The big bite

Justin Trudeau may be the prime minister. But Jag Singh may up being the finance guy. As mentioned here a few days ago, it’s the sum of all fears – that a minority left-lib government will cave to the far-lefties in order to retain power. T2 says no coalition. But he cannot govern without support. Facts are facts.

This terrifies Nate.

“I have a question about the inclusion rate on capital gains and possible government future changes,” he writes me. “If the Libs and NDP passed changes to the inclusion rate would it be effective immediately?  Just wondering the likely outcome. Pam and I have about 2-plus million in unrealized capital gains in real estate most of which is on one property. Selling sooner would be a big difference? I wonder about selling to myself or into a limited company thereby triggering capital gains tax –   sounds crazy but the extra tax is around $500,000 plus for all our buildings? Ouch.”

Yup, big ouch. The tax hit on dumping those properties would be 50% higher in this scenario. But is this a realistic possibility?

First, how are capital gains taxes calculated?

When an asset is sold, the difference between its market value (selling price) and what you invested in it (the ACB – adjusted cost base) is called a capital gain. In the case of real estate the ACB includes the purchase price plus the cost of all improvements made while you’ve owned it. That number is reduced if you claimed capital cost allowance annually or deducted the improvements from taxes owed. (Never, ever let your accountant claim CCA on a leased condo, by the way…)

If you sell for a profit over the ACB then half that gain is tax-free. Yay! The other half is added to your taxable income for the year in which the sale occurs. Clearly that can push you into a higher tax bracket, so just imagine if the capital gains inclusion rate moves from 50% to 75%.

Example: Nate, who has an income of $100,000, sells and realizes a million in profit on his properties. Under the current rules $500,000 is added to his income and his 2019 tax total (for Ontario) is $153,000. If the cap gains tax were bumped to 75%, his tax would jump to $220,000.

Of course, the dollar-is-a-dollar crowd argues investors today (in investment real estate, stocks or ETFs etc) get an outrageous advantage in having only half the gains taxed while working schmucks are fully exposed to tax on employment income, rent, pensions or interest on their pathetic GICs. Sadly, this is growing in our tilting society.

“When you go to work, you’re taxed on almost all of your income,” says Jag. “It doesn’t make sense that someone making their money from investments is taxed on only half.”

Says the lobby group, ‘Canadians for Tax Fairness’: “This costs the government $10 billion that could boost their inadequate investment in child care. It would create more jobs, boost participation of women in the labour force and increase tax revenue over time. Budgets are about priorities. When 92% of the benefit of this protected loophole goes to the top 10% it makes one question their stated commitment to tax fairness and helping the “middle class”. “

The current 50% inclusion rate has been in place for two decades. Bumping it up by half, the NDP claims, would bring in $3 billion that Ottawa can spend on social programs. The socialists claim 88% of the cap gains benefit goes to the top 1%, and “this is unfair for people who are trying to build a better future for their families.”

Let’s not forget that the Liberals themselves have toyed with diddling with capital gains. A controversial plan to restrict this in terms of farm families (and others) was abandoned after sharp criticism, and the party’s 2015 platform included a commitment to review every tax advantage investors ( aka ‘the rich’) enjoy over employees. This was the philosophy at the heart of Morneau’s attack on the self-employed and private corps last year.

Why should capital gains receive special tax treatment?

Simple, so people invest. Doing so involves inherent risk, since assets can fall in value as easily as they increase. Taxing gains less and allowing losses to be deducted from profits recognizes that risk. It encourages people to put money into businesses, creating jobs. Or into the capital markets, strengthening the overall economy. Or into rental real estate, providing housing. Or financing government debt, so politicians can overspend. Current laws also keep us competitive with the US (even though cap gains are taxed less there), since money has no patriotism.

“If we raise the capital gains tax rate that’s just going to encourage more people to look at the American market to start businesses or to develop things down there as opposed to here if that happens,” says tax academic Jack Mintz. “It’s not good to start looking at hiking more taxes on investors at this point.”

In any case, is this change possible?

My answer to Nate: an unqualified maybe. T2’s been coy so far about how far into the sheets he’ll crawl with the Dippers. Obviously the Libs need money. The projected deficit numbers are horrendous, and if a recession materializes we’re pooched. Meanwhile Trudeau has shown – with his special tax bracket for high income-earners, his attack on stock options and his assault on business owners and professionals – that he’s no friend of the investor class.

Selling now and paying on 50% to avoid selling later at 75% is a strategy. It’s called ‘insurance.’

And yes, the tax change would be effective the night it was introduced. In 20 weeks.

135 comments ↓

#1 Marcus on 10.27.19 at 3:53 pm

Elections have consequences. Suckers.

#2 BlogDog123 on 10.27.19 at 4:06 pm

T2 and JS together would be a disaster.
Money will go elsewhere.
JS would cozy up to the radicals who love stopping the oil (money) and prosperity from flowing.

Once they have a financial disaster on their hands, they’ll blame the rich and the downward spiral repeats until they are booted out of office.

By then it’ll be too late.

#3 Shawn Allen on 10.27.19 at 4:09 pm

Capital gains Tax inclusion rate change effective date

If I recall correctly there was a time when the rate was calculated as 0% for gains prior to “Valuation Day” circa 1971, then I believe 50% for gains up to another date (1990) and 75% for gains past that date.

It was lowered to 50% in the year 2000 and did they do away with the Valuation Day approach at that point?

Based on that past precedent… (If I have it half way correct…)

It is possible that if the inclusion rate is increased it will apply only to gains from today forward. With prior gains taxed at 50%.

#4 Shawn Allen on 10.27.19 at 4:11 pm

Elections and Tax increases

#1 Marcus on 10.27.19 at 3:53 pm
Elections have consequences. Suckers.

*******************************
Apparently, 40% of adults pay no net income tax

Another huge chunk will never pay capital gains tax

All of them get to vote.

Representation without taxation.

Who are the suckers again?

#5 Drill Baby Drill on 10.27.19 at 4:19 pm

Vote for me it won’t cost you anything cuz the government will pay for it. Hey I guess if you don’t pay any taxes it is a great deal.

#6 Yukon Elvis on 10.27.19 at 4:24 pm

It is not a question of if and when they will raise taxes, it is a question of what they will tax. If I had to bet a bag of mice I would say it will be capital gains.

#7 Stan Brooks on 10.27.19 at 4:30 pm

In many cases these gains are imaginary, i.e. the assets do not increase in real value, but in nominal value measured in increasingly worthless currency.

So inflation contributes to the gains that itself are taxed.

That includes investments in collectibles, i.e. a gold or silver maple leaf coin that does not increase in size or weight suddenly is taxed when you sell it because the currency it is measured in has lost purchasing power.

The 50 % inclusion rate was somehow mitigating this resulting in partial skimming that now evolves in whole-scale wealth confiscation.

Will it be implemented? Of course.

Keep growing that RRSP nesting egg though, I am sure the lefties will find it ‘unfair’ and somehow take it from you either through outright confiscation or aggressive taxation.

Lasciate ogne speranza, voi ch’intrate
Abandon all hope, ye who enter here.

inscription at the gate of hell.

When will they tax the ‘gains’ on primary residences?
That is way more fair than taxing capital gains on investments/already 50 % taxed and I fully support it.

#8 Shawn Allen on 10.27.19 at 4:30 pm

Capital Gains inclusion rate

#3 Shawn Allen on 10.27.19 at 4:09 pm
Capital gains Tax inclusion rate change effective date

If I recall correctly there was a time when the rate was calculated as 0% for gains prior to “Valuation Day” circa 1971, then I believe 50% for gains up to another date (1990) and 75% for gains past that date.

