Do it

When the feds proposed whacking the self-employed with a menu of tax hits over the summer, lots of people cheered. Many were here. The comment section, way down in the hold with the rats and spiders, exploded with anti-entrepreneur, anti-doctor, anti-small biz emotion. Overwhelmingly the sentiment was that regular working, ‘honest’, salaried deplorables can’t deduct stuff or pay their spouses so why the hell should some dude with a print shop get to?

It was music to Liberal ears. That was the strategy. Divide and conquer. Call the self-employed loopholers, infer they’re cheating everyone else, then jack their taxes with impunity. As you know, it almost worked. Some measures have been shelved (a 73% tax on retained earnings income) while others will go ahead (no income-sprinkling).

Lost on most of the wailing employees was the fact they, too, have a bevy of ways to reduce tax. Most of them are never utilized, because people are too busy working, minding their families, retweeting Trump, or bitching about others. So, here’s a handy checklist of a few of the most obvious. Print it out. Tape it to the fridge. Do it.

Do you and your squeeze both work? If one earns more than the other, have the chief breadwinner pay all of the regular expenses – mortgage, rent, food, daycare, weed, insurance, booze, clothes, rehab. Make the lesser-monied spouse the chief investor in the family, so the returns (capital gains, dividends, interest) will be taxed at a lower rate.

Ditto for registered retirement savings. If you earn considerably more than s/he does, or have a defined-benefit pension, use up all your RRSP room for a spousal plan. You write the contribution off your higher taxed income while your spouse gains control of the money. After three years it can be withdrawn at their lower rate – so you’ve just sprinkled!

Here’s another one, if there’s an income disparity between you: loan your less-taxed spouse a bunch of money for investment purposes. S/he puts it into a nice little non-registered account and starts collecting dividends and earning capital gains in a tax-efficient way. Even though it’s your money, none of that income is attributed back to you – so long as this is set up as a loan at the CRA’s prescribed rate of interest which is, believe it or not, just 1%. Interest must be paid annually by the end of January but all of that is tax-deductible. Yes, your spouse can write it off the investment returns. This works for kids over 18, too. More sprinkling!

Also with income-splitting: if you are a wrinkly collecting CPP (everybody should start taking it at 60, no exceptions), this can also be split with your less-taxed spouse.

If you didn’t listen to the advice on this blog, bought individual equities and were handed your rear end by Mr. Market, sell those dogs before Christmas in order to realize a capital loss which can be used to reduce taxes on capital gains. Losses can be used to neutralize gains not only in the current tax year, but going back three more years. This can help you recover taxes that you paid as far back as 2014.

You can also take crap assets that dropped in value and dump them on your kid. Another great reason to have children! Investments can be transferred to a minor child and that will also trigger a tax loss in your hands which can be used to offset gains. Now your spawn has an asset that, when it recovers in value, will be essentially tax-free with none of the gain attributed back to you.

Fill up your TFSA, obviously. Also that of your spouse. And your kids over the age of 18. Gift money to all of them with no gains TFSAs attributed back to you. Remember, $5,500 a year for 35 years earning 7% will result in $819,000, of which more than six hundred grand is compound growth. So ensure these are not savings accounts, but investment accounts – no GICs, HISAs or other dorky stuff. Also when you retire, a $819,000 TFSA will give you about $50,000 a year in taxless income which will not reduce your CPP or OAS by one cent.

If you’re 71 and have to convert an RRSP to a RRIF, be thankful you robbed the cradle and married a babe younger than you. Your mandatory retirement fund withdrawals can be based on the age of your spouse, keeping them to a minimum and allowing your nest egg to grow larger, longer.

Obviously put money into a RESP for your kids. The feds will give you an automatic grant equal to 20% – so for a $2,500 contribution you receive $500, up to a lifetime total of $7,200. Free money. Duh. Why would you not do this? If your kid grows up to be a rock star or a high-net-worth, Mercedes-driving plumber you can fold much of the RESP money into your RRSP. Remember to buy growth assets. Establish a family plan for multiple kids, not separate ones. And, for God’s sake, avoid the RESP-flogging baby vultures that skulk around hospitals. Go self-directed.

And, yes, use RRSPs. They’re still the best tax-shifting vehicle around, allowing you to write off up to $25,000 in taxable income a year. You can borrow money cheap to contribute, then use the refund to pay much of it back. Or open a plan, shift in assets you already own, and get paid money by Bill Morneau for selling yourself stuff you already own. That should make his head all splody.

So, there you go. Ten ways to cut your taxes without even becoming an MD!

When you finish doing all those, you can complain. Until then, stuff it.

192 comments ↓

#1 Robert on 10.29.17 at 3:10 pm

I’m in my mid-fifties and earn 42K–before taxes – does it still make sense to have an RRSP? I was told that low-income earners should put money into TFSAs or investments and stay away from RRSPs.

#2 Coopoiler on 10.29.17 at 3:12 pm

I am interested in knowing more about this comment. CPP(everyone should start taking it a 60 no exceptions). Each year you wait you get 7% more is that not a good thing? Comments please!

#3 Andrewski on 10.29.17 at 3:13 pm

Great outline Garth! If only the naysayers and doomers would actually take this info & do something fiscally responsible with it, we might have less whining.

#4 calgary rip off on 10.29.17 at 3:13 pm

FIRST!

#5 crowdedelevatorfartz on 10.29.17 at 3:19 pm

Excellent, easy to understand advice 3 blog days in a row.
Someone pinch me.

#6 Nic on 10.29.17 at 3:20 pm

Millenials are not upset about Drs, lawyers, farmers, hair dressers….so very tired of this line of thinking. Millenials are tired of companies who’s executive team is making astronomical income while paying their employees less, not providing benifits, no wage growth, lay offs etc etc. When the executive makes 20x long term employee wages there is an issue. Sears, ICBC, Bay street, Wall street, oil sands etc etc. That is the problem. Greed. Not the Dr, surgeon, small business owner or veterinarian. Tax benefits for the wealthy (most of the people you mention dont even fit in that caregory) do NOT trickle down..enough with the smoke show comparison.

#7 crowdedelevatorfartz on 10.29.17 at 3:27 pm

@#100 Turner Nation
“Least Coast goes to Sobeys family”
+++++

Sobey’s bought ownership of Canada Safeway 3 years ago…..sold off some of them where they owned both food stores in the same area( cant have 100% of the market).
They’ve been bleeding money ever since( just like the the original US Safeway owners)
From a small town grocery 100 years ago…..They’re all across Canada now………but “the Sobeys Stellarton Syndicate” prefers to keep a low profile…..

#8 conan on 10.29.17 at 3:44 pm

Bad messaging on their part. They should have just laid it out there. That these measures were targeting old money, for the most part, and new money, from tech and real estate, for the most part.

It would only effect the wealthy with 200 thousand, or more, income from passive investments.

Makes it an easier sell.

In the end though, it should be policy that does not necessitate raising taxes, that should be the goal.

https://www.youtube.com/watch?v=PuuM00tMxww

#9 Andrewski on 10.29.17 at 3:45 pm

Re: Calgary rip off, And she said, you always come first…

#10 For those about to flop... on 10.29.17 at 3:51 pm

Pink Pumpkins being carved in North Vancouver.

This one come back on the market with an unblemished history but with myself on the case they didn’t stand a chance.

Paid 1.94 in June 2016 with an assessment that matches current ask ,at this price they would take a hit after expenses.

The one thing they have in their favour is that it’s in North Vancouver and not Terrace B.C…

M43BC

1388 Terrace Avenue, North Vancouver

Jun 6:$2,369,000
Oct 25: $2,008,000
Change: – 361000.00 -15%

https://www.zolo.ca/north-vancouver-real-estate/terrace-avenue

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAyODUxSA==

#11 Jungle on 10.29.17 at 3:57 pm

For those with kids: Maxing out your RSP can provide around 5-8% more CTB, because net income’s used to calculate CTB. And CTB is indexed to inflation.

CTB does not like non-reg dividends or income, especially the CND “gross-up”, (40%+) so max your registered accounts first.

#12 Single MGTOW on 10.29.17 at 4:06 pm

What if you owe at least $10,000 from a credit card debt because of your ex?

Do credit card companies know if you have a TFSA? I don’t want to be garnished by those creditors when that $10,000 turns into $70,000 in 35 years because of the magic of credit card interest.

Do credit card companies sue? What are the chances of being sued and garnished by a Canadian credit card company? It’s been at least 5 months and no lawsuit for now.

#13 Yanniel on 10.29.17 at 4:14 pm

Other advices to complement Garth’s list:

1.) If you are doing RRSP contributions and getting a refund when filling taxes. DON’T! Better to Request to Reduce Tax Deductions at Source. This will increase your cash flow and give you the satisfaction of not giving Ottawa a zero interest loan.

2.) If you maxed your RRSP don’t stop there. You can over-contribute a lifetime max of 2k without consequences. That 2K will compound tax sheltered gains for as long as you have it in your RRSP.

3) If you are heading South for good and are thinking to withdraw money from your RRSP, wait until you are a non-resident to withdraw the money. Non residents pay a max tax of 25% when taking money out of the RRSP. This will allow people with a marginal tax rate above 25% to cap the tax grab at 25%.

#14 For those about to flop... on 10.29.17 at 4:21 pm

Pink Pumpkins being carved in Delta.

These guys still have a little bit of wiggle room but I thought I would put it up to show Whipster since they have been good enough to try and help me and this one is out their way.

Paid 1.32 in November 2016 with an assessment that will be updated in a few months coming in at 1.31

Speaking of assessments,the only 2016 assessments that I have discovered that went into reverse for the 2016 edition were Richmond condos,I suspect it will be a bit more widespread in 2017 but we will have to wait a while longer and it will take me a while to process enough to see any increase.

Thanks again ,Whip…

M43BC

899 50b Street, Delta

Aug 30:$1,550,000
Oct 25: $1,490,000
Change: – 60000.00 -4%

https://www.zolo.ca/delta-real-estate/899-50b-street

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDA1VlBMUQ==

#15 PastThePeak on 10.29.17 at 4:23 pm

#6 Nic

You must be new here, because the commentary on this blog by the salaried guvmint and welfare types was very much against the small biz and incorporated professionals.

You might not know, but the tax changes being discussed were not about large public corps or their CEOs. The were/are entirely about private corps like small biz.

You might have missed that the reaction here and in the broader media was pointing out the fact that the real rich like T2 and Morneau weren’t affected by the changes.

However, given the rambling nature of your rant in touching on Wall Street (not in Canada) and the oil sands, I am thinking you are just a socialist ideologue.

#16 Figmund Sreud on 10.29.17 at 4:23 pm

When the feds proposed whacking the self-employed with a menu of tax hits over the summer, lots of people cheered. Many were here. The comment section, way down in the hold with the rats and spiders, exploded with anti-entrepreneur, anti-doctor, anti-small biz emotion.
_________________________________

Ah, … yes, there is a reason for that. Most folks don’t really read and study how, in general, the system works, evolves, et al., … but they sense it’s injustice. It’s true, …

No one studies works of Adam Smith, David Ricardo and John Stuart Mill, … or Karl Marx, but work of these chaps explains a lot, … and may just explain why the folks sense what they sense.

Anyway, … here is a germane essay, that, just perhaps, will enlighten a bit why lots of folks feel they way they do about all that stuff you are harping about, … I suspect. Short snip first:

Socialism a century ago seemed to be the wave of the future. There were various schools of socialism, but the common ideal was to guarantee support for basic needs, and for state ownership to free society from landlords, predatory banking and monopolies. In the West these hopes are now much further away than they seemed in 1917. Land and natural resources, basic infrastructure monopolies, health care and pensions have been increasingly privatized and financialized.

Instead of Germany and other advanced industrial nations leading the way as expected, Russia’s October 1917 Revolution made the greatest leap. But the failures of Stalinism became an argument against Marxism – guilt-by-association with Soviet bureaucracy. European parties calling themselves socialist or “labour” since the 1980s have supported neoliberal policies that are the opposite of socialist policy. Russia itself has chosen neoliberalism. …

http://michael-hudson.com/2017/10/socialism-land-and-banking-2017-compared-to-1917/

F.S., Comox, BC.

