit to seniors with lower incomes and no pensions other than the OAS or OAS & CPP and who own a home is that unlike the RSP, when you withdraw, you lose the RSP room but with the TFSA, the room is cumulative. Even though they may not have been able to put money into a TFSA, when it comes to sell their home, they can invest part of the proceeds into the TFSA.
For a couple doing that today, they would have $100,000+ room available for these funds to grow tax free. In fact for those individuals who have substantial equity in their home and wish to downsize to a smaller home that is worth less, they can put the excess funds in the TFSA and the equity in their home continue to be sheltered from tax.
We ourselves plan to continue living in our current home for many more years and continue to top up our TFSA’s. Fortunately for ourselves, we do not qualify for GIS by a long shot having good pensions. Something that is becoming more rare.
If we are having a retirement crises now, I can’t imagine what it will be like when the GenXer’s and the current generation come to that point.
There is very much a need out there right now for seniors to have the advice of a good financial planners as we have many seniors with very low incomes sitting on millions of dollars of equity in their homes and cash poor and living on KD. Not a good situation. Others are just poor and will remain that way.
At the moment, seniors receiving OAS are not clawed back on their benefits until they exceed $73,756 of net income. Amounts in excess are clawed back at 15% and fully clawed back after $119,400.
If the government was to even mention the idea of eliminating the OAS from the above noted high income individuals, there would be a major lashback from this group but when the low income earners as mentioned previously get clawed back from their GIS, not much is said. They just grin and bear it.
Sorry for being so long winded.