***********************
I might be totally wrong on that. Always double check things people claim on the internet. I try to be right but not at all sure in this case. It’s how I remember it but memory can be suspect. Not seeing evidence for what I remember when I search it.

#9 Sail Away on 10.27.19 at 4:34 pm

If Jag is searching for a way to get wealthy dual citizens out of Canada while starving Canadian corps of investment, this is a good start.

Time to prep.

#10 JohnnyAB on 10.27.19 at 4:36 pm

As an immigrant, I thank Canada for giving me the opportunity to come here and for giving me the citizenship. I truly appreciate it. But after paying more than 350K in taxes for the last 7 years, I think it’s time to move south where my skills are in great demand, where my salary would be at least 50% more and where the taxes I pay would be at least 10% less. Please keep this in mind that there are A LOT of people like me, and that will continue to happen. An impossible housing market + high taxes + lower wages will be the main causes the highly skilled specialists will be leaving this country.

#11 Flop... on 10.27.19 at 4:37 pm

I like my vegetables how Trudeau likes his voters.

Baked…

M45BC

#12 I’m stupid on 10.27.19 at 4:37 pm

I think there will be no where to hide in terms of taxes. The only exception will be if you’re at the bottom of the income scale or if you have a trust account. I for one have an exit plan in place. I have access to huge amounts of credit. When it’s becomes too much I’m going to exhaust my credit and liquidate my assets and head south. I’ll give the banks, credit card companies and revenue Canada my middle finger as I leave.

#13 JohnnyAB on 10.27.19 at 4:38 pm

And BTW, I’m coming from an ex-communist country. Just wanted to let you know that communism doesn’t work, and socialism is a cancer. Keep that in mind when you’ll realise that too.

#14 Sail Away on 10.27.19 at 4:39 pm

#6 Yukon Elvis on 10.27.19 at 4:24 pm

It is not a question of if and when they will raise taxes, it is a question of what they will tax. If I had to bet a bag of mice I would say it will be capital gains.

————————————

I’ll see your bag of mice and raise you a primary residence exemption.

#15 Ronaldo on 10.27.19 at 4:41 pm

And yes, the tax change would be effective the night it was introduced. In 20 weeks.
——————————————————————
#3 Shawn Allen
It is possible that if the inclusion rate is increased it will apply only to gains from today forward. With prior gains taxed at 50%.
——————————————————————
I would agree with that Shawn as the consequences would otherwise be quite severe to the housing and stock markets.

#16 Stan Brooks on 10.27.19 at 4:42 pm

#3 Shawn Allen on 10.27.19 at 4:09 pm

Valuation day?

How precisely would you calculate that for a second house or a gold coin, or a stock bought in 2000 that is sold in April 2020 or 2021 for four time the initial price, if this comes into effect on January 1st 2020? You will have everything appraised before it comes into effect (and by whom?)
Of course it will be valid/in full effect/rate from day one.

And the 75 % will be just the initial increase.

#17 Another Deckchair on 10.27.19 at 4:45 pm

Garth wrote:

“Nate, who has an income of $100,000, sells and realizes a million in profit on his properties. Under the current rules $500,000 is added to his income and his 2019 tax total (for Ontario) is $153,000. ”

And, CRA will also ask for interm tax instalments the next year; this has happened to me twice. This year, I expect to pay more tax than I have in income; it’ll all work itself out in the wash come tax time next spring.

This is the second time I’ve had to pay income tax instalments; 25 years ago I had a big argument with CRA because I was a single parent, and went from contracting to much lower $$ employment with taxes removed at source; the CRA tax bill was greater than my take home… it was declare bankruptcy or fight it. It did take some convincing, even though my new employer was the Federal Government!

#18 PastThePeak on 10.27.19 at 4:47 pm

On the agenda for tax increases in 2020:
– Capital gains inclusion rate
– Dividend tax credit
– Carbon tax increase (this is no surprise as it is already in plan)

But the deficit will still grow…

Canada is demographically pooched. If they can’t balance the budget today, they never will 10 years from now…

#19 Smartalox on 10.27.19 at 4:51 pm

Wait a minute: I already pay income tax on the money that I invest before I invest it. Why should I have to pay 100% tax on that money again? THAT’S why there’s a 50% inclusion rate; some of those returns are the return of previously taxed capital.

#20 theoryAndPractice on 10.27.19 at 4:59 pm

“When you go to work, you’re taxed on almost all of your income,” says Jag. “It doesn’t make sense that someone making their money from investments is taxed on only half.”- GT

Very good points, I like the thoughts above (hoping the people asking these questions not thinking backwards to solve it.)

The good news for them is that , I do have the best solution hoping their absolute support :

– Why not tax only 50 % of the employment income for the sake of equality as in capital gains etc.

– Why not * NOT * tax up to 100K for family income just to match equality, equal treatment to public as in dividend income per year ?

https://business.financialpost.com/personal-finance/you-can-earn-50k-in-tax-free-dividends-but-theres-a-catch-you-cant-have-a-job

(*) About the catch : Why do they need to quit the job ? I guess if the one works and generates something better than nothing, it must be punished.

It is absolute nonsense, all of it.

End of transmission…

#21 Yo Yo Ma on 10.27.19 at 5:05 pm

“And yes, the tax change would be effective the night it was introduced. In 20 weeks.”

What is the 20 weeks? Is that when the minority is officially in place?

Budget. – Garth

#22 Kilt on 10.27.19 at 5:07 pm

Why is the solution to always raise taxes on someone to make things fair. Why not reduce taxes on those who are complaining so they can invest the difference and be part of the capital gains crowd.

Kilt.

#23 Shawn Allen on 10.27.19 at 5:09 pm

#19 Smartalox on 10.27.19 at 4:51 pm

Wait a minute: I already pay income tax on the money that I invest before I invest it. Why should I have to pay 100% tax on that money again? THAT’S why there’s a 50% inclusion rate; some of those returns are the return of previously taxed capital.

*********************
No, the entire gain is return ON capital not return of. You pay tax becasue it is new income.

It’s taxed at half the rate for a variety of reasons.

Stan is right that part of the gain is ersatz because it simply represents inflation. But that was a much bigger concern when inflation was actually high.

#24 Stan Brooks on 10.27.19 at 5:13 pm

#10 JohnnyAB on 10.27.19 at 4:36 pm

So you are not happy with your taxes being used to subsidize 10 % of the purchasing price of a house for debt junkies? Have you not heard of the great startup culture and opportunities in GTA? Apparently the whole world wants to come here, pay these house prices and even higher according to house pimps at CMHC.

Expect accusations of ungratefulness, ‘don’t let the door hit you on your way out’, failure, incompetence etc. stupidities.

BTW, what took you so long/7 years?

#25 Another Deckchair on 10.27.19 at 5:24 pm

@10 JohnnyAB:

“I think it’s time to move south where my skills are in great demand, where my salary would be at least 50% more and where the taxes I pay would be at least 10% less.”

I have friends and family and some work-term students who have done that – loads of opportunity, however cost of living can be quite high. Still, though, a net gain. (for one of the students; incredible wealth)

If you are in the field I think you are in, you just also might find the work more cutting edge than here.

#26 crowdedelevatorfartz on 10.27.19 at 5:26 pm

Trudeau’s first term at the helm was an embarrassment and fiscal disaster.
We haven’t seen anything yet….

Much bigger deficits.
SNC “deal” rammed through, voters be damned.
Wheeling and dealing with the NDP or BLOC.
Recession in 12 months or less.
Taxes and user fees…..goin’ uppa uppa uppa

#27 AlbertaGuy in AB on 10.27.19 at 5:29 pm

Someone said “Time to prep”…

Lets say you have retained earnings in your CCPC and you also own a primary residence personally. Why not sell the PR to your corp at assessed/market value and then lease it back on long term lease?