#17 not so liquid in calgary on 10.29.17 at 4:27 pm

@ Nic #6

How ’bout this:

tax consumption, not income

go Riders

#18 Interstellar Old Yeller on 10.29.17 at 4:29 pm

Tax optimization posts are the sexiest posts. Thanks, Garth.

#19 MF on 10.29.17 at 4:41 pm

I am interested in the bit about the RRSPs. Who exactly are we borrowing money from to put into an RRSP? How do we sell it back to ourselves?

MF

#20 Zapstrap on 10.29.17 at 4:41 pm

Divide and conquer.

Pretty well says it all. But how stupid are we collectively for letting it happen over and over and over again? For just about everything now. Aren’t we all in this together?

#21 Bowlkey on 10.29.17 at 4:41 pm

Do you realize that I have people who..
constantly have new vehicles, live in a ridiculously expensive housing, go on 2 airplane vacations every year..
Telling me that they can’t afford to save for retirement.

I took my first airplane vacation when I was 43 years old, drive a 10 year old truck and live in a plain small house in a sensible neighborhood.
I can “afford to retire”.

We are Alberta tradesmen pushing 50 years old.
What am I supposed to say to these people with out pointing out the obvious?

#22 WUL on 10.29.17 at 4:44 pm

#2 Coopoiler on 10.29.17 at 3:12 pm

I am interested in knowing more about this comment. CPP(everyone should start taking it a 60 no exceptions). Each year you wait you get 7% more is that not a good thing? Comments please!
****

Let me try. Picture two people the same age. One takes CPP at age 60. The other takes it at 65. A graph plotting total amounts shows that the two lines cross at age 72. Will you see your 72nd birthday?

Also and a true story. I am close to a person who applied on the first of a month for CPP at the age of 61. By the 30th of the same month, the diagnosis of Stage IV Big C was back. Incurable, inoperable and terminal. Only about 10% with the same condition see a 5th year.

I’m with Garth. Apply when you are 59.5 years old.

#23 LivinLarge on 10.29.17 at 4:48 pm

Robert, taking your CPP at first availability is the perenial “a bird in the hand…” concept.

Get your money (even a reduced entitlement) ASAP. If you don’t need it for your lifestyle wonderful but get it your pocket and drop it into and investment portfolio, TFSA etc. First you may die not long after 65 and then your entire lifetime entitlement is up in smoke.

Personally, I like the idea of dropping much of it into a TFSA. A very very low % of tax payers have maxed out their TFSAs already so using the unneeded CPP to max out your TFSA (including previous year’s unmaxed amounts) simply lets that CPP money grow tax free.

There certainly may be even more lucrative options but I like the TFSA maxing because it is so easy and in the end even your returns are never taxed.

#24 WUL on 10.29.17 at 4:49 pm

Re CPP above:

Minor edits and clarification. The two people the same age are entitled to receive the same CPP at age 65. Also, the lines plotted are total amounts received.

#25 Victor V on 10.29.17 at 4:54 pm

Tighter lending rules will send borrowers into the arms of ‘alternative lenders,’ posing a whole new set of hazards

http://www.macleans.ca/economy/has-fixing-canadas-mortgage-market-made-it-riskier/

#26 Butcher on 10.29.17 at 4:58 pm

7.2% per year of CPP
That’s 36% if you wait till 65

Never wait until you are 65. — Garth

#27 Trojan House on 10.29.17 at 4:59 pm

All those ways employees can avoid tax, as Garth just pointed out, are not fair and should be rolled back by the Liberals. Greedy employed people should not be allowed to give their kids underperforming assets.

Why is it fair to be able to loan your spouse money so you can avoid tax and the interest rate should not be 1%. Should be at least 10%.

Just because your spouse makes less money is no reason that you should be able to write off tax.

Anyway, you get the point. Close all the loopholes for employed people who take no risk.

#28 I’m stupid on 10.29.17 at 5:00 pm

#6 Nic

You are the reason that big companies can afford to pay top executives 20x average worker incomes. If you stopped being so stupid by spending all your money on junk they couldn’t afford to pay so much and stay profitable. I don’t mean you , but your generation, boomers, millennials, Gen x, everyone. If the savings rate was 20% like it was in 1980 we’d have fewer “rich” people. It’s gone from 20% in 1980 to almost zero today. Can you guess who benefited the most?

#29 AfterTheHouseSold on 10.29.17 at 5:07 pm

#2 Coopoiler
CPP “Each year you wait you get 7% more is that not a good thing?”

Each year you wait you could get dead. 0% is not a good thing.

#30 rv-aggeddon on 10.29.17 at 5:08 pm

https://www.wired.com/story/meet-camperforce-amazons-nomadic-retiree-army/

Could this be Canada’s future after the great housing crash of 2018…..imagine rv-ers ad igloos, maybe build the parks near Timmies for the cheap coffee

#31 Capt. Serious on 10.29.17 at 5:10 pm

That should make his head all splody.

I enjoyed the use of “splody”.

#32 Tony on 10.29.17 at 5:12 pm

Re: #2 Coopoiler on 10.29.17 at 3:12 pm

The Canada pension plan will go broke. It bases future payouts on fictitious returns that can never in a million years be realized. At best the Canada pension plan will earn about 2 percent a year in the future and even that’s unrealistic. This is one of the reasons to take it at 60, that and the entire plan might go insolvent.

#33 Jimmy on 10.29.17 at 5:34 pm

Not First.

Mmm. Fresh baked muffins at Belfountain.
Did the driver ever apologize for taking out the corner of your building?

Hey SM, how come there is no hotel video of Vegas shooter coming and going?

#34 rainclouds on 10.29.17 at 5:35 pm

Got a non indexed DB pension. Started drawing at 55, 6 months from 60.
RRSP/TFSA maxed.
Gonna wait till I’m 64/5 till I draw CPP. Likely get 1k per month, plus OAP.
Want more indexed protection as the value of DB erodes……….
Probably take money from RRSP to make up any shortfall till then . maybe 5k per yr.

Expect to live longer than 73

#35 Dan.t on 10.29.17 at 5:43 pm

Great post. Informative and educating the masses is a good thing. Too bad a huge majority of Canadians still only know, “buy house at any price, get rich”.

Thanks for showing that there are many ways to make a decent return year in year out without leveraging every thing you have for an asset that has never cost more and so that you can sleep at night without worrying about massive debt and what the market is doing.

If you are making an investment decision, it should not be so intense that you can’t sleep and night and worry constantly…

actually, forget it, just buy a 1.5 mil bungalow in surrey or Langley… or a 840k 1 bedroom condo on YVR, and chill.

#36 FOUR FINGERS WATSON on 10.29.17 at 5:49 pm

#5 crowdedelevatorfartz on 10.29.17 at 3:19 pm
Excellent, easy to understand advice 3 blog days in a row.
Someone pinch me.
……………………..

Did you find your marginal propensity yet ?

#37 Lost...but not leased on 10.29.17 at 5:51 pm

Some bad news..

Today’s blog photo has inspired me, in the Thanksgiving season…into a plethora of punchlines…but unfortunately to the degree some @sshole on this blog reported me to CRA.

PS Luckily, in joint venture with my North Korean contacts… we are close to exposing them.

#38 -jwk=- on 10.29.17 at 6:06 pm

@# 13 You must be new here, because the commentary on this blog by the salaried guvmint and welfare types was very much against the small biz and incorporated professionals.

————-

Uh, no. The conversation was quite clearly targeting at those who were abusing the system by pretending be a productive ‘small business’ while just using the label for tax avoidance purposes. Taking zero risk, getting all the gain. You really think your local convenience store owner had a few million stashed away in off shore passive investments?

#39 Debtslavecreator on 10.29.17 at 6:08 pm

Tony
The CPP will not go broke. It will be worth a lot less due to the currency debasement that will accelerate from 2018 onward – this will impact all pensions and the result is a default via inflation. Government and other bond holders will see the same impact
There will be no default in nominal terms as happened in 1930-1931 by several govts
I can’t believe these corrupt liberals and ndp types
JT just celebrated that our deficit is 7-8 B less so hey let’s spend the difference
This is borrowing from our kids and young Canadians today to pay the lowest income dependants of government and these same kids will be the ones facing high inflation and high taxes
It is hypocrisy of the highest order
Word has it the most corrupt liberals of all, the Clinton’s, will be taken down very shortly
Can’t wait for McGuinty and Wynne and the rest of them to get handcuffed even if it takes 2-3 years

#40 Tom on 10.29.17 at 6:09 pm

Ugh
Stop wasting words on non registered accounts
No 1%ers here

A regular family has over 30k per year to contribute to tax advantaged accounts

That doesn’t even include employer plans

Not a ton of $$ left over for non registered plans

#41 LivinLarge on 10.29.17 at 6:09 pm

Clearly I should have referred my previous comment to Coopoiler.

Also, based on 3rd hand journalist info, there is an exception to the “everyone take CPP at 60”. If you are already on CPP Disability benefits, do not then apply for regular CPP. As I understand it, CPP-D doesn’t reduce your entitlement for CPP but taking CPP at 60 does reduce your benefit rate and you can’t subsequently go on CPP-D.

Also, I “think” there may be an issue with benefit amount when the Libs already announced increase in
CPP benefit set to start rolling out around 2023ish but I am far from certain about that. This increase to benefit is something like a 30% increase.

#42 Michael King on 10.29.17 at 6:11 pm

Today I took a long walk through the Kitsilano and adjoining Fairview Slopes neighbourhoods in Vancouver. “For Sale” RE signs galore, especially condos/townhouses. Over 1k/sq. ft. is not uncommon! The city’s RE reality is still toxic.

https://www.straight.com/news/987356/vancouver-beats-manhattan-and-san-francisco-least-affordable-housing-north-america-study

#43 Hotdogs from Heaven on 10.29.17 at 6:23 pm

#32 Tony on 10.29.17 at 5:12 pm

Re: #2 Coopoiler on 10.29.17 at 3:12 pm

The Canada pension plan will go broke. It bases future payouts on fictitious returns that can never in a million years be realized. At best the Canada pension plan will earn about 2 percent a year in the future and even that’s unrealistic. This is one of the reasons to take it at 60, that and the entire plan might go insolvent.
————————————————–
WRONG. The CPPIB’s investment fund is designed to continue its current rate of payouts for 70 years based on annual earnings of 3% above inflation. It is well run and has been making more than that for several years.

#44 The Mom on 10.29.17 at 6:24 pm

For those too broke to contribute to RESPs early, thinking they’re going to lose out on many years of grant money if you start it when kids are in their teens, CHECK THIS OUT.

You can contribute TWO YEARS WORTH of the max required for grant ($5,000) in one calendar year, and get TWO YEARS’ WORTH OF GRANTS. You get to receive past years’ grants. You can do this if you start the RESP before the kid is 15 (IIRC), and the last year you get grants is the year they turn 17 (IIRC). Check the regs to be sure on those ages, I’m going by memory.

We couldn’t contribute until kid #2 was 15, but we had opened it earlier. We contributed $5,000 at age 15, got $1,000 in grants. Did the same during the next two years (16 and 17), another $1,000 in grants each year. So, $3,000 ingrants (6 years’ worth, in just 3 years).

Even the bank wasn’t aware we could do this, but you can.

We

#45 Stone on 10.29.17 at 6:28 pm

#40 Tom on 10.29.17 at 6:09 pm
Ugh
Stop wasting words on non registered accounts
No 1%ers here

A regular family has over 30k per year to contribute to tax advantaged accounts

That doesn’t even include employer plans

Not a ton of $$ left over for non registered plans

——

Speak for yourself. LOL

#46 TalkingPie on 10.29.17 at 6:30 pm

#12 Single MGTOW on 10.29.17 at 4:06 pm
What if you owe at least $10,000 from a credit card debt because of your ex?

Do credit card companies know if you have a TFSA? I don’t want to be garnished by those creditors when that $10,000 turns into $70,000 in 35 years because of the magic of credit card interest.

Do credit card companies sue? What are the chances of being sued and garnished by a Canadian credit card company? It’s been at least 5 months and no lawsuit for now.

—————————————————————–
Do you really think that the banks are going to forget about 5 figures’ worth of debt just because you stuck your money into a registered account? Your credit card debt will continue to accrue at 18+%, and once you go into arrears (which you surely already are after 5 months), that’ll jump to more like 23+% plus any penalties. Just for fun, I punched that into my financial calculator; $10,000 in debt compounded at 23% interest over 35 years doesn’t make $70,000 – it makes a little over $14 million. Good luck trying to make up for that with your returns in your TFSA. The good news is that they’ll get you long before then.