– A nifty way to get funds out of our corp tax free
– Corp takes on all risk of owning real estate – risk which is higher now that T2 back in for 4 more and especially in AB where RE not going anywhere anytime soon
– Corp expenses all future costs including maintenance, insurance, taxes
– Increase the ACB (and reduce Cap Gain) by developing the basement and rent it outing out for further income stream
– Freedom to move at a whim by giving “notice” to landlord

Where is the downside?

#28 reynolds531 on 10.27.19 at 5:43 pm

I work with a guy. His brother lives in Venezuela. I’m told the government there is going house to house looking for excess food.

We should have put the brother in TV ads explaining how socialism works.

#29 TurnerNation on 10.27.19 at 5:53 pm

“Bumping it up by half, the NDP claims, would bring in $3 billion that Ottawa can spend on social programs. ”

3 billion that’s it? I found it almost all here:

“Government announces $2.65B to help developing countries fight climate change”
https://www.cbc.ca/news/politics/funding-for-climate-change-chogm-1.3339907

– you see this global agenda is all about theft now. Nothing else.
NO daycare, NO transit, NO better education is coming. It’s all a lie to support the system.

Climate what? I can name a dozen of these massive construction projects underway. Entire blocks to be changed with 10,000s of new condos.
Roads are full during rush hour. As are Commuter trains and subways. At total capacity now.
Was of the Feds to cancel the annual Transit pass rebate. Not enough virtue there.
Pure madness for a post-national state aka open air tax slave kamp:

https://www.blogto.com/real-estate-toronto/2019/10/mr-christie-toronto-transform-condo-entertainment-complex/

The plan proposes around 550,000 square metres of residential space (7,500 condo and rental units) and nearly 100,000 metres of commercial, retail, entertainment and restaurant space over the 11 hectare lot.

#30 FreeBird on 10.27.19 at 5:58 pm

Interesting views on socialism.

Welfare state helps politicians not the poor.
https://www.google.ca/amp/s/www.ocregister.com/2011/05/24/thomas-sowell-welfare-helps-politicians-not-the-poor/amp/

Probably a controversial quote but seems timely…

“There is no difference between communism and socialism, except in the means of achieving the same ultimate end: communism proposes to enslave men by force, socialism – by vote. It is merely the difference between murder and suicide.” -Ayn Rand

#31 Keith on 10.27.19 at 6:05 pm

The NDP isn’t just broke, they are in debt millions. They campaigned with a bus because they couldn’t afford a plane, and took a beating in Quebec. The Liberals know, and the NDP know the relative bargaining position here. The NDP needs a lot of time before the next election to rebuild finances. Very little of their agenda will become policy.

#32 Lefty on 10.27.19 at 6:06 pm

If you get a mortgage on an investment property, the mortgage interest is tax deductable. So it makes sense you’d pay capital gains when you sell.

Primary residence capital gains tho with no corresponding deductable mortgage interest.. wtf?

#33 Just Saying on 10.27.19 at 6:10 pm

Can somebody go and tell stupid JS that there is difference in yearly work income & investment income. It take years to gain something on investment. You’re not going to divide capital gain in years one has invested, not practical. So 50% rule make sense for that reason too.

#34 Xpat on 10.27.19 at 6:13 pm

I could see this being a big ol’ nail in the housing markets’ coffin

Bad for the TSX too especially if they mess with the Dividend tax credit

#35 Lee on 10.27.19 at 6:14 pm

That can’t be the JT I know.

#36 Smoking Man on 10.27.19 at 6:20 pm

Run, only takes about a year and bit for Canadians to get green cards.

Money has wings.

#37 Blutterfy on 10.27.19 at 6:25 pm

I take back what I said the other day about Alberta needing to separate. Kenney just gave $233 million dollars (of taxpayer money) to Husky energy (which is owned by a Chinese billionaire. Clearly we have bigger problems in Alberta than our pocket change going to Quebec. At least the Americans bailed out their own.

#38 Blutterfy on 10.27.19 at 6:27 pm

Sources.
https://www.cbc.ca/news/business/husky-kenney-sask-nfld-alta-alberta-1.5335823

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

#39 crowdedelevatorfartz on 10.27.19 at 6:36 pm

BC Forestry down ….big time.
Less housing construction?
Tip of the iceberg?

https://theprovince.com/news/local-news/forestry-crisis-shows-up-with-deepening-decline-in-b-c-s-trade-figures/wcm/1da85725-9c2e-4a93-ad4b-7e7b3b1d9e00

Only time and NDP / Liberal populist drivel will tell.

Oh,
And BC teaching “support staff” are walking out next week in about 15 districts….for higher wages.
Tip of the iceberg….and the S.S. Populist is heading right for it.
NDP Budget “rock” meet Cost of Living “hard place”.

#40 This will kill home speculation in Canada: “Trudeau’s secret home tax.” on 10.27.19 at 6:37 pm

Monreau will announce this:

Principal Residence Capital Gains Tax on a sliding scale, where principal homeowners would be taxed up to 50 per cent if they lived in their home for one year or less before selling. By the time you’ve owned your home for over five years the tax drops to 5 per cent.

#41 yvr_lurker on 10.27.19 at 6:40 pm

Of course, the dollar-is-a-dollar crowd argues investors today (in investment real estate, stocks or ETFs etc) get an outrageous advantage in having only half the gains taxed while working schmucks are fully exposed to tax on employment income, rent, pensions or interest on their pathetic GICs. Sadly, this is growing in our tilting society.

“When you go to work, you’re taxed on almost all of your income,” says Jag. “It doesn’t make sense that someone making their money from investments is taxed on only half.”

————————————–

With regards to residential real estate, I support Jag on this one 100%. I would not increase the capital gains for those buying into small businesses and creating jobs, but have no problem with going after the leisure set who stand to make windfalls of $$$ from inherited second and third homes, empty homes, homes flipped like pieces on a monopoly board, anything other than principal residences. The ones who have been in the bulls-eye in the recent past are the large salaried people who watch the marginal rate go up and up…Let’s focus on this other group now.

However, nothing will happen in this direction as Jag will have zero power in all of this…. Garth is only trying to rally his base with fear-mongering…..T2 won’t need to pander to the NDP to keep power… Jaq does not want an election as their coffers are in the red…..

#42 Moh on 10.27.19 at 6:41 pm

Why is the current goverment doing this. I already work 7 days a week why are they messing with our investments? Sigh looks like I’ll take up what the recruiters are saying in USA and get a job in the USA and move they’re.

#43 Curious on 10.27.19 at 6:44 pm

You say “Never, ever let your accountant claim CCA on a leased condo, by the way…”. Can you explain why? Wouldn’t this allow you to reduce rental income today, which has a 100% inclusion rate. I understand the drawback is a higher capital gain, but the gain only has a 50% inclusion rate and is deferred into the future, potentially by many years. What am I missing? Love the blog by the way.

#44 crowdedelevatorfartz on 10.27.19 at 6:46 pm

Oh.
Just when you thought the BC govt run car insurance company couldnt be any worse…….

https://theprovince.com/opinion/columnists/another-icbc-sticker-shocker-1-9-billion-was-paid-to-law-firms-last-year

ICBC was created by the NDP in the mid 1970’s and it has grown and grown and grown to absorb the Ministry of Transport.
A bloated, arrogant, monopoly that is too big to nuke….
Unless it becomes pivotal in the next election that THIS minority BC Govt will face in the near future.

Yes. next time you try and renew your expiring drivers license, better have everything paid up with your govt car insurance or……you dont get a drivers license.

ICBC rates going uppa uppa uppa !

That should stick a nail in the heart of every person trying to save money.
$2000 a year for car insurance?
Lets make it $3000/year….
Well at least the NDP’s social experiment with govt car insurance is finally coming home to bite them in the goolies.

#45 Oakville Sucks on 10.27.19 at 6:49 pm

NDP WILL want to increase foreign buyers tax nationally. This is a great idea since homes should not be treated as the stock market. Liberal minority with NDP couldn’t have been a better election outcome.!

#46 Leftover on 10.27.19 at 7:13 pm

Trudeau won’t give Jag credit for anything, and they both know the biggest loser in a snap election would be the NDP.

Pretty sure the Liberals will govern and tax the same way they would as a majority, which is scary enough on its own.

#47 Treasure Island CEO - 34,021,584.55 Offshore on 10.27.19 at 7:15 pm

I just completed CAGR calculation for a client who just sold their house in Kelowna. Bought at the last bottom, sold just after the most recent peak.

I matched the time of ownership (house bought right after the financial crisis and sold just last month) with the exact same time of my investment portfolio mix.

I took out input costs for both scenarios and also deduced the market going rental income costs for the scenario of investing (and having to rent) into a balanced portfolio instead of buying the house at a 32% discounted price from the year previous, buying in 2008.

So, they made money. In both situations.

However, looking soley at the numbers, buying the home was a mistake. And this is when property values have spiked like never before in history (+88% in the latest bubble in Kelowna) in this situation.

Home Ownership Wealth Annualized Growth = 4.8% annual growth (10 years)

Financial Investment CAGR Growth = 6.65% annual growth (Same 10-year period)

The above wealth includes the same standard of living whether owning the house or paying those high rents for the same standard of a nice home.

People do not understand the true ownership cost and the government loves it this way (The Canadian Dream of Home Ownership)!

If things go bad when renting you pull from the money pile you are growing (write down).

If things go bad when owning and you don’t have that money pile to pull from (like most house poor owners with all of their money in a house) the banks forecloses on you and it is game over. Cash flow issue. 30-years to recover. If you are 40 years or older, you will never recover. Handicapped until going into the grave.

That is the game and risk involved. The debt carrying generations (gen x in particular) have a messy future. Better hope wealth is transferred down through inheritance to deal with the accumulating debts.

#48 NoName on 10.27.19 at 7:21 pm

i just cant wait for mandatory carbon offsets to be implemented…

#49 nita groves on 10.27.19 at 7:24 pm

Garth –
In giving reason for justifying the current 50% exclusion, should you not include the fact that in older assets that are sold, the costs include dollars that had much greater buying power.

#50 akashic record on 10.27.19 at 7:27 pm

Maybe we can lobby to certify the teenagers climate lawsuit as class-action, and join the claim for some supplementary income. Hell, we can even drop everything on Fridays to protest for bigger payout.

#51 Yukon Elvis on 10.27.19 at 7:39 pm

#47 Treasure Island CEO – 34,021,584.55 Offshore on 10.27.19 at 7:15 pm

That is the game and risk involved. The debt carrying generations (gen x in particular) have a messy future. Better hope wealth is transferred down through inheritance to deal with the accumulating debts.
………………………

Better hope they forget about an inheritance tax.

#52 lana on 10.27.19 at 7:39 pm

‘When you consider personal, sales, and property taxes and social security contributions, it really starts to add up, and I would argue, one reason why Canadians are finding it more difficult to make ends meet’. The only reason why making ends meet is increasingly difficult is that my wage/income has not changed in 25 years. But the cost of living/groceries/insurance etc only inches higher every year. I’ve stopped buying avocados! Ryan and Garth – have your wages increased in the last 25 years?

#53 Linda on 10.27.19 at 7:39 pm

It all boils down to money. The politicians need money in order to fund all those promises they have made to the electorate. Whether they keep all those promises is another matter.

#54 Out Of Work CEO, Will Travel on 10.27.19 at 7:47 pm

Things will get more than a little dark with interest rates next to nothing and now with this possible upping the tax on capital gains. The “back to the land hippie vibe” going off the grid growing your own food and other “delicacies” has a certain appeal. This democracy smells funny.

#55 Td on 10.27.19 at 7:52 pm

2 questions
1. If you sell a cottage for capital gain after say 20 years and want to show the money u have put into Reno’s and improvements, are you supposed to have 20 years or receipts? Or can u just ballpark it reasonably?

2. 75pct capital gains wouldn’t be too bad if the TFSA limit was doubled or so. Then working stiffs could still save without getting slaughtered and the truly rich would pay the higher rate. Amirite?

#56 Keith on 10.27.19 at 8:08 pm

@#44 crowdedelevatorfartz

ICBC has been around since the seventies. The Socreds and B.C. Liberals have been in office the majority of years since then, and neither of them privatized ICBC. If they privatized it, and insurance rates dropped for the majority of drivers, they could run elections on that decision for decades of political credit. They never privatized ICBC, and they aren’t stupid, and they are politically astute. Makes you wonder why.

#57 MF on 10.27.19 at 8:12 pm

2 Moh on 10.27.19 at 6:41 pm

-happening all over the western world. Product of a bigger and bigger wealth divide that has been exacerbated by low interest rates/ill advised central bank policy.

Lol at you if you can’t see this.

MF

#58 BillyBob on 10.27.19 at 8:17 pm

Posting this from layover in Buenos Aires, where they’re having a national election today. Looks like the incumbent Marchi is out and Fernandez is in. His running mate is the former president Cristina Kirchner who served from 2007-2015. In that time her net worth grew from a few million to an estimated 200 million. Hmm. Now the general consensus is that she will essentially be controlling the country’s finances again. She was a controversial figure, but the working poor loved her as she was glamorous and spent money like a drunk sailor on social programs. Money it turns out the country didn’t have. Sound familiar?

If anyone wants to see what unfettered public spending combined with rampant corruption can do to a country, please do come visit.

Yes, yes, I know, it can never happen in Canada, MF says so.

#59 not 1st on 10.27.19 at 8:22 pm

Good job Toronto, you deserve it. How about a wealth tax, estate tax, carbon tax and GST increase to boot.

#60 Flop... on 10.27.19 at 8:23 pm

Hmmm, what can I contribute to this wood chopping blog?

On several occasions I saw the worlds best woodchopper in action as he is a fellow Taswegian.

“David Foster OAM (born 20 March 1957) is a world champion woodchopper, and Tasmanian community figure. He has held the World Woodchopping Championship title for 21 consecutive years,[1] and is Australia’s most successful athlete[2] and possibly the only athlete in any sport in the world to win over 1000 titles.[3]”

https://en.m.wikipedia.org/wiki/David_Foster_(woodchopper)

Probably one of the more famous Tasmanians.

I always considered Hollywood actor and ladies man Errol Flynn to be the most famous Tasmanian.

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

He was born in Tasmania and died in Vancouver at the age of 50.

I don’t want to match that feat and will try and get out of Vancouver when I’m 49…

M45BC

#61 not 1st on 10.27.19 at 8:26 pm

Singh is probably selling his $5M Vancouver mansion to some shell company as we speak.

The house story is fake. But don’t let that stop you. – Garth

#62 yorkville renter on 10.27.19 at 8:28 pm

#30 – There is no pure capitalist, socialist or communist economy – probably never was. Even in China, “communism” really isn’t… just like in Canada, we will not be a socialist country. A blend is where it’s at.

Personally, I think the Liberals would be best served by going after the Centre, and bringing some of the Cons with them.

Being socially progressive and financially conservative would be a boon to the party that makes it happen.

#63 TFSA Elimination on 10.27.19 at 8:31 pm

How long until #trudeau gets rid of TFSAs altogether. After all, they are an evil tool of the 1%.
They want people to put that money in real estate and pump up this gasbag.