If you think you can just ignore this problem and it’ll go away, it’s starting to become apparent how you managed to go into 10 grand of credit card debt “because of your ex” in the first place.

#47 Millenial on 10.29.17 at 6:45 pm

US Official Unemployment Rate: 4.2%
S&P 500: 2,581
Effective Federal Funds Rate: 1.16%

#48 TurnerNation on 10.29.17 at 6:48 pm

From the unbalanced dept. (Schlock Pickers) a hard luck capital play: Convertable Debs exist on Morneau’s company; also, loan sharkers Mogo Financial and GoEasy (formerly Easyhome).

Mogo’s cost of capital is wretching. Bet they pown it out even higher.
Bill M. got that upper crust Snivelity.

#49 Willy H on 10.29.17 at 6:51 pm

The T2 government’s fascination with self-employed tax avoidance looks rather tame when compared to what is happening south of the border …

“Details of the Republican tax plan have not yet been released, but the talk has been of imposing a cap of $2,400 a year on tax-deferred contributions to 401(k) plans — a sharp reduction from the current ceiling of $18,000 a year for people under 50, and $24,000 for people age 50 and above.”

https://www.nytimes.com/2017/10/28/business/401k-limit-tax-cuts.html

As usual the GOP is going after the middle class whether they are self-employed or Walmart greeters.

The irony here that the Trump Administration is looking for revenue from the middle class to offset tax breaks that will largely benefit the rich – brazen would be an understatement.

The good news is that Trump’s fiscal fairy tale tax cuts* are not likely to materialize.

In Canada it’s the gigantic hole left after the GST was cut 2% which many economists estimate depleted government coffers by $14-$17 billion per year.** Small business owner’s were delighted with these cuts. Ironically it’s partially behind what is fueling T2’s hunt for more revenue. This is what happens when politics trumps sound taxation policy.

*A rehash of failed 1980’s Conservative trickle-down tax policy.
** Billions in revenue that engineered serial deficits.

#50 Parksville Prankster on 10.29.17 at 6:52 pm

I’m still wrestling with the advantages of taking a reduced CPP at 60 versus waiting if there’s a 36% decrease in benefits, and the break-even point is 73 (versus taking it at 65). Given that one of the largest issues we’ll face going forward is a longevity risk, would it not mathematically make more sense to hold off a few years? Statistically, if a Canadian male makes it to age 65, he then has a 50% chance of living into his 80s.

#51 TheDood on 10.29.17 at 7:23 pm

Lol!

Priceless advice from Garth! Thank you so much.
Already printed and taped to the fridge.

This blog is without doubt the best ‘layman’s reading’ on the internet!

Cheers!

#52 Blobby on 10.29.17 at 7:31 pm

So not only am I still paying my ex wife all the money she thinks she deserves because I earned more than her.. but I also can’t get many of the benefits now either

#53 crowdedelevatorfartz on 10.29.17 at 7:34 pm

Garth,
So the recommendation to take CPP at 60 vs 65 ( or older)
Stats Canada:
Max CPP at 65 = $1114.00
Avg. CPP at 65 = $653.00

subtract 0.6 % for each year before 65 you draw early

Max CPP at 60 = $704.00 x 12 = $ 8448
Avg. CPP at 60 = $420.00 x 12 = $ 5040

Invest it in TFSA or RRSP from 60 to 65( while still working and also topping up contributions) because you might not live to 65…….

Are these the reasons for drawing before 65?

If your single and already maxed out on TFSA’s and RRSP’s does it really matter if you draw early other than contributing to non registered accounts?

#54 Tower on 10.29.17 at 7:39 pm

Not much relief here for us single childless folk. On the whole great advice for the masses though, hope the deplorables take note!

#55 crowdedelevatorfartz on 10.29.17 at 7:39 pm

@#36 “Elementary, its four fingers Watson!”

“Did you find your marginal propensity yet ?”
++++++

I prefer butter

#56 Lost...but not least on 10.29.17 at 7:40 pm

#16 Figmund Sreud

Other than SRO/Gravitydefying/Flatulence post/s ……your post was one of THE best.

Follow the money…..

The Federal Reserve was created in 1913 under Woodrow Wilson administration (after emissaries of the Banksters had somehow acquired “love letters” from Wilson to his lover aka extortion)

Russian Revolution circa 1917….”coincidence”….???

(NOTE: Rule of thumb for American heroes with holidays named after them ?= scum sellout traitors)

Abraham Lincoln was a Pen Pal of Karl Marx.

Lincoln was an oligarch lawyer, in deep with railroads….who via the Fort Sumter false flag , baited the US Civil War which denied the Southern states their constitutional right to secede, moreso due to their economic exploitation by the Northern states.

In other words….. Lincoln was as Marxist as Marx, insofar as denying their constituents existing legal rights.

The US Civil War was effectively one of THE earliest Communist Coups.

(To Be Continued)

#57 MaudeH. on 10.29.17 at 7:49 pm

CPP (everybody should start taking it at 60, no exceptions ——-
just tax more to pay for it.

#58 PastThePeak on 10.29.17 at 8:01 pm

#50 Parksville Prankster

That is my thinking. It depends upon your health and personal life expectancy. If I have health problems that have me considering a reduced life expectancy, I will certainly take it at 60. Otherwise I will wait, as a higher CPP is a hedge against a higher life expectancy.

Many seem very concerned about “not getting their due” – I am more concerned with planning for different scenarios of retirement and longevity.

#59 akashic record on 10.29.17 at 8:18 pm

#50 Parksville Prankster on 10.29.17 at 6:52 pm

I’m still wrestling with the advantages of taking a reduced CPP at 60 versus waiting if there’s a 36% decrease in benefits, and the break-even point is 73 (versus taking it at 65). Given that one of the largest issues we’ll face going forward is a longevity risk, would it not mathematically make more sense to hold off a few years? Statistically, if a Canadian male makes it to age 65, he then has a 50% chance of living into his 80s.

Garth addressed this earlier, his argument was along the lines that what money can buy makes you happier at 60 than after 73.

He is absolutely right.

#60 SASK Planner on 10.29.17 at 8:29 pm

SK residents max your RESP contribution this year ’cause the SAGE 10% bump is GONE in 2018, maybe never to return. https://www.saskatchewan.ca/residents/education-and-learning/scholarships-bursaries-grants/grants-and-bursaries/save-for-your-childrens-post-secondary-education/sages-information

#61 FLHTK on 10.29.17 at 8:31 pm

Those are great! how do I go about letting you manage it all for me?

#62 MSM-Free Zone on 10.29.17 at 8:37 pm

#33 Jimmy on 10.29.17 at 5:34 pm
“…..Mmm. Fresh baked muffins at Belfountain….”
__________________________

Ditto. Whole town was still awash with Banff-like splendour today, this late in October. Even the leaf colours on the way north still put on a good show, this late in the season.

The walk back along the roadside and ten minute wait in the ice cream line was worth the wait for my final, year end tiger tail addiction. Cheers to the #1 lady running the whole kitchen show. Such a hard working sweetheart.

Short of a global warming miracle, sadly, that’s probably it for hawg season until next year.

Oh, yeah. “No sprawl”. I get it.

#63 Keith on 10.29.17 at 8:38 pm

Life expectancy of a 60 year old? Twenty two years. Two risks, dying young and longevity risk. If you can afford to wait to take CPP, think about demographics and the gigantic demand in the works for assisted living facilities and nursing homes.

The government has no real fiscal plan for OAS, let alone the health care costs of a baby boom generation of seniors. CPP is indexed to inflation and funded for the rest of this century. It may pay you to wait. If you die early and get stiffed, will you really care?

There has to be a powerful argument for giving up 60 payments of about $800 which, if invested in a TFSA, would equal $58,000 at age 65. Haven’t heard one yet. — Garth

#64 For those about to flop... on 10.29.17 at 8:39 pm

Pink Pumpkins in some dudes farmers field in Abbotsford.

Hopefully no one in luxury cars are backing up to this guys land like in Richmond.

I wrote a post about Townhomes being underrepresented in my 10 month study into the Vancouver real estate market and I guess we can add farmland to that mix.

It is not my first case I can think of a handful ,but they are pretty rare to show examples since farmland seems to be highly desirable with urban sprawl.

This one has 3.5 acres that come with a house built in the early 70s and the current owner shelled out 1.21 in March 2017.

Assessment doesn’t really play a factor in this one at 155k as it is set by B.C Farmland regulations.

No matter what happens with this case no one will be able sue these guys for false advertising as it located on Farmer Road…

M43BC

34288 Farmer Road, Abbotsford.

Sep 8:$1,489,000
Oct 25: $1,349,000
Change: – 140000.00 -9%

https://www.zolo.ca/abbotsford-real-estate/34288-farmer-road

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDBGN1FGNw==

#65 Ex-Cowtown on 10.29.17 at 8:50 pm

#17 not so liquid in calgary on 10.29.17 at 4:27 pm
@ Nic #6

How ’bout this:

tax consumption, not income

go Riders
+++++++++++++++++++++++++++++

T2 already taxes income, consumption and has now convinced scientifically illiterate Canadians that imaginary problems like Carbon need to be taxed.

Taxing real and unreal things! Go T2!!!! Unicorn hemmorhoids need taxing next!!

#66 For those about to flop... on 10.29.17 at 8:54 pm

I believe the quote from Garth went something like this.

When the government is offering you money,take it…

M43BC

#67 Porsche on 10.29.17 at 9:01 pm

Better be damn sure she’s the one and only.

#68 For those about to flop... on 10.29.17 at 9:01 pm

Pink Pumpkins in some dudes farmers field in Abbotsford.

Hopefully no one in luxury cars is backing up to this guys pumpkin patch like in Richmond.

I wrote a post about Townhomes being underrepresented in my 10 month study into the Vancouver real estate market and I guess we can add farmland to that mix.

It is not my first case I can think of a handful ,but they are pretty rare to show examples since farmland seems to be highly desirable with urban sprawl.

This one has 3.5 acres that come with a house built in the early 70s and the current owner shelled out 1.21 in March 2017.

Assessment doesn’t really play a factor in this one at 155k as it is set by B.C Farmland regulations.

No matter what happens with this case no one will be able sue these guys for false advertising as it located on Farmer Road…

M43BC

34288 Farmer Road, Abbotsford.

Sep 8:$1,489,000
Oct 25: $1,349,000
Change: – 140000.00 -9%

https://www.zolo.ca/abbotsford-real-estate/34288-farmer-road

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDBGN1FGNw==

#69 For those about to flop... on 10.29.17 at 9:03 pm

Pink Pumpkins in some dudes farmers field in Abbotsford.

Hopefully no one in luxury cars are backing up to this guys land like in Richmond.

I wrote a post about Townhomes being underrepresented in my 10 month study into the Vancouver real estate market and I guess we can add farmland to that mix.

It is not my first case I can think of a handful ,but they are pretty rare to show examples since farmland seems to be highly desirable with urban sprawl.

This one has 3.5 acres that come with a house built in the early 70s and the current owner shelled out 1.21 in March 2017.

Assessment doesn’t really play a factor in this one at 155k as it is set by B.C Farmland regulations.

No matter what happens with this case no one will be able sue these guys for false advertising as it located on Farmer Road…

M43BC

34288 Farmer Road, Abbotsford.

Sep 8:$1,489,000
Oct 25: $1,349,000
Change: – 140000.00 -9%

#70 For those about to flop... on 10.29.17 at 9:07 pm

Having trouble with the links for the last so here is the zolo one …

M43BC

https://www.zolo.ca/abbotsford-real-estate/34288-farmer-road

#71 conan on 10.29.17 at 9:09 pm

There has to be a powerful argument for giving up 60 payments of about $800 which, if invested in a TFSA, would equal $58,000 at age 65. Haven’t heard one yet. — Garth

Women who comes from families where the women routinely live to their mid 90’s?

Some people have less risk in their lives then others.

https://i.redditmedia.com/XRbw1nFIbVum56I2mtHfIdOBUEuHN-rRkOv-ZAK3tTE.jpg?w=576&s=1de85280278ef95d913f6b24a9072415

#72 Lost...but not leased on 10.29.17 at 9:17 pm

Re: Free Gov’t money at 60(vs. 65)

Had this discussion with a family member 20 years ago.