#64 Loonie Doctor on 10.27.19 at 8:45 pm

The problem with the argument that earned income is unfairly taxed relative to capital gains is more than just the fact that we need incentive for people to risk capital (we do). It is also that when I earn $1, I get use of that $1 right now. When I have a $1 unrealized capital gain, I can’t buy anything with it until I realize it and pay tax. That could be years away and in the interim, inflation has eaten away the value of $1. A different short-term and long-term capital gains inclusion rate could make sense as long as it doesn’t snuff out investment. But, a blanket rate should be generous to encourage long-term investment if that is the tax route taken (like it has been).

Of course, that kind of thinking long-term is beyond the election-cycle time horizon. So, not of much interest to governments that won’t even pretend to ever find a balanced budget anymore.
-LD

#65 HH on 10.27.19 at 8:47 pm

Wouldn’t Trudeau and Morneau be affected by an increase to the inclusion rate? Why would they do this to themselves?

#66 meslippery on 10.27.19 at 8:51 pm

#7 Stan Brooks
In many cases these gains are imaginary, i.e. the assets do not increase in real value, but in nominal value measured in increasingly worthless currency.
—-
Tell that to Scarborough home owners who bought in the 1970s with a single factory wage earner.
Try that now..

#67 Bobo on 10.27.19 at 8:54 pm

#43

CCA (depreciation) is not taxed as capital income but rather reclaimed capital cost at time of sale , so the depreciated capital is added all at once to your income in the year of the sale. You end up paying 50% on CCA money ! not good in most cases unless you have a large portfolio and high income

#68 Ronaldo on 10.27.19 at 9:11 pm

#62 TFSA Elimination on 10.27.19 at 8:31 pm
How long until #trudeau gets rid of TFSAs altogether. After all, they are an evil tool of the 1%.
They want people to put that money in real estate and pump up this gasbag.
—————————————————————-
That would be a terrible blow to the very people it was intended for.

#69 Barb on 10.27.19 at 9:13 pm

T2 also said the budget would balance itself.

How could abject idiocy lead to re-election?
I’m still shaking my head.

#70 TC on 10.27.19 at 9:16 pm

Early warning watch……………”Credit Accidents” could start another 08/09 credit crisis very shortly. The CLO/CDO market is seizing up. Investment banks that hold these deteriorating assets are having a hard time finding buyers. That’s why the FED is providing liquidity to the REPO market. These failing assets on the books of these global investment banks are now stressing their balance sheets and solvency. Institutions are not buying because they don’t think they will be paid back. This is how a credit crisis starts and spreads. Those who have the money all of a sudden wake up in a cold sweat and decide “I want out” and then it starts…………..the domino effect of credit freezing up everywhere all over the world. Buckle up!

#71 PastThePeak on 10.27.19 at 9:19 pm

If you are young, ambitious, have some sense of adventure, and appropriate skills (STEM, finance, or a business entrepreneur) – then there are enormous opportunities outside of Canada to earn more, pay less tax, and save for the future. Make sure you really do save a lot, be diverse, and have some money in a few countries.

For those of us who are past this point, have saved some for a decent retirement (down the road, or near term) – then best bet is to keep a low “wealth” profile. Retire early, enjoy life, try to de-stress (you will be healthier and live longer). Any income over $100K in this country is considered “excessive wealth” and will be dealt with accordingly.

Fully maximize RRSP and TFSAs. The rules on these may be adjusted one time, but they are still the best bets out there. Non-reg portfolios have had some historical advantages, but these for certain will disappear over the next 10 years.

#72 HH on 10.27.19 at 9:19 pm

#62 – I’m not a 1%er and I have maxed out my TFSA.

#73 crowdedelevatorfartz on 10.27.19 at 9:27 pm

@#55 Keith
“They never privatized ICBC, and they aren’t stupid, and they are politically astute. Makes you wonder why.”
+++++

Because the Socreds and the provincial BC Liberals( Socreds in another skin) realized that ICBC was a govt CASH COW.
They scooped billions off the top of ICBC profits to “balance” the provincial budget year after year after decade.

ICBC is a hugely profitable business that does NOT have the consumers best interest at hand.
(They are the judge, the jury, and the arbiter of cash settlements if you have an accident)

And now?
The consumers (voters) have had enough.

ICBC and their exorbitant rates have reached “boiling point” with the public that cant afford to insure a 10 year old piece of crap.
No politician.
Either the NDP that invented ICBC or the Liberals that raped their fiscal coffers are willing to say….
“I stand behind ICBC 100%”…. as rates rise into the stratosphere.
No.
When NDP spokesperson David Eby calls ICBC’s fiscal mess a “Dumpster Fire’ …you know the love is gone.

ICBC is now nothing more than a perpetual govt motion machine snuffling up huge amounts of money and squandering it on unnecessary union payrolls ( unnecessary because the private sector can and does the same job for much much less money everywhere else in Canada)

Get rid of ICBC.
Privatize.

#74 crowdedelevatorfartz on 10.27.19 at 9:34 pm

@#57 Billy Bob
“If anyone wants to see what unfettered public spending combined with rampant corruption can do to a country, please do come visit.

Yes, yes, I know, it can never happen in Canada, MF says so”

+++++

ahahahaha.

good one.

I hear Argentinians love their bbq’d beef ….

#75 crowdedelevatorfartz on 10.27.19 at 9:41 pm

@#68 Barb
“How could abject idiocy lead to re-election?
I’m still shaking my head.”
+++++

Unfortunately Scheer had the charisma of a manure pile in Saskatchewan during a Febuary whiteout blizzard.

You know you’re lost, freezing, hypothermic searching for anything to save you and the only way to save yourself is to jump into a pile of crap.

Unfortunately not enough voters were willing to “jump”.

#76 Duffy on 10.27.19 at 9:46 pm

There will be a lot of “buyers remorse” to go along with their ongoing guilt in the upcoming months for that special group of people known as . . . . . the liberal voters.

#77 Reminder Man on 10.27.19 at 9:54 pm

Don’t forget – #trudeau LOST the popular vote

#78 TurnerNation on 10.27.19 at 9:56 pm

Someone spotted long line ups for buying new kandos in TO. None of these people appear homeless; ergo they might be speccers.

Where is GTA Girl and her stories??

https://old.reddit.com/r/toronto/comments/dnwxqg/apparently_buying_a_pre_con_in_toronto_now_is_a/

#79 45north on 10.27.19 at 10:06 pm

Yup, big ouch. The tax hit on dumping those properties would be 50% higher in this scenario. But is this a realistic possibility?

it sounds like the short answer is yes

which is pretty scary coming from the former Minister of Revenue

#80 baloney Sandwitch on 10.27.19 at 10:23 pm

Garth, A hypothetical question – if you were given a choice 1) double the TFSA 2) 75% cap gains inclusion rate. What would you choose?

#81 crazyfox on 10.27.19 at 10:38 pm

As stated earlier, the Libs can pass a budget with 3 parties, not 1: Cons, NDP, Bloc.

This means something. Strategically, its not out of the question and also wise for the Libs to take a conservative, fiscal approach budget that reigns in spending with a modest tax cut to lower income earners, to the Conservatives and make the offer public. If the Cons reject it, the budget is taken to the NDP who will make demands for more spending. If demands are deemed too costly by the Libs and NDP refuses to back off on some if not all demands, T2 will take it to the Bloc likely with a small perk for Quebec and the budget will pass.

Readers should be aware of one very important fact. The Bloc will support the Liberal government as it gives them legitimacy and is in their best interest, an easy sell because it’s in Quebec’s best interest. If the other 2 parties were smart, they would choose that same legitimacy but will likely choose an adversarial approach. The Cons for sure, the NDP less so… but if either party doesn’t take the opportunity to support the Lib budget proposal close to as is, their only choice will be to attack the Libs taking the support of the Bloc to pass a budget. That might sell out west for the divisive Cons but not the rest of Canada and it will hurt the Cons/NDP in the polls.

Tactically, its a mistake for any party to not support with small concessions (for any number of reasons, the parties are broke, the nation is election exhausted, the efforts to further divide can seriously backfire) but lets face it, the Cons ran a highly regional divisive campaign and now they own it.

The NDP is more versatile in their support but they can’t ask for the moon. Why? Their lack of approval for a Lib budget takes away their legitimacy because the Bloc will support this Liberal government. The Bloc will do what is their own interests and in the best interests of Quebec, of this I have no doubt and Quebec’s interest is a Canada governed by the Liberals so all this talk about capital gain tax increases to cover big spending required by the NDP as if the Libs would go for that anyway is, I believe, misplaced conjecture at least for the next 2 years.

Blanchet is on record in saying he supports the Liberal mandate for the full 4 year term. Of course, polls will make all the difference. A serious Lib scandal can change everything as example (sorry Cons/NDP, dress and makeup won’t cut it) but if I was reading these words, I would be thinking long and hard about what Bloc support for a Lib government means for Canada and its political parties if Blanchet decides to own his words and support the Libs through a full 4 year term.

#82 Mike on 10.27.19 at 11:07 pm

The capital gains exemption was introduced to spur innovation, and compensate investors who entered those bets. Those were different times, the USA was the engine of innovation, Canada had to do something to ecourage domestic innovation. Now all innovation happens in China, Korea and India, no need for the exemption.

#83 Mike on 10.27.19 at 11:18 pm

My strategy, max tfsa, contrib 50% of my contrib room into rrsp, liquidate unregistered account and pay off debts. Retire now at age 51 from full time job, find part time work close to home. I save on income taxes and commuting costs, annual income drops far enough I can take advantage of social programs. Hey, if by working hard you cant beat them, then join them. I salute our Kommisar masters, long live Venezuela North.

#84 crazyfox on 10.27.19 at 11:24 pm

#31 Keith on 10.27.19 at 6:05 pm

Agreed. As you state, the NDP is not in a good $ place to fight another election (none of them are) and as I state, 2 other parties also hold the balance of power putting the NDP in a weakened state politically. The NDP simply cannot demand the moon. It’s a strategic mistake for any of the parties to not support the Libs right now especially if the Libs cut spending and offset with a tax increase to low earners.

If the Libs come out with the budget I think they will, the Cons would be unwise to not support it, the NDP would be unwise to demand any kind of major spending and the Bloc would be wise to support the Libs for obvious reasons. We’ll see what kind of leadership we have going forward soon enough and I just gotta say….

Whoever drummed up the Conservative platform should be fired and I say it with no bias. Their entire election strategy was also seriously flawed. Cuts to infrastructure spending alone cost them votes in the 60 seat GTA. Their election campaign was a Harper 2.0 reboot of policy/tone that was soundly rejected in 2015. It’s like they tried to lose or were too banal to see how stale it all was. Now, the Cons, through a divisive regional campaign evident in their platform, run the risk of being identified as a western separatist party and if that label sticks (its beginning to), a regional party is all they will be for years to come.

#85 crazyfox on 10.27.19 at 11:26 pm

Sorry, meant tax decrease (cut) to low income earners.

#86 Paul on 10.27.19 at 11:26 pm

#77 TurnerNation on 10.27.19 at 9:56 pm
Someone spotted long line ups for buying new kandos in TO. None of these people appear homeless; ergo they might be speccers.

Where is GTA Girl and her stories??

https://old.reddit.com/r/toronto/comments/dnwxqg/apparently_buying_a_pre_con_in_toronto_now_is_a/
————————————————————————————————
Anybody that lines up to buy Realestate is the greater fool!

#87 Paul on 10.27.19 at 11:36 pm

The new Condo sales pitch?
This should work. Lol

https://youtu.be/6jHgpuNoSfQ

#88 Ponzius Pilatus on 10.28.19 at 12:24 am

Any blog dog watched the new Mountain Men episode.
If yes, how do you rate it?

#89 Dragonslayer on 10.28.19 at 1:33 am

#72- crowdedelevatorfartz

Sigh. So many misconceptions.

Used to work for ICBC but no longer do, so have no skin in the game.

Be careful what you wish for. There was a reason they booted private insurance out of BC in the first place. Insurance is a funny product- it’s based on a promise and it’s not like buying a TV or a tangible object. I normally agree with you that private enterprise should always be the first choice but some things are better left to government and auto insurance is one of them.

Leaving aside the coverage for physical auto damage, auto insurance is actually health care coverage. And private insurance has a woeful record of sharp practices and outright scammery when dealing with their policyholders. Do you trust that your private travel health insurance will be there for you when you need it? I have news for you.

ICBC isn’t perfect, and I agree that slamming motorists with massive rate hikes isn’t the answer either (my view is that more should have been done to attack the outflows on the claims end) but we have excellent coverage here in BC. When is the last time you heard about an uninsured motorist in the news? And when that does occur UMP steps in and pays the cost through your own policy. That’s unheard of in many other jurisdictions.

There are other examples too, but the bottom line is that the Liberals ran the Corp into the ground. I believe that was intentional. They hoped ICBC would crash and burn so they could turn that book of business over to their corporate cronies. The IBC has been drooling over ICBC’s market share for decades.

So you privatize it and that means you disband a local BC company employing >5000 people. The profits then get sent down south to large US corporations.

Doesn’t make a ton of sense, does it? No, Minister Eby is on the right track. Contain costs and the ship will right itself.

I’ll finish with an entertaining clip from a mechanic in the US that has a Youtube channel and commented on car insurance tactics down there. He has no bias either way, so his comments are interesting. It really is the Wild West:
https://youtu.be/lU3_6E-2Jeo

#90 Bobby on 10.28.19 at 1:54 am

No country has ever taxed their way to prosperity. But no doubt Justin and Jagmeet will try, it is all about staying in power. Once business packs up and leaves and people start to lose their jobs, perhaps Canadians will wake up.

#91 Leo on 10.28.19 at 2:00 am

#41 yvr_lurker

you missed listing the people who own places to rent them out….

Driving up the inclusion rate is going to make it unprofitable for owners of rental places, which would drive up rents and drive down the availability of affordable housing.

#92 Worried in Vancouver on 10.28.19 at 2:39 am

If I were to leave Canada without selling my assets, and then (after breaking tax residency) proceed to sell them in a lower tax jurisdiction, does the increased inclusion rate then not apply to me? Really worried now and thinking I should sell everything while the rate is still 50%, so that at least the gains so far would be taxed at that rate. (I could re-invest later).

#93 Nonplused on 10.28.19 at 2:44 am

Missed one point Garth. Part of the reason capital gains are taxed at a lower inclusion rate is because they are not adjusted for inflation. So for example if your capital gains are 4% per year and CPI is 2%, well you could go through all the bother of adjusting the capital gains for inflation but some things aren’t worth doing, so while CPI is at 2% the government says we’ll just tax half.

If they want to bring the capital gains inclusion rate to 100%, well that’s fine but then we also have to come to an agreed upon inflation rate and adjust the assets accordingly. Very complicated. Otherwise they are just taxing inflation. The very inflation the government is creating itself by printing too much money. It turns out to be just a wealth tax. “Hey, you own a rental property! It’s gone up in value by 100% in the last ten years! You own tax on that gain!”. But you still only have one house, you really haven’t gotten anything else out of it, other than the rent which they are already taxing.

What’s coming folks, is a huge hyper-inflationary event. Sure, it will only be reported as 2% per year, but the number of real inflation is closer to 5-8%, and they intend to tax that. That’s why the rich don’t sell their income properties. Its better to pay the taxes you owe on income than let inflation put your property, which is still the same property, into capital gains. Unless there is a bubble of course. Sometimes it gets so weird that you should sell and pay the capital gains tax.