One can crunch actuarial numbers all one wants..but the guiding thesis is that outguessing the grim reaper concurrently with how much longer BIG BROTHER will remain generous with your taxes ….err extorted income.

aka take every penny ASAP!!!!!

#73 akashic record on 10.29.17 at 9:21 pm

@SmokingMan

Have a nice day at the tax farm tomorrow… :)
Behave yourself for once, at least on the first day…

#74 akashic record on 10.29.17 at 9:25 pm

There has to be a powerful argument for giving up 60 payments of about $800 which, if invested in a TFSA, would equal $58,000 at age 65. Haven’t heard one yet. — Garth

—-

Sounds awesome, but is it $800 even if you work?
Doesn’t it add to the taxable income?

#75 LivinLarge on 10.29.17 at 9:25 pm

Finally Fearless Leader jumped back in.

That $58,000 continues to compound tax free after age 65 as well presuming you don’t just blow it. That tax free nature of TFSAs is immensely important to everyone’s over all financial safety in the eventual retirement.

A 6% reduction in benefit amount is more than offset by a compound 7% tax free investment return forever.

#76 MF on 10.29.17 at 9:29 pm

#39 Debtslavecreator on 10.29.17 at 6:08 pm

“The CPP will not go broke. It will be worth a lot less due to the currency debasement that will accelerate from 2018 onward”

-Not disagreeing but I have a few thoughts on the above statement.

If our currency does start to become really low compared to the USD, wouldn’t that mean we have room to raise the BoC interest rate? We are only at 1% and a higher rate would mean a higher dollar.

Secondly, if the dollar does dip too much, then our manufacturing (if there is still some) would benefit greatly, leading to a possible economic rebound.

I can see the dollar losing some strength against the USD, but I don’t think it will ever be too low.

MF

#77 Al on 10.29.17 at 9:32 pm

Great post today! On a cheeky note, what you re saying is that the small business folk already have all these tax avoidance strategies at their disposal (like the salaried folk) and yet they still feel entitled to income sprinkle, additional tax deferred savings, etc..on top of all that!?

Self-employed who take income as dividends have no earned RRSP room and likely no CPP. — Garth

#78 AR on 10.29.17 at 9:33 pm

Also, if your kids end up getting great summer jobs, the RESP can fill up their TFSA. Great leg up before they graduate.

#79 MF on 10.29.17 at 9:37 pm

#63 Keith on 10.29.17 at 8:38 pm

“There has to be a powerful argument for giving up 60 payments of about $800 which, if invested in a TFSA, would equal $58,000 at age 65. Haven’t heard one yet. — Garth”

-I’ll chime in. CPP payments depend on how much you have contributed and for how long.

Lots of folks only get about 300/month if CPP is taken early based on these factors.

MF

#80 ITguy on 10.29.17 at 9:38 pm

“If you earn considerably more than s/he does, or have a defined-benefit pension, use up all your RRSP room for a spousal plan. You write the contribution off your higher taxed income while your spouse gains control of the money. After three years it can be withdrawn at their lower rate – so you’ve just sprinkled”

Thank you, Garth, for the advice. My wife is a stay-at-home mom. I earn 140K. Can I contribute 25K a year to spousal RRSP, then she withdraws it at her lower rate, and we spend it for living expenses? Then, I replace the spent amount and repeat the process. Are there any limitations to this strategy? I see that she can only withdraw 10K a year.
On the other hand, if we do this strategy, I won’t be able to claim her basic amount (tax-free money) of 9K on my income tax. So, is there any significant benefit in my case by following the RRSP income-splitting strategy?
I would appreciate any help from other commenters too.
Thank you.

#81 Irish Stew on 10.29.17 at 9:44 pm

So…..how much does a person need to retire?
This seems to still be the question that cannot be answered.

#82 Pet lover on 10.29.17 at 9:57 pm

Awesome advice, and absolutely free! CPP at 60, and so much more. Thank you.

Word of the day: Splody. Still chuckling…

#83 Smoking Man on 10.29.17 at 9:57 pm

It was music to Liberal ears. That was the strategy. Divide and conquer. – Garth

You anit seen nothing yet. Wait for tomorrow then Nov 4th.

On the 5th a bay street blog dog met up. 5pm the Duke.
Discussions, making loot and plotting to make T2 a teacher again.

#84 Mario on 10.29.17 at 10:05 pm

In the same boat as ITGUY. Would love to know the answer

#85 Doghouse Dweller on 10.29.17 at 10:05 pm

If you calculate in the inflation you notice every time you open your wallet, pay a bill or wonder if you can afford to turn on the heater. Then the extra 7% a year you get after 60 is rather trivial.
The Ministry of Fairness has you Indexed for 1% just in time for $10 cauliflower season.

#86 thestealthmc on 10.29.17 at 10:13 pm

You used “infer” when you meant “imply”.

Always wanted to say that!

#87 Hotdogs from Heaven on 10.29.17 at 10:17 pm

#64 Ex-Cowtown on 10.29.17 at 8:50 pm

T2 already taxes income, consumption and has now convinced scientifically illiterate Canadians that imaginary problems like Carbon need to be taxed.
——————————————-
This is what I find interesting.

The whole climate change issue is caused by excess carbon.
Carbon is caused by people.
Trudeau wants to increase people in Canada by 400,000 a year.
Trudeau is using the CTB to subsidize people who which to bring excess numbers of people into the world.
Trudeau then wants to tax all of the rest of us for the carbon these other people are producing.

It just doesn’t make sense.

#88 Happy Housing Crash Everyone! on 10.29.17 at 10:17 pm

Victor V on 10.29.17 at 4:54 pm
Tighter lending rules will send borrowers into the arms of ‘alternative lenders,’ posing a whole new set of hazards

http://www.macleans.ca/economy/has-fixing-canadas-mortgage-market-made-it-riskier/
_________________________________

That’s fine by me. The internet rates charged will be the true market rates of 10% plus. This is where interest rates should be now.

#89 conan on 10.29.17 at 10:21 pm

“A 6% reduction in benefit amount is more than offset by a compound 7% tax free investment return forever.”- LivinLarge

I do not think it is prudent to promise that return.
Nay on that.

https://i.pinimg.com/564x/d7/83/32/d78332b1e303449394d77fcdd186f3f5–melbourne-cup-grumpy-cat.jpg

Besides the cpp portion of your investments is currently kicking the return of the bond component in a balanced portfolio.

So, take the cpp and off set the bonds in your balanced portfolio. Meaning, buy more equities.

#90 Smoking Man on 10.29.17 at 10:23 pm

#70 akashic record on 10.29.17 at 9:21 pm
@SmokingMan

Have a nice day at the tax farm tomorrow… :)
Behave yourself for once, at least on the first day.
….

Going to be hard to start rehab on the 1st postponing it for 8 weeks. But the UCC is talking to me.

I finished the deplorables movie script. It’s saying go west young man go west. I’m a multi tasker bit how do I fit the rehab centre the gig and a movie deal and the bay strert blog dog met up all at once.

Plasma flier bitches.

#91 dumpinmydumpster on 10.29.17 at 10:30 pm

Garth,

Is this the future? Only the accountants and fin’l planners have jobs (but they have to dumpster dive to survive)
Extreme Cheapskates – Season 1 Episode 1 – Kate Hashimoto

https://www.accountingweb.com/technology/trends/extreme-cheapskate-cpa-ny-living-on-the-cheap

http://www.dailymotion.com/video/xwfzj0

#92 NoName on 10.29.17 at 10:37 pm

#77 ITguy on 10.29.17 at 9:38 pm

Thank you, Garth, for the advice. My wife is a stay-at-home mom. I earn 140K. Can I contribute 25K a year to spousal RRSP, then she withdraws it at her lower rate, and we spend it for living expenses? Then, I replace the spent amount and repeat the process. Are there any limitations to this strategy? I see that she can only withdraw 10K a year.

You cant have a cake and eat it too.

She can take more than 10k, only thing is that 1st 10k free of tax. Considering that you got 10k tax rebate on 25k contribution to to spousal rrsp, If she withdrew whole 25k tax payabele is around 2.5-3k for her, so you are good at least 6-7k anyway. So, whats your problem?

#93 Long-Time Lurker on 10.29.17 at 10:44 pm

Free sprinkles from Belfountain!

SCM, if you go back and look for Ace Goodheart’s comments from maybe up to over a year ago, he tells of how he went from “hood rat” to multi-millionaire in a little over twenty years. His latest posts were about value investing.

Speculations:

Trump gets his tax cuts passed easily because US Congress reps face re-election next year and need to save their political hides.

Kim Jong-Un is finished. He’s got the three big players in the region (US, China, Russia) all against him. They’re putting the sanction squeeze on him and waiting for his head to pop. Kim has three options: 1. Stop the nuclear weapons program. 2. Get overthrown by his starving populace. 3. Do a Dr. Strangelove (launch a nuke). Red China also told him to stop his nuclear testing because his test site mountain is about to collapse and will spread radiation into Red China. Actually, a close analogy to North Korea might be East Germany before the fall of the Berlin Wall.

Catalonia gets to secede from Spain, otherwise Spain and the EU can’t help looking like fascists. The Eastern European “closed border” countries might also secede from the EU in the long term.

#94 Dr. on 10.29.17 at 10:51 pm

#2 Coopoiler on 10.29.17 at 3:12 pm

I am interested in knowing more about this comment. CPP(everyone should start taking it a 60 no exceptions). Each year you wait you get 7% more is that not a good thing? Comments please!
****

It depends. I am planning to retire once I turn 60. First I will deplete RRSP money that is shared between me and my wife (I have about 50% in spousal RRSP) until I turn 70. Then I will take CPP supplemented by TFSA and investments from taxable account.

#95 Smoking Man on 10.29.17 at 10:55 pm

Some health profit taken on Friday aftetnoon USDCAD long. Expect a huge spike when markets open in the morning.

Feeling it huge.

Dr Smoking Man PhD

#96 Ontario's Left Coast on 10.29.17 at 11:02 pm

Great. Advice, Garth – Thanks so much. Cheers to all the dogs!

#97 Ponzius Pilatus x on 10.29.17 at 11:04 pm

Garth,
The picture is creepy.
Maybe you should get some help with your dog addiction.

#98 Doghouse Dweller on 10.29.17 at 11:06 pm

#78 Irish Stew
So…..how much does a person need to retire?
“““““““““““““““““““““““““““““`
Depends, Do you want mutton and bread with your stew ? Coal for the hearth ? CPP , OAS, and a large pot of Gold should suffice. The bigger the better.

#99 acdel on 10.29.17 at 11:16 pm

Good post today Garth, thanks!
Already pasted it to the fridge!

#100 Lost...but not leased on 10.29.17 at 11:18 pm

Rather sad to be under the impression via comments above some of Greater Fool comrades actually believe CPP will be there in perpetuity.

Tomorrow is never assured, especially with a highly mortgaged future.

IMHO, Canada is a ticking time bomb whose purpose on the global stage is to be ” YIN” to the USA’s “YANG.”

Any country that not only didn’t learn from T1, but actually embraces their incubii spawn T2 deserves the inevitable judgement day.

#101 Smoking Man on 10.29.17 at 11:39 pm

Has any mortal man ever tried to untangle a set of ear bud wires knowing rehab is near. You go for one last mega drunk I’m my case because you know the party is over.

Me and my ear buds and this song.

Only going sobar because I need some strenght to fight globalist.

https://youtu.be/WANNqr-vcx0

#102 Smoking Man on 10.29.17 at 11:43 pm

Bet a lot of people don’t remeber this one.
Globalists I don’t like you.

https://youtu.be/YH0eHzTKEMY

#103 Smoking Man on 10.29.17 at 11:52 pm

Smoking Man to SJW

https://youtu.be/cvChjHcABPA

#104 ITguy on 10.30.17 at 12:00 am

#89 NoName
#77 ITguy on 10.29.17 at 9:38 pm

Thank you, Garth, for the advice. My wife is a stay-at-home mom. I earn 140K. Can I contribute 25K a year to spousal RRSP, then she withdraws it at her lower rate, and we spend it for living expenses? Then, I replace the spent amount and repeat the process. Are there any limitations to this strategy? I see that she can only withdraw 10K a year.

You cant have a cake and eat it too.

She can take more than 10k, only thing is that 1st 10k free of tax. Considering that you got 10k tax rebate on 25k contribution to to spousal rrsp, If she withdrew whole 25k tax payabele is around 2.5-3k for her, so you are good at least 6-7k anyway. So, whats your problem?


Thank you for your answer. According to this site http://www.investopedia.com/university/rrsp/rrsp7.asp my wife would pay 30% if she withdraws 25K. This is 7.5K.

#105 Keith on 10.30.17 at 12:08 am

Garth, according to our government, the average CPP benefit at age 65 is $653.27, before taxes. Taking it early, and taking the hit of 36% equals $400.10. Let’s allow income taxes at 25%, because I like even numbers.

That makes it $300.08 x 60 months, for a TFSA contribution of $18,004.80. It seems that you would need to run the numbers with a qualified financial planner to determine the value of delaying CPP, burning through taxable RRSP funds while simultaneously maximizing TFSA contributions, the five year room being lees than half the 58,000 you are talking about. Hopefully contributions have not been maximized in the past.

#106 Karlhungus on 10.30.17 at 12:15 am

If your kid doesn’t go to post secondary you have to repay the resp grant money

Of course. Why wouldn’t you? — Garth

#107 Smoking Man on 10.30.17 at 12:20 am

Life
https://youtu.be/Ckom3gf57Yw

I’m cool with it.

#108 AdamYVR on 10.30.17 at 12:27 am

“You can also take crap assets that dropped in value and dump them on your kid”.

Would transferring underperforming stocks to a RESP count?

#109 GordonS on 10.30.17 at 1:16 am

Agree with all your points Garth, EXCEPT for the RRSP advice which has got to be the greatest government scam going.

RRSP are fine IF you have a living spouse to transfer them to when you die. If you want to leave your RRSP to your children, then your RRSP is taxed at a rate of 50%.

I learned the hard way when a relative passed and CRA took 50% of the whole account.

So some schmuck spends 40 yrs squirreling money into an RRSP and if its worth $1M at death then the beneficiaries only get 1/2…so its only worth $500K

7% annual return on your money is really only 3.5% when taxes are factored in.

There are other ways to grow your retirement and leave your heirs something that isn’t taxed to death (literally) but an RRSP is not one of them

Avoid RRSP like the plague.

#110 NV Landlord no more on 10.30.17 at 2:10 am

re#19 MF
RRSPs:
you borrow the $$$ from the bank,
deposit it into an RRSP account
file your tax return and expect a big refund
When the CRA does send you the refund,
you pay back the bank loan.

Easy Peasy : Thanks Banks!

#111 Howard on 10.30.17 at 4:28 am

Do you have any ideas for childfree singles?

Or are we the cash cows that keep this tax-avoidance party going for the marrieds?

#112 Arne on 10.30.17 at 5:31 am

Since the first three paragraphs of the article are completely incorrect, it throws into question the validity of everything that follows.

#113 under the radar on 10.30.17 at 5:48 am

78- Bingo! That is the question people need to think about from the get go. (Excluding your home) For some, one million in cash will seem like a kings ransom. For others, lifestyle ,health etc will require much more.
Where you end up matters.

#114 Jay (not that one) on 10.30.17 at 5:55 am

Great!

So what you’re saying is we don’t need a separate tax code for a special interest group since tools already exist that everyone can use?

Awesome! Crisis averted!

#115 Dharma Bum on 10.30.17 at 7:03 am

If you retire on Dec. 29th in year 1, and subsequently have $26,000.00 RRSP contribution room for year 2, can you still contribute in year 2 even though you have no employment income in year 2, only investment income?

I would appreciate it if someone can clarify this for me.

Thanks.

RRSP room is carried forward until age 71. — Garth

#116 jess on 10.30.17 at 7:54 am

OSC chair and CEO Maureen Jensen said she’s “very worried” about companies using non-standard methods — referred to as “non-GAAP measures” — to report earnings.
http://www.cbc.ca/news/canada/toronto/ontario-securities-whistleblower-1.3781381
Jensen highlighted an initiative by the Canadian Securities Administrators, a coalition of provincial securities regulators, to explore the possibility of banning embedded mutual fund fees.
She argued that embedded fees encourage financial advisers to choose funds with higher fees, regardless of how well they are performing.

How unaudited financial information could threaten Canadians’ savings
Regulators warn that lurking in non-GAAP measures could be surprises that are a hazard to investments
George Lewis

http://www.cbc.ca/news/business/gaap-unaudited-financial-information-investors-1.4367685

revenue recognition jan 2018
The SEC has warned more than 20 companies in the last 6 months about their potential misuse use of the non-standard metric
https://www.marketwatch.com/story/sec-tells-companies-to-be-careful-how-they-talk-about-free-cash-flow-2017-06-30
Non-GAAP Financial Measures
Last Update: October 17, 2017

http://retheauditors.com/2017/09/06/revenue-recognition-is-coming-following-the-progress-at-marketwatch/
circumvention? deferrals
https://www.marketwatch.com/story/apple-changes-tune-on-new-revenue-recognition-rules-2017-07-31

#117 LivinLarge on 10.30.17 at 8:05 am

Conan, “I do not think it is prudent to promise that return. Nay on that.” OK, I’ll at least agree with that in principle.

It’s also at least reasonable to note that in today’s world of low interest rates and low inflation, 7% return is the oft quoted average return for a conservative balanced portfolio. My own portfolio has been averaging more than 8% for quite a while. So, while guaranteeing 7% is totally impossible and maybe imprudent, it is a relatively reasonable benchmark if you’re employing a fee based advisor who rebalances regularly.

#118 MF on 10.30.17 at 8:11 am

106 NV Landlord no more on 10.30.17 at 2:10 am

Thank you for the response.

Will a bank just lend you 25k for nothing though?

And if I am correct, when you take out the money from an rrsp it gets taxed at your normal rate. How do you end up ahead?

MF

#119 Stan Brooks on 10.30.17 at 8:25 am

The tax assault on the small business was planned by the elite/the ultra rich.

The very idea that people like BM and T2 who explore family trusts and foreign private corporation ownership of oversea assets as true loopholes to save on taxes can actually hurt themselves by introducing laws forcing them and their rich friend on bay street to pay more taxes is ridiculous.

So you will never see tax hit on the really rich in terms of progressive taxation on dividends from public corporations or on stock options.

BM is is in such crazy conflict of interest that it is a miracle that he is not under criminal investigation.
Every legislation that he proposed including Bill C27, the target benefit pension plan, the hit on small Businesses directly benefits his company which he holds conveniently managed by a private corporation and not in a blind trust.

Now suddenly when his hypocrisy became public he is willing to transfer that to a blind trust. Why? Because he was wrong not to place it in blind trust in first place.

As for income sprinkling, it is truly sad that we have such retarded taxation system in first place, in every country on earth there is family taxation, so the BM idiocies of income sprinkling as a form of tax evasion do not exist.

You have to loan you spouse money to invest.
Really?
But you can not pay her/him for staying at home and doing the chores or helping in the Business?

What a mess, now they want to individually tax within a corporation.

#120 Stan Brooks on 10.30.17 at 8:27 am

And our ONLY tech darling suddenly became not so shiny.

https://ca.finance.yahoo.com/news/investors-hope-details-shopifys-response-110411910.html

But hey, BM and T2 superclusters work. in a clusterf…ng way!

#121 crowdedelevatorfartz on 10.30.17 at 8:29 am

@#108 Arne
“Since the first three paragraphs of the article are completely incorrect, it throws into question the validity of everything that follows.”
++++++

The first 3 paragraphs were opinions about gullible people whining about the “rich” .
Ignorant rubes easily swayed by partisan politicians, who also happen to be inheiritance babies, looking for votes that intended to pass unfair tax laws that would punish the self employed…..

The remaining paragraphs contained tax and or investment information for the poor, middle class and the rich. But you already knew that right?
. Nothing “suspect” (other than your unsubstantiated snark)
Ignore it at your financial peril.

Just curious .
Which group do you fall in?

#122 nope on 10.30.17 at 8:44 am

“A 6% reduction in benefit amount is more than offset by a compound 7% tax free investment return forever.”- LivinLarge
……..

you are ASSUMING that you will receive a 7% return of investement between 60 and 65 ish. You could earn 8.5%, or 3%, or worse

keep this in mind. The time frame is tragically short

And you could die, too. — Garth

#123 crowdedelevatorfartz on 10.30.17 at 8:46 am

@#56 Lost but not Lucid
“Abraham Lincoln was a Pen Pal of Karl Marx.

Lincoln was an oligarch lawyer, in deep with railroads….who via the Fort Sumter false flag , baited the US Civil War which denied the Southern states their constitutional right to secede, moreso due to their economic exploitation by the Northern states.

In other words….. Lincoln was as Marxist as Marx, insofar as denying their constituents existing legal rights.

The US Civil War was effectively one of THE earliest Communist Coups.
++++++

Well I see someone has dipped into the Magic Mushroom conspiracy tea…..again.
Historical Hallucinations……Just in time for Halloween

US civil war: 1861-1865
Abraham Lincoln shot: 1865
Karl Marx published Das Kapital: 1867

Were they conversing via seances ?

On an interesting note
: Maex was a freelance reporter that sold articles occationally to the New York Times, The London Times , etc.
At a particularly bad time in his life when he was almost broke and his family was starving he wrote several editors begging them for a cash advance on his next article.
An editor wrote back that they werent charities and no money would be loaned.
Marx was so angry he formed the idea for Das Kapital and began writing.

The bible for communism hatched by an angry, broke, desperate writer…..

#124 HaHaHa on 10.30.17 at 8:55 am

Off topic but relevant to all climate change nutjobs and Obama worshippers. In 2015 the Obama administration lifted a 40 year ban on exporting domestic oil. While Canada squabbles over the Tar Sands and the harm only we do to the planet the saintly former President lifts the ban. Oh my that Harper was so mean eh? What a con job and you all fell for it. Or maybe this report is fake news from a right wing rag…..but no it is from CNBC. The first shipment of American Oil arrived in India October 2….1.6 million barrels. No Keystone, no Trans Mountain, no Energy East. Well done Canada.

#125 maxx on 10.30.17 at 9:00 am

#28 I’m stupid on 10.29.17 at 5:00 pm

#6 Nic

“You are the reason that big companies can afford to pay top executives 20x average worker incomes. If you stopped being so stupid by spending all your money on junk they couldn’t afford to pay so much and stay profitable. I don’t mean you , but your generation, boomers, millennials, Gen x, everyone. If the savings rate was 20% like it was in 1980 we’d have fewer “rich” people. It’s gone from 20% in 1980 to almost zero today. Can you guess who benefited the most?”

Far too many people don’t seem to understand the power that they have in their wallets. There are a gazillion excuses for blowing money and not building wealth – many have been deftly and stealthily delivered over decades by marketing manipulators.

Smart ‘phones in excess of 1K…..etc, etc. Armies of well-indoctrinated dummies line up for them, then, as you quite rightly say, bitch about the rich.

You either want to get there, or you don’t.

#126 Spectacle on 10.30.17 at 9:04 am

#119 crowdedelevatorfartz on 10.30.17 at 8:46 am
@#56 Lost but not Lucid
“Abraham Lincoln was a Pen Pal of Karl Marx.

……In other words….. Lincoln was as Marxist as Marx, insofar as denying their constituents existing legal rights.

The US Civil War was effectively one of THE earliest Communist Coups.
++++++

Well I see someone has dipped into the Magic Mushroom conspiracy tea…..again.
Historical Hallucinations……Just in time for Halloween

US civil war: 1861-1865
Abraham Lincoln shot: 1865
Karl Marx published Das Kapital: 1867

Were they conversing via seances ?

On an interesting note
: Maex was a freelance reporter that sold articles occationally to the New York Times……..

At a particularly bad time in his life when he was almost broke and his family was starving………

Marx was so angry he formed the idea for Das Kapital and began writing.

The bible for communism hatched by an angry, broke, desperate writer…..
——————————— reply below —————-
Hey Crowded..

In a word, KaaPoW! Nailed it.

It seems there still exists in 2017-18 false news, a need-to-believe population, and an easily manipulated populace too.

Excellent response. Does anyone else notice a fresh new round of 1) financial desperation and 2) simmering , misplaced anger in our own current society?