Remember folks, about half of what’s happening to your asset’s value is plan old inflation, caused by the government. Paying taxes on government caused inflation seems like a raw deal.

#94 NoName on 10.28.19 at 3:04 am

#77 Shawn Allen on 10.27.19 at 3:58 pm

Pay to Spew Carbon

#75 NoName on 10.27.19 at 3:47 pm
#73 Shawn Allen on 10.27.19 at 3:29 pm
Climate Change Deniers who advocate no action

Maybe review Pascal’s wager?

https://en.wikipedia.org/wiki/Pascal%27s_wager

Do tell us how is that vegan diet of yours coming along. Any recepies to share?

*************************
Not sure your point. I advocate the right to emit carbon but am willing to pay a tax to do so which the government should use to offset carbon consumption. I wish to compensate the world for my meat eating and gas guzzling. It’s only fair. Money can help to lower overall carbon emissions.

I also may choose to take certain actions to reduce my carbon emissions. Vegan diet will not be part of that however.

—-

I like your replay, especially part about vegan diet!

I fail to see how tax will offset your carbon emissions connection there, it might force you to modify you behavior, but assuming that you won’t run out of the money there is absolutely no have no incentive to change.

There is a dude flying horses around world telling everyone about how we have to act on climate change. And I fund that funny.

As for that filosofer dude, he should know that book is written just to make people docile and to buy candle or two every once in a while.

But is all about science now days anyways. ;)

#95 Victor V on 10.28.19 at 7:12 am

47% of Canadians plan to borrow to cover basic costs, survey shows

https://www.bnnbloomberg.ca/47-of-canadians-plan-to-borrow-to-cover-basic-costs-survey-shows-1.1338497

#96 phil on 10.28.19 at 7:42 am

“ Selling now and paying on 50% to avoid selling later at 75% is a strategy. It’s called ‘insurance.’”
———————————————
I’m assuming that this also refers to any other capital gain related type of investment, like a financial (stocks) one. If this goes through, I can only see it adding to any rational why a person would tend to put all their eggs in one (capital gain free) basket like their own house.

Of course not. Financial portfolios pay you to own them in the form of tax-efficient cash flow, not just unrealized capital gains. Residential real estate does not pay. It costs. – Garth

#97 BipartisanBill on 10.28.19 at 7:49 am

Don’t kid yourselves, governments can and have implemented legislative changes not just immediately but RETROACTIVELY.

An example is when the liberals won the Ontario election in the early 2000’s, they retroactively clawed back a private school tax credit that the conservatives had implemented the year before.

It was a non refundable tax credit of 10 or 15% towards towards the cost of your child’s private education. Many people had already place their children in private schools based on that tax credit. The liberals stripped it away, leaving some with the inability to make the ends meet without the tax credit. In the end, it actually cost taxpayers more as the public system received a small army of children from the private schools.

But all part of the grand scheme, how can we indoctrinate your children outside the walls we control?

On a side note, alone against his opposition, against his administration and against his allies, Trump does not seem to be able to fulfill his campaign commitments. And the House of Representatives launched an impeachment procedure against him because he is fighting against the corruption of the democrats/Clinton clan.

The US President and office is really just a facade, simply a toy of the invisible actor called the Deep State. Canada’s liberals have bowed to the same actor. Trump is the first President who is not playing to their game, hence all the backlash.

The West is being undressed of it’s liberties and freedoms and most people are too blind to even see it.

#98 Raging Ranter on 10.28.19 at 7:58 am

I’d support a 75% inclusion rate for capital gains IF they also allowed the ACB to be adjusted for inflation to eliminate the tax on phantom income. Of course they won’t do that, because said increase will be all about revenue, not about removing distortions from the tax system.

#99 crowdedelevatorfartz on 10.28.19 at 8:04 am

@#88 dragonslayer
“So you privatize it and that means you disband a local BC company employing >5000 people. The profits then get sent down south to large US corporations.”
++++

Sigh.
I’m pretty sure that if disbanding ICBC and tossing 5000 govt workers on the dole went to a referendum ….
I know which way the MILLIONS of taxpayers being fleeced by ICBC’s exorbitant rates would vote.

ICBC was created to stop the private insurance sector from gouging consumers…..it now gone full circle.
We pay , by far, the highest car insurance rates in Canada.

Nah.
Time to take that cash cow away from incompetent govt drecks ( NDP OR Liberal) and send it back to the private sector where it belongs.
Not to worry.
Its becoming a political hot potato that neither side wants to touch so….give ICBC enough rope and it will hang itself. :)

#100 Tater on 10.28.19 at 8:05 am

#10 JohnnyAB on 10.27.19 at 4:36 pm
As an immigrant, I thank Canada for giving me the opportunity to come here and for giving me the citizenship. I truly appreciate it. But after paying more than 350K in taxes for the last 7 years, I think it’s time to move south where my skills are in great demand, where my salary would be at least 50% more and where the taxes I pay would be at least 10% less. Please keep this in mind that there are A LOT of people like me, and that will continue to happen. An impossible housing market + high taxes + lower wages will be the main causes the highly skilled specialists will be leaving this country.
—————————————————————-

If there’s a lot of you, a) by definition you’re not highly skilled and b) your chance of getting a green card is very low.

But keep blustering about how you’re going to leave.

And lol at the idea that Alberta has an impossible housing market.

#101 crowdedelevatorfartz on 10.28.19 at 8:09 am

@#94 Victor V
“47% of Canadians plan to borrow to cover basic costs, survey shows”
++++

I watch people pay for milk and bread with credit cards.
I watched a courier a few weeks ago deliver McDonald’s breakfasts to an apartment building 4 blocks from a McDonalds.
The most ridiculous thing he’s ever delivered?
A bag of Cookies.

Spend spend spend. Declare bankruptcy. Wipe out debt.
Spend spend spend. Repeat.

#102 Tater on 10.28.19 at 8:13 am

I seem to remember seeing a stat that showed only 3 billion is collected annually from capital gains. So, upside here is 1.5 billion in new revenue, which won’t be realized as people will simply invest less in Canada, or do it in tax advantaged ways (RRSP, TFSA and, of course, homes)

At some point the government will realize that the bottom 2 tax brackets need to go up, and the top 2 down, to broaden the tax base.

Back of the envelope, move the bottom brackets to 17% and 22.5% and the top brackets down to 27.5% and 30.5% and you’ll reap an extra 10 billion a year. The average person will see their taxes rise about $500 per year.

So does the average person think its fair for their bi-weekly tax bill to raise $19?

#103 thebarold on 10.28.19 at 8:17 am

Wasn’t the proposed capital gains on housing based on time owned? If Nate has held the property (assuming it’s his primary residence for some time to achieve a $2M gain then it should be ok. I thought the proposal was to reduce speculation – I see it with professional house flippers who essentially take their pay in capital gains on the house rather than fees for service which results in a lower effective tax rate.

CRA disallows capital gains treatment on flipper profits. Most are taxed fully as income. – Garth

#104 Remembrancer on 10.28.19 at 8:29 am

#96 BipartisanBill on 10.28.19 at 7:49 am

Usually a post referencing ‘the deep state’ is not terribly interesting, but this one is at least local content, not some lost tinfoil hat looking for a home…

Much like the auditor general & ON PCs IMHO rightfully calling out dubious accounting by the Libs in marking a pension obligation an asset, the backdating was a surprise but within same fiscal year n’est pas? Making it semi-retroactive but legit? Sorry the road to a 50% tuition tax credit got yanked, but this is a self-selective and elective option and if there’s no money for inner city breakfast programs how is there any for UCC want-a-bies who can’t handle the full ride?

https://www.theglobeandmail.com/news/national/liberals-deliver-body-blow-with-clawback-of-school-tax-credit/article774249/

#105 BillyBob on 10.28.19 at 8:35 am

#73 crowdedelevatorfartz on 10.27.19 at 9:34 pm
@#57 Billy Bob
“If anyone wants to see what unfettered public spending combined with rampant corruption can do to a country, please do come visit.