Regards, & gold star to Crowded on clearing the air on this one ( well some of the air)

#127 LivinLarge on 10.30.17 at 9:19 am

Nope: “You could earn 8.5%, or 3%, or worse” well, again this is one of those true in principle under certain circunstances but in the real history of life, getting only 3% requires a serious mismanagenent of your investments or at the very least no active management at all. Something as simple and conservative as treasuries can pretty much take care of 3%.

On an ‘any given year’ basis OK maybe but this us why you hire an active portfolio nanager…to exceed the returns you can get when managing things yourself.

The old “buy quality and hold forever” philiosophy requires a long time horizon to work properly but that is antithetical to modern investment management.

Oh, and of course, you could die too.

#128 Grey Dog on 10.30.17 at 9:23 am

To Single MGTOW, credit card companies are not after you yet? Think again…that 10k$ is compounding at 22%+ a month! Meanwhile it sounds like YOUR credit rating is being ruined by your stubbornness. Get rid of it ASAP!

#129 Stan Brooks on 10.30.17 at 9:26 am

#100 ITguy on 10.30.17 at 12:00 am

You cant have a cake and eat it too.
————————————

You are getting it. It is a tax deferral tool where you are exposed to government changing the rules and tax withdrawal rates at their discretion at any point in time.

It is NOT your money. Try using/withdrawing it.
When the time comes to need it, god knows how much will you be able to retain.

It is like a house ‘ownership’ which becomes community ownership through municipal and property taxes.

Like group ownership of condos.

You own nothing, even the land, just the responsibility to pay.

Try cutting your own tree in ‘your’ backyard or park on your own lawn/not on the driveway.

#130 n1tro on 10.30.17 at 9:29 am

#6 Nic on 10.29.17 at 3:20 pm
Millenials are not upset about Drs, lawyers, farmers, hair dressers….so very tired of this line of thinking. Millenials are tired of companies who’s executive team is making astronomical income while paying their employees less, not providing benifits, no wage growth, lay offs etc etc. When the executive makes 20x long term employee wages there is an issue. Sears, ICBC, Bay street, Wall street, oil sands etc etc. That is the problem. Greed. Not the Dr, surgeon, small business owner or veterinarian. Tax benefits for the wealthy (most of the people you mention dont even fit in that caregory) do NOT trickle down..enough with the smoke show comparison.
—————————–
Life’s not fair. Get over it and find a way to be the boss instead of bitching about it. Bosses making grossly more than employees spans generations.

#131 Grey Dog on 10.30.17 at 9:34 am

Hubby took his CPP at age 65, when he retired, his full 40 years of contributing to it. We just thought it wasn’t worth the extra employment taxes he was going to have to pay. TFSA and Max RRSPS were always all topped up without it.

Since his pension is NOT indexed CPP is. If high inflation hits during retirement we may regret not taking it at 70!

#132 IHCTD9 on 10.30.17 at 9:49 am

#121 maxx on 10.30.17 at 9:00 am

Far too many people don’t seem to understand the power that they have in their wallets.

____________________________________________

Consumer spending is over half our GDP. It is the ultimate power. If Canadians ever learn how to delay gratification, they could make big Corps pull their hair out, and the Government beg for mercy.

Good thing for big business is that Canadians prefer to pay whatever they’re asking no matter how overpriced, and then bellyache about the cost (right after paying it).

#133 Where's The Money Guido? on 10.30.17 at 10:23 am

Here’s a question, can you use these principles the other way, say, use the lower income parent to lower the higher income child’s income, if they live in the same house?
Why not if they are blood related? Good for the goose.

#134 IHCTD9 on 10.30.17 at 10:33 am

#114 MF on 10.30.17 at 8:11 am
106 NV Landlord no more on 10.30.17 at 2:10 am

Thank you for the response.

Will a bank just lend you 25k for nothing though?

And if I am correct, when you take out the money from an rrsp it gets taxed at your normal rate. How do you end up ahead?

MF
_______________________________________

I once took out a loan to dump a few grand into RRSP’s as I was very close to knocking my gross earnings into a lower tax bracket. The loaned amount bumped up the return more than enough to pay it back a month or so later when the return came in. I came out ahead because the Government effectively paid my RRSP loan off (albeit with my taxes), but I still had the money in my investment account after paying back the Bank.

Check with your Bank, some have special lines of credit meant just for dumping money into RRSPs. I opened one, it was called an “RRSP top-up LOC” and it came with a lower interest rate than the regular LOC’s they offered.

The idea is you don’t take the money out while you’re working because yeah, you’ll eat in taxes.

#135 Howard on 10.30.17 at 10:35 am

#126 n1tro on 10.30.17 at 9:29 am

Life’s not fair. Get over it and find a way to be the boss instead of bitching about it. Bosses making grossly more than employees spans generations.

————————–

Life may not be fair, but your statement about “gross” CEO pay spanning generations is false. Unless by “generations” you mean precisely ONE generation, going back to the 1990s.

The multiple in the 1960s was something like 20x an average worker (reasonable in my opinion) whereas today it’s 300x. You don’t see a difference? Those are US figures so perhaps a tad less in Canada but the trend is obviously the same. http://fortune.com/2015/06/22/ceo-vs-worker-pay/

And for what? The immense responsibility? What responsibility? Merrill Lynch’s CEO brought the company to the verge of bankruptcy (was later rescued by Bank of America) but was given a $159 million golden parachute anyway. https://www.theguardian.com/business/2007/oct/30/6

#136 IHCTD9 on 10.30.17 at 10:40 am

#107 Howard on 10.30.17 at 4:28 am
Do you have any ideas for childfree singles?

Or are we the cash cows that keep this tax-avoidance party going for the marrieds?
_______________________________________

Moooo…

#137 Stan Brooks on 10.30.17 at 11:16 am

#107 Howard on 10.30.17 at 4:28 am
Do you have any ideas for childfree singles?

Or are we the cash cows that keep this tax-avoidance party going for the marrieds?
————————————

You sir are an idiot/at best.

No wonder you can not find a partner in life.

Canadian tax laws are the worse as it applies to family taxation.

This is why Canadians have no kids so we need to import immigrants.

Who will pay you pension, the holy ghost?

Go to Germany to see what nightmare the singles taxation there is, you pay guaranteed on average over 50 % on average, not on the upper tax brake.

Pretty much defines you status as a burden to the society and lack of responsibilities.

Mooooooooooooooooo
as another gentleman here said.

T2 and BM would love ya.

#138 Penny Henny on 10.30.17 at 11:22 am

#100 ITguy on 10.30.17 at 12:00 am
#89 NoName
#77 ITguy on 10.29.17 at 9:38 pm

Thank you, Garth, for the advice. My wife is a stay-at-home mom. I earn 140K. Can I contribute 25K a year to spousal RRSP, then she withdraws it at her lower rate, and we spend it for living expenses? Then, I replace the spent amount and repeat the process. Are there any limitations to this strategy? I see that she can only withdraw 10K a year.

You cant have a cake and eat it too.

She can take more than 10k, only thing is that 1st 10k free of tax. Considering that you got 10k tax rebate on 25k contribution to to spousal rrsp, If she withdrew whole 25k tax payabele is around 2.5-3k for her, so you are good at least 6-7k anyway. So, whats your problem?


Thank you for your answer. According to this site http://www.investopedia.com/university/rrsp/rrsp7.asp my wife would pay 30% if she withdraws 25K. This is 7.5K.

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

The 30% is withholding tax. Similar to the tax taken off your paycheck by your employer.
At the end of the year when wife files tax return she will calculate taxes due on the 25k income (about 2.5 – 3k) and the rest comes back as a refund

#139 Stan Brooks on 10.30.17 at 11:23 am

#131 Grey Dog on 10.30.17 at 9:34 am
Hubby took his CPP at age 65, when he retired, his full 40 years of contributing to it. We just thought it wasn’t worth the extra employment taxes he was going to have to pay. TFSA and Max RRSPS were always all topped up without it.

Since his pension is NOT indexed CPP is. If high inflation hits during retirement we may regret not taking it at 70!

——————————-

You think CPP is indexed with the real inflation?
The real 5-7 % vs the 1 % the magicians at stats Canada are reporting?

Good luck with that thinking.

#140 Doghouse Dweller on 10.30.17 at 11:23 am

#127 Grey Dog
Since his pension is NOT indexed CPP is. If high inflation hits during retirement we may regret not taking it at 70!
“““““““““““““““““““““““““““““““““
This whole indexing business is just a scam. Yes, an index raise is better than nothing , but not by much and no where near real cost inflation.
Last year my pension raise was 1.3% and every bill I opened was up at least 15% ….gas, water, hydro …. etc . The better half ,an employed supermarket price fixer, estimates at least 20% to 30% on food.

So called TIPS (inflation protected Gov Bonds) actually began paying negative rates. Imagine that, paying the Gov to borrow your money, and paying MER ( management expense ) on the ETF, for the privilege.

The money they extort with this CPI (Consumer Price Index) con game must be phenomenal. Probably more than their gambling, tobacco and alcohol profits combined.

#141 Capt. Serious on 10.30.17 at 11:26 am

Some of this advice requires projecting the path of future salary increases of yourself and your spouse. That’s not simple. I’m always wary of over optimization.

#142 IHCTD9 on 10.30.17 at 11:36 am

#105 GordonS on 10.30.17 at 1:16 am
Agree with all your points Garth, EXCEPT for the RRSP advice which has got to be the greatest government scam going…

…Avoid RRSP like the plague.
____________________________________________

This is just a question of management.

If you start early with RRSP’s you will always win – even if the gov takes 50% at the end.

Consider that 500.00/month from 25 years old to 65 making 6.0% will gross $964,000.00. Of that, 723,000 is interest. Now factor in reinvesting your tax returns and you could easily bump that number over 800,000.00. Now factor in the gains on the taxes you never paid, and that these gains are also tax free.

All you need to do is draw off your original investment of 240,000 and you’re even. A married couple could draw 120K out each efficiently over only 4 years. If you died directly thereafter, the Gov would take half the gains, your kids would get the other half. 360K for your kids cash – taxes paid, and all of it was pure 100% interest (same with what the Government took).

You’re always going to pay taxes – either up front, or down the road. I like to make ’em wait while earning tax free gains on taxes that I never paid. Then I’ll enjoy paying them back during retirement at lowest marginal rate I can muster

#143 Stan Brooks on 10.30.17 at 11:37 am

#140 Doghouse Dweller on 10.30.17 at 11:23 am
#127 Grey Dog
Since his pension is NOT indexed CPP is. If high inflation hits during retirement we may regret not taking it at 70!
“““““““““““““““““““““““““““““““““
This whole indexing business is just a scam. Yes, an index raise is better than nothing , but not by much and no where near real cost inflation.
Last year my pension raise was 1.3% and every bill I opened was up at least 15% ….gas, water, hydro …. etc . The better half ,an employed supermarket price fixer, estimates at least 20% to 30% on food.
————

Food and hydro increases are scary

Hydro itself at least doubled in the last 4-5 years.
All in ridiculous delivery/hydro party hookers taxes.

I was discussing it/the hydro prices a year ago at a Starbucks with a friend of mine when a gentlemen fro the near table joined the conversation.

He spent 50 k on changing his windows and doors with energy efficient and insulating his house only to see his hydro bills increase by 30 % in a year!

I told him politely: You have seen nothing yet, just wait for the real price of a kilowatt to go over 1 CAD. It is coming folks, in the next 10 years, it is coming.

As for the groceries, same picture there. At least 1-=15 increase on early bases. Same for rents. Houses were up 30 % in the last year.

1 % inflation is laughable. These people have no credibility whatsoever left.

#144 Stan Brooks on 10.30.17 at 11:43 am

#140 Doghouse Dweller on 10.30.17 at 11:23 am

At some point the ruling class will generate huge surplus in the CPP fund by underpaying retirees and then will spend the rest of the money (as previous government did with 50 billion of unemployment insurance) on pet projects with their friend.

Through subsidizing an infrastructure bank for example where you pay to somebody to do the work in advance, not after the work is done as proposed by the liberals.

Or just confiscate it/the CPP surplus to pay the bloated pensions and benefits of the government employees.

#145 joblo on 10.30.17 at 11:44 am

#94 Dr.
“It depends. I am planning to retire once I turn 60. First I will deplete RRSP money that is shared between me and my wife (I have about 50% in spousal RRSP) until I turn 70. Then I will take CPP supplemented by TFSA and investments from taxable account.”

Please explain how this is advantageous?

#146 Terrorelf on 10.30.17 at 11:45 am

Dear Garth, we’re trying to grow our funds to the point where we can turn them over to Turner Investments. I’ve carefully read all your guides, but can’t find one on a newbie’s guide to choosing an ETF (or at least google didn’t turn up any). Would you consider writing one in future? Thanks.

#147 aa3 on 10.30.17 at 11:58 am

I’ve seen people with mundane skills who 20 years ago were whining about unfairness and ‘the rich’, and hoping their socialist party comes to power.

20 years later and they still are low paid workers with mundane skills whining about unfairness.

#148 IHCTD9 on 10.30.17 at 12:01 pm

#145 joblo on 10.30.17 at 11:44 am
#94 Dr.
“It depends. I am planning to retire once I turn 60. First I will deplete RRSP money that is shared between me and my wife (I have about 50% in spousal RRSP) until I turn 70. Then I will take CPP supplemented by TFSA and investments from taxable account.”

Please explain how this is advantageous?
____________________________________

He’s emptying the RRSP’s first so the Gov doesn’t get any.

He’s delaying CPP so he get’s paid more

He’s using TSFA’s alongside the CPP and investments to keep taxes low

#149 Capt. Serious on 10.30.17 at 12:05 pm

To people wondering about why take CPP at age 60, it’s simply a matter of getting more money in your hands earlier. The decrease in the amount per month is trivial compared to the accumulated extra sum you’re getting by getting 5 extra years of payments.
Someone has handily calculated the break even points. Unless you know for sure you’ll live to 74, everyone should start taking at 60:
https://retirehappy.ca/taking-cpp-early-the-new-breakeven-points/
The 2016 table is at the bottom.

Nobody knows for sure what the future holds, so for those of us still decades from retirement, we may have a different best decisions. I’d wager the government will continue with the carrot of higher payments if you delay — that appeals to some people who do not do the math. It’s like car payments in reverse.

#150 Tony on 10.30.17 at 12:15 pm

CIBC recommends shorting the Canadian dollar and kindly puts the figure at 75 cents. It will likely be quite a lot lower than that.

#151 Fake News Again on 10.30.17 at 12:32 pm

“When the feds proposed whacking the self-employed with a menu of tax hits over the summer, lots of people cheered. Many were here. The comment section, way down in the hold with the rats and spiders, exploded with anti-entrepreneur, anti-doctor, anti-small biz emotion. Overwhelmingly the sentiment was that regular working, ‘honest’, salaried deplorables can’t deduct stuff or pay their spouses so why the hell should some dude with a print shop get to?”

Of course MANY people here cheered on the tax hikes. Most people here are Govt Workers and are scared they will not get their cushy gold plated pensions being as the coffers are short by hundreds of billions of dollars……

Well sorry public sector……yer going to have your cushy lottery winning job cut soon. There is not enough money to pay you anymore…..

#152 n1tro on 10.30.17 at 12:49 pm

#135 Howard on 10.30.17 at 10:35 am
#126 n1tro on 10.30.17 at 9:29 am
Life’s not fair. Get over it and find a way to be the boss instead of bitching about it. Bosses making grossly more than employees spans generations.
————————–
Life may not be fair, but your statement about “gross” CEO pay spanning generations is false. Unless by “generations” you mean precisely ONE generation, going back to the 1990s.
The multiple in the 1960s was something like 20x an average worker (reasonable in my opinion) whereas today it’s 300x. You don’t see a difference? Those are US figures so perhaps a tad less in Canada but the trend is obviously the same. http://fortune.com/2015/06/22/ceo-vs-worker-pay/
———————
I see the difference but it doesn’t change my statement. 20X or 300X…..those complaining about it will never be happy until it is 1X because misery loves company.

I agree that most executives today are just as idiotic as past executives but that isn’t going to change their pay because they are supported by other idiots collecting ridiculous pay waiting in the wing at their chance to be top dog.

As a worker, the mythical barrier is to get to director level in a well known company or VP level in a smaller one. At that point, you just need to talk a good game and be rewarded with wads of cash. Also helps a lot if you are 6′ or higher and be a white male.

Good luck to all.

#153 Welcome to Slurrey on 10.30.17 at 12:51 pm

# 12 SMGTOW……. I can help you if you contact me……..

What if you owe at least $10,000 from a credit card debt because of your ex?

Do credit card companies know if you have a TFSA? I don’t want to be garnished by those creditors when that $10,000 turns into $70,000 in 35 years because of the magic of credit card interest.

Do credit card companies sue? What are the chances of being sued and garnished by a Canadian credit card company? It’s been at least 5 months and no lawsuit for now.

#154 Gravy Train on 10.30.17 at 1:02 pm

#118 MF on 10.30.17 at 8:11 am

“And if I am correct, when you take out the money from an rrsp it gets taxed at your normal rate. How do you end up ahead?”

You might want to read up on such financial concepts as present and future values, time value of money, net discounted cash flows, and tax-deferred compounding!
https://en.m.wikipedia.org/wiki/Future_value
https://en.m.wikipedia.org/wiki/Present_value
https://en.m.wikipedia.org/wiki/Time_value_of_money
https://en.m.wikipedia.org/wiki/Net_present_value
https://en.m.wikipedia.org/wiki/Discounted_cash_flow
https://en.m.wikipedia.org/wiki/Compound_interest

Alternatively, just schedule a meeting with Garth, and he can explain it all to you—for a fee! :)

Hey, nobody ever pays to talk to me! — Garth

#155 ITguy on 10.30.17 at 1:03 pm

#138 Penny Henny

The 30% is withholding tax. Similar to the tax taken off your paycheck by your employer.
At the end of the year when wife files tax return she will calculate taxes due on the 25k income (about 2.5 – 3k) and the rest comes back as a refund


Thank you. However, I lose her 9K basic amount on my income tax. Is there any significant benefit then?

#156 MF on 10.30.17 at 1:21 pm

IHCTD9 on 10.30.17 at

Thanks IH.

I am going to go to Bmo and ask them about this. Interesting plan that could work well.

Btw, keep up the fight against the Liberal supporters. Always nice reading you take out the trash with them.

MF

#157 Doghouse Dweller on 10.30.17 at 1:21 pm

#143 Stan Brooks
Yes, at this rate those living on the edge will be pushed over the cliff in no time. Garth says they are a large percentage of the population. Things could get real nasty in a hurry. Wasn`t there a pro/con T2 riot in TO lately. Glad I got the hell out of there. I`ve been thinking some bug out moose pasture land might be a good investment.

#158 People are Strange on 10.30.17 at 1:21 pm

I heard the TREB prez on the radio over the weekend. It’s no wonder there are so many shyster realtors these days. They’ve replaced lawyers as the bottom feeders of society (sorry lawyers).
This guy was saying that buyers have to be diligent when purchasing. He said in the GTA, the list price is often a ‘marketing price’. Something to bring people in. Isn’t that called ILLEGAL? If I went to buy a new car and it was being advertised at 25-30% less than actual, i’d tell the sales rep to go F themself. What has this market come to? Total desperation?

#159 Smartalox on 10.30.17 at 1:42 pm

New Twitter Account @VISTRO11 targets allegedly illegal Air BnB listings in Vancouver

http://www.news1130.com/2017/10/29/twitter-account-targets-illegal-airbnb-rentals-vancouver/

“Those behind the account say they were inspired by passionate people who came out to speak about short-term rentals to an open hearing at City Hall last week, like Rohana Rezel.

Rezel says the lack of enforcement from the city is what actually inspired a Twitter account like this.

“The city has done very little to enforce the existing laws and I have looked at some of the Freedom of Information requests that the city has received and I think that the city probably acts on one per-cent of all complaints that it receives.”

#160 Island travelbug on 10.30.17 at 2:08 pm

Garth,
Could you, or any of the bloggers, please elaborate on your advice re a 71 year old retiree with a younger wife could postpone his RIF withdrawals based on the spouse’s age? My husband is 74 and I am 9 years younger. We started with his minimum withdrawals at 74 (moving the amounts into the open investment account) but if we could avoid this for a few more years until I hit 71, that would be great. Thanks.

#161 bdwy sktrn on 10.30.17 at 2:09 pm

it seems that most all of us dogs got into the wrong job!

we should have become realtors.

So , last week my friend (a realtor) says want to go to a canucks game, he has a line on free tickets.
It turns out that the seats are not really seats, but entry to a suite (the booze and food is free!!!)
It turns out it’s the best suite in the building, center ice, but for the cameras.
Next to us was apparently the TEAM OWNERS suite, just a little further away from the red line. A certain ex police chief , now a vp in the aquilini group, was chilling there with some ex players and dudes in power suits.
How could this happen? I wondered myself. Esp since i had spend the afternoon digging a huge hole in my front yard, and then climbing into it to fix a 100yr old rotted water pipe, getting covered in mud in the process.
anyway…

the suite belonged to (surprize) a big 6 cdn bank.
it was full of realtors. average, regular, lower performing realtors. getting there asses kissed by a big bank.

#162 LivinLarge on 10.30.17 at 2:09 pm

“He said in the GTA, the list price is often a ‘marketing price’. Something to bring people in. Isn’t that called ILLEGAL? If I went to buy a new car and it was being advertised at 25-30% less than actual, i’d tell the sales rep to go F themself.” …where have you been for 20 years? No, it’s not illegal. The agent doesn’t set the house price nor what the owner will even take. Just the same as if you found a used car on Kijiji. No sell is compelled to sell to you at any price before a contract is executed.

#163 Island travelbug on 10.30.17 at 2:10 pm

Sorry, there was a typo error in my former comment. We started the minimal withdrawals at 71, of course, as required.

#164 crowdedelevatorfartz on 10.30.17 at 2:18 pm

@#159 Smartalox

The City Clowncil in Vancouver is going to have a very rude awakening in 11.5 months.
Mayor Gregor the Dim is an idiot with the gravitus of a navel picking chimp and the Clowncillors are too busy haggling for funding for such important things as socially correct gender neutral bathrooms at public beaches to worry about real issues such as unaffordable, non existant rental units………

#165 IHCTD9 on 10.30.17 at 2:32 pm

#156 MF on 10.30.17 at 1:21 pm
IHCTD9 on 10.30.17 at

Thanks IH.

I am going to go to Bmo and ask them about this. Interesting plan that could work well.

Btw, keep up the fight against the Liberal supporters. Always nice reading you take out the trash with them.

MF
___________________________________

No problem, just understand I’ve more or less always done what [email protected] told me to do, I don’t like investing, and am a lowly bottom feeding Mutual Fund sucker for punishment.

I’ll tell you this though, it’s not been a half bad deal, probably because I started young enough to make it count. Hard to lose getting your taxes back from the feds, chuck the return back into your RRSP account, and you’ve effectively made a great ROI right there before you factor in any interest – if you’re just getting started.

If you get going with RRSP’s make it with an auto withdrawal to ensure you pay yourself first. You’ll like that tax return. The best way is to just sock it in there and wait for your reward in April :).

Yes it’s a ham fisted, knuckle dragging, bone headed way of investing, but for a guy like me – it’s this way or probably no way at all. Since my mid 20’s till now it’s a nice chunk between the wife and I that we never would have had otherwise.

#166 Lost...but not leased on 10.30.17 at 2:37 pm

#123 Crampedescalatorphartz

thou truly are the master baiter..

Might be a good idea to quit reading the comic books, turn off Gilligan’s island reruns and perhaps go where no crampedescalatorphartz has gone before.

While we truly respect your determination to provide something??!! anything ??!! useful, it might be time to debate…as glib comments posted on line in between clown shows at children birthday parties are so passe’.

Moi’s comments ala Honest Abe Lincoln?….obviously you buy the comic book version of Lincoln..maybe keep it to yourself.

The roots of where we are now are not that difficult for an open mind to personally research and see the patterns more clearly. Lincoln was a scumbag pure and simple.

Millions have died needlessly, as soldiers and civilians, because of propoganda that can be rooted in “All Wars are Banker Wars”.

Now get back to your clown show…

#167 Penny Henny on 10.30.17 at 3:12 pm

#155 ITguy on 10.30.17 at 1:03 pm
#138 Penny Henny

The 30% is withholding tax. Similar to the tax taken off your paycheck by your employer.
At the end of the year when wife files tax return she will calculate taxes due on the 25k income (about 2.5 – 3k) and the rest comes back as a refund


Thank you. However, I lose her 9K basic amount on my income tax. Is there any significant benefit then?
————————–

Well let’s say you were taxed at 40%.
In 2017 you put 25k in spousal RSP and got 10k tax refund.
In 2020, wife takes out half, 12.5k and pay basically ZERO tax. While you lose the 9k basic exemption so you paid extra 3.6k in tax.
In 2021, wife takes out same 12.5k, so a repeat of 2021.
Net story is you got refund of 10k, but paid extra 7.2k when funds were withdrawn. You are up 2.8k.

Now imagine if you did this with multiple wives. You’d be rolling in it.

If someone sees where I missed something then by all means please chime in.

#168 Lost...but not leased on 10.30.17 at 3:18 pm

Value Village and charities it supports going to be hooped?

Came across an article re: East African countries planning a ban(or tariffs) on 2nd hand clothing imports from North America.

This will affect charities like Diabetes which derive 1/4 of their income($10 million annually) from Value Village.

The ban is meant to encourage domestic clothing production in these countries. Apparently global export market of used clothing is almost $2.5 Billion, with Canada and US accounting for 25% of this.

Clothes are sent to wholesalers who then sell them to local retailers.

Other articles state that only 25% of items donated to Value Village make it to the sales floor…rest is wholesaled off or recycled.

Love em or hate em..Value Village provides a service.

#169 Farsyd on 10.30.17 at 3:57 pm

An excellent and valuable post. I thought I knew it all but I learned a couple of new ones (granted maybe I would have picked it up by 71 when it applied and the kids aren’t getting any stock any time soon).

#170 JohnnyBoy on 10.30.17 at 3:58 pm

#90 Smoking Man on 10.29.17 at 10:23 pm

#70 akashic record on 10.29.17 at 9:21 pm
@SmokingMan

Have a nice day at the tax farm tomorrow… :)
Behave yourself for once, at least on the first day.
……………………..
Going to be hard to start rehab on the 1st postponing it for 8 weeks. But the UCC is talking to me.
I finished the deplorables movie script. It’s saying go west young man go west. I’m a multi tasker bit how do I fit the rehab centre the gig and a movie deal and the bay strert blog dog met up all at once.
Plasma flier bitches.
______________________________________
Holy shit the Old Smoking Man is somebodies lackey. Ha your now owned by the man bitch.
How does it feel to do a 9-5 Smoking Man? Why the hell is the rich Caribbean socialite back here in the big smoke? You must have cranked a gig with someone who is a lame old turkey that lacks social media skills.
Well this will put a damper in your drinking vocation at your casino or perhaps it will help you to ween yourself off the bottle just in time for that eight week showdown.
still lmao……………….
Smoking Man working…………lmao

#171 Victor V on 10.30.17 at 4:02 pm

New mortgage rules expected to heat up Toronto housing before winter chill

http://www.bnn.ca/new-mortgage-rules-expected-to-heat-up-toronto-housing-before-winter-chill-1.900562

Although the overall market is “more balanced” than it was a year ago, Pasalis is seeing stark divergences in the market between condos and freeholds, and from neighbourhood to neighbourhood.

“Average prices are up two per cent over last year, but this is due to the condo market which saw prices rise 17 per cent,” Pasalis told BNN in an email.

“Freehold prices were flat over last year.”

And if you start investigating those Greater Toronto Area average prices by postal codes, the divergences are even more pronounced.

“The market for houses and condos is relatively competitive in downtown Toronto,” said Pasalis. “Regionally, York Region continues to be hardest hit.”

Sales volumes in some of those communities north of the City of Toronto have been cut nearly in half, and average annual prices are down double digits.

Prices in Whitchurch-Stouffville, Pasalis notes, are down 25 per cent year-over-year.

#172 IHCTD9 on 10.30.17 at 4:10 pm

#152 n1tro on 10.30.17 at 12:49 pm

Also helps a lot if you are 6′ or higher and be a white male.

Good luck to all.
____________________________________________

I’m 6′-3, 225 lbs., ripped, white as a serial killer, and I’ve still not been bloody rewarded with wads of cash! Maybe it’s the shitbox car I drive.

If your assertion is correct, I know a guy out in the shop here that has it made. He is 6′-7, 280 lbs, white as lightning, blond hair, blue eyes, and is a Band Card carrying Mi’kmaq Indian. All the benefits of an apparent white guy, all the financial perks of a legit native. He also has to bat the Women off him with a stick.

Trouble is out my way it is 99% old stock Canadians which basically means all the Men are White, and 6′-0 puts you in the middle of the pack.

#173 Lost...but not leased on 10.30.17 at 4:25 pm

#126 Spectacle…

BTW: How did you escape WTC 7

Chiming in as overcrowdedescalatorphartz mini me accomplishes what?

We all know about Karl Marx’s surficial history…
In 1863 The Russian Navy entered NYC and San Francisco to support Lincoln…a rather bad move

One of the sadder legacies re political movements was Trostky being intercepted by Canadian authorities in 1917 in Halifax who later were pressured to release him. After that Russia went down…

We know what happened next…WW1..WW2…etc etc.

#174 jess on 10.30.17 at 5:18 pm

so why would the donald hire this guy?

The 31-page, 12-count indictment against Paul Manafort and Richard Gates focuses on their years as political consultants and lobbyists working with Ukraine.
It alleges that they received tens of millions of dollars for their Ukraine work, and to hide that income, they laundered the money through “scores of United States and foreign corporations, partnerships, and bank accounts.”cnn

https://www.newyorker.com/current/former-trump-campaign-manager-paul-manafort-is-first-person-charged-in-the-mueller-investigation

#175 crowdedelevatorfartz on 10.30.17 at 5:44 pm

@#1666 Lost the leased

” Lincoln was a scumbag”
+++++

My how eloquent.
What do you do for an encore.
Pull the wings off baby birds?

Well if we’re going with childish, paranoid conspiracy drivel.
Perhaps you should stop inhaling when the New World Order jets fly over spewing the mind control vapours?

#176 Garth fan on 10.30.17 at 5:45 pm

Good advice. One drawback on your tax strategies is that you have to be married.

Get divorced and you’re wiped. Even if you stick with your spouse, she may wanna do the Eat Pray Love thing and dump your sorry ass. No fault divorce at play.

Freedom first, where art thou???

#177 NoName on 10.30.17 at 5:54 pm

#138 Penny Henny on 10.30.17 at 11:22 am
#100 ITguy on 10.30.17 at 12:00 am
#89 NoName
#77 ITguy on 10.29.17 at 9:38 pm

Why take all 25 at once, makes sense to make 5 withdrawals 5k each and pay only 10% withholding tax?

#178 Penny Henny on 10.30.17 at 5:59 pm

#177 NoName on 10.30.17 at 5:54 pm
#138 Penny Henny on 10.30.17 at 11:22 am
#100 ITguy on 10.30.17 at 12:00 am
#89 NoName
#77 ITguy on 10.29.17 at 9:38 pm

Why take all 25 at once, makes sense to make 5 withdrawals 5k each and pay only 10% withholding tax?
///////////

Careful what they charge per redemption

#179 AGuyInVancouver on 10.30.17 at 6:07 pm

#166 Lost…but not leased on 10.30.17 at 2:37 pm

…Now get back to your clown show…
_ _ _
Speaking of clown shows, what time does your circus strike the tents and leave town? It makes one long for the days of Screwed Canadian Millennial.

#180 Shaggy on 10.30.17 at 6:34 pm

#100 ITguy on 10.30.17 at 12:00 am
#89 NoName
#77 ITguy on 10.29.17 at 9:38 pm

Thank you, Garth, for the advice. My wife is a stay-at-home mom. I earn 140K. Can I contribute 25K a year to spousal RRSP, then she withdraws it at her lower rate, and we spend it for living expenses? Then, I replace the spent amount and repeat the process. Are there any limitations to this strategy? I see that she can only withdraw 10K a year.

You cant have a cake and eat it too.

She can take more than 10k, only thing is that 1st 10k free of tax. Considering that you got 10k tax rebate on 25k contribution to to spousal rrsp, If she withdrew whole 25k tax payabele is around 2.5-3k for her, so you are good at least 6-7k anyway. So, whats your problem?


Thank you for your answer. According to this site http://www.investopedia.com/university/rrsp/rrsp7.asp my wife would pay 30% if she withdraws 25K. This is 7.5K.

—-

ITguy, you are confusing withholding tax with income tax. When you remove money from an RRSP the Financial Institution has to withhold a prescribed amount from the amount paid to her and forward to the government. This is the same as your employer remitting a portion of your gross pay to the government. When you file your annual income tax return, you would get any excess payment back. In the case that you mention, if the RRSP withdrawal is the only income that your wife has in the year, she’ll get a sizeable amount of the 30% ($7,500) back.

Now, BE CAREFUL with your strategy because spousal contributions must be maintained in the RRSP for 3 calendar years from the last contribution, otherwise they revert to the contributor for tax purposes. For example, if you make your last contribution in Dec 2017, you can remove on Jan 1, 2020 with no consequences. However, if you make spousal contributions every year up to the 2020 withdrawal, then remove from your wife’s RRSP, the money is taxable to you.

So your plan is possible, if done over a 3 calendar year cycle.

#181 Penny Henny on 10.30.17 at 6:42 pm

Two dozen octopuses crawled to shore en masse in Wales and no one knows why?
http://nationalpost.com/news/world/two-dozen-octopuses-crawled-to-shore-en-masse-in-wales-and-no-one-knows-why

Probably had something to with crowded elevator fartz guy

#182 Atrate on 10.30.17 at 6:51 pm

@#54 Tower

I was thinking the same thing you said. There doesn’t seem to be much in the way of tax saving things the single and childless among us can do to avoid paying out big chunks of cash. Once we’ve maxxed out RSP’s and TFSA’s and have invested in non-registereds as much as we can, there doesn’t seem to be much left.

Garth, any tax relief for the non-procreative, non-couples among your readers?

#183 Ryan on 10.30.17 at 8:20 pm

Garth, you said “Establish a family plan for multiple kids, not separate ones.”

Why?

Because if one kid becomes rock star you can use all the funds within the plan to support the other failure who will train to be a surgeon. — Garth

#184 People are Strange on 10.30.17 at 9:37 pm

Hey Living Large

I won’t be paying more than asking for a used car on Kijiji! Maybe you would.

#185 Where's The Money Guido? on 10.30.17 at 11:23 pm

Can anyone give me any info on how to split income, or any other tax avoidance items with a child when the parent is single and the child makes more than the parent. Thanks

#186 Arne on 10.31.17 at 4:17 am

#121 – Google “Ad Hominem fallacy”.

#187 isuckless on 10.31.17 at 8:16 am

#174 jess:
because they used to work for Podesta and DNC (at the time this happened) so he probably thought that they we squeakily clean /sarcasm off

#188 LivinLarge on 10.31.17 at 10:25 am

People are strange: Boy did you ever miss my point. I wasn’t suggesting that anyone pay more than the asking for a car, just that the price a seller accepts is entirely up to them even if a buyer is eager to pay the asking price for something, the seller is under no obligation to accept it until a contract exists.

I have had a few friends who have gone to look at used cars in private sales and been told by the seller that there’s another buyer who has first right of refusal already. Want to bet there isn’t and the seller has realized that the demand to see the car already means they’ve priced it too low and the listing will evaporate and a new listing magically appear?

#189 People are Strange on 10.31.17 at 12:37 pm

I totally understand the list pricing can be unexpectedly pumped by demand; however, the jist of the conversation by the TREB guy was that people need to know how to weed out the intentional ‘marketing’ price posted by some sellers/agents, which they concede can be knowingly listed way under market value. If unknown demand pumps it up, that’s awesome!!

#190 People are Strange on 10.31.17 at 12:39 pm

The scenario I was describing is predatory.

#191 Moller on 10.31.17 at 4:21 pm

Only in Canada do things cost more when paying in cash… https://www.theverge.com/circuitbreaker/2017/10/31/16585758/best-buy-stops-selling-full-price-iphone-x-iphone-8

#192 Mehdi on 11.02.17 at 7:03 am

Garth, thanks a bunch for all those (free) advices! They’re worth so much.