Yes, yes, I know, it can never happen in Canada, MF says so”

+++++

ahahahaha.

good one.

I hear Argentinians love their bbq’d beef ….

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

OMG both nights I was here I ate steaks as big as pizzas. Excellent bottles of Malbec for a couple of bucks. But there’s a reason it’s so cheap. The entire economy has collapsed.

The comparisons to Canada/Liberals/Trudeau would be more amusing if not so drearily predictable. It’s sad to see such a beautiful city as BA crumbling from within.

#106 Dharma Bum on 10.28.19 at 8:53 am

Some government we have.

An unqualified douchebag barely squeaks out a pathetic technical electoral vote win (popular vote loss) and contemplates hooking up with the ultimate sad sack dipper loser to form a coalition in order to rape the peons of society barely scratching out a living to grab more tax dollars to waste on utterly useless social programs.

Canadians should hang their heads in shame.

Disgusting.

#107 Dharma Bum on 10.28.19 at 9:20 am

#29 TurnerNation

The plan proposes around 550,000 square metres of residential space (7,500 condo and rental units) and nearly 100,000 metres of commercial, retail, entertainment and restaurant space over the 11 hectare lot.
——————————————————————-

What an incredibly shallow and vacuous life Torontonians lead. Just what the GTA needs: more space for “entertainment” and “restaurants”.

Hahahaha! Yah, so we can all wander around aimlessly seeking purpose and meaning for our pitifully insignificant lives after spending 8 or more hours a day toiling in worthless, inconsequential, underpaid, soul sucking, morale crushing, monotonous, dreary, stressful, mind numbing wage-slave jobs.

I’m sure the new space will be chock full of really super
exciting and titillatingly creative culinary enterprises like Starbucks, Tim Hortons, McDonalds, Pizza Pizza, Boston Pizza, Burger King, Wendy’s, Cineplex, Subway, The Keg, KFC, Taco Bell, Beaver Tails, Cora, JOEY, Kelsey’s, Earl’s, and Second Cup.

What an utter yawn fest.

#108 Tony on 10.28.19 at 9:29 am

Re: #3 Shawn Allen on 10.27.19 at 4:09 pm

I hope you’re right if not moving outside of Canada would be the solution. If the capital gains rate is hiked Canada would lose more money in income tax from the people leaving than they’d gain in implementing the tax.

#109 Tony on 10.28.19 at 9:44 am

Nate you should have put all the properties in one name not joint owned. That way you could sell everything to the wife or the wife could sell everything to you thus avoiding the rise in capital gains tax if its implemented. As it stands maybe a son or daughter over the age of 18 could be used if they stand to inherit the properties eventually.

#110 IHCTD9 on 10.28.19 at 9:58 am

#88 Dragonslayer on 10.28.19 at 1:33 am
#72- crowdedelevatorfartz

Sigh. So many misconceptions.
————

Fartz pays 2400.00/yr with ICBC

I pay 650.00/yr in Ontario (private insurance)

We are both of similar age, with near perfect records, and both drive pickups.

ICBC has come off the rails and will not get fixed. When have you heard of government fixing problems related to excessive costs?

I have had excellent experiences with the private Ins CO’s here in Ontario, none of the scary things you say happen actually do for the most part.

ICBC however, does scary things every year, to every customer. They send them an invoice…

#111 BipartisanBill on 10.28.19 at 10:09 am

#103 Remembrancer on 10.28.19 at 8:29 am

the intent of this example was not a grumble about the loss of this particular credit, but an example to reveal that gov’ts can make tax changes not only effective immediate but retroactively.

But if you want to delve further on the fairness, what is your take on this example? You hire an uber and are promised a 15% discount. Half way through the ride you are advised the discount expired while you were in the cab. Pay up. Ah, Ah, no complaining, you elected to take the uber. And look at all the people who have to walk.

#112 Quintelian on 10.28.19 at 10:26 am

Capital gains should be based at a much lower rate if invested in industries that create jobs and, or add to the innovation and technology portfolio of the country.

Capital gains that accrues to properties that have increased value without improvement is simply inflation resulting from speculation which should be taxed at 100%

#113 Jenny Wang on 10.28.19 at 10:35 am

#104 BB. Oh yes, the “Parilla Argentina”. A rib eye steak so big and juicy it falls over the edges of s turkey platter sized plate. Under $5 bucks with fries. Nothing like it except for Texas, where big steaks are the norm. Giant steaks at Kroger for under $5 bucks a piece bought in a family pack of three. Trudeau wants you to starve and crawl. Get out of Canada . It’s a big world.

#114 Robert Ash on 10.28.19 at 10:35 am

The Media, and our Education system, seem to be exerting a significant influence on our young folks, and thier interests, and decision making. If you read, some of the comments, personal accountability is not at the fore front of the conversation. It is sad to me to see this type of Independent, and Entrepenurial and go get em… attitude deminished, with poor policy. There certainly seems, to be a sentiment, that Father Knows best…scary to me… My Niece said to me, with a little vitriol, that “It’s you Boomers, who have caused many of the Problems”… Nice to see this type of Politics. We have not seen this type of Identity Politics in years, and I had hoped it had a limited presence… I think the Internet has also caused a lot of angst, as more folks can offer opinions… maybe better to lay low, or leave. I hate sounding like a Negative person, but I do live out West, and there is a bit of a disparity here, in this region. Economically.

#115 Shawn Allen on 10.28.19 at 10:41 am

Using Credit Card for Groceries!

#100 crowdedelevatorfartz on 10.28.19 at 8:09 am
@#94 Victor V
“47% of Canadians plan to borrow to cover basic costs, survey shows”
++++

I watch people pay for milk and bread with credit cards.

****************************
Come on, the use of credit cards for tiny purchases is proof of nothing.

Yes of course many people use credit cards for necessities and pay high interest. When the kids are hungry you do what you have to do.

But, way over half of credit card dollar use is paid off monthly. These people use credit cards as a payment card.

They get at least 1% back in rewards. Often 2% at grocery store. The merchants pay for what they lose in credit card fees by increasing prices to everyone.

Why use cash or a debit card when you can get 1 to 2% back as a reward?

The outrage here is that the competition bureau allows monopolistic credit card companies to impose unregulated and high fees on merchants costing everyone more. Tapeworm.

#116 Remembrancer on 10.28.19 at 11:15 am

Using Credit Card for Groceries!

#100 crowdedelevatorfartz on 10.28.19 at 8:09 am
@#94 Victor V

#113 Shawn Allen on 10.28.19 at 10:41 am
————————————————–
Yep paying bills with a credit card and not being able to pay your credit card bill are two separate things…

Those transaction / merchant fees are already baked in, so virtue signaling with cash isn’t helping anyone…

#117 yvr_lurker on 10.28.19 at 11:27 am

#88 Dragonslayer

———————-
You and I agree with the view on ICBC. This would be my fear with private insurance; when the time comes to pay up they find every excuse not to pay. I have little faith that the low-cost private insurer would not seek every avenue to avoid paying legitimate claims. Has anybody dealt with SunLife long-term disability claims? Had a friend at work given the complete run-around. Go look up the reviews on that company on yelp. Dismal 1/5 throughout the entire board.

That being said, ICBC does have to contain costs. One key problem is the rapid escalation of the costs of litigation. Specialty law firms have sprung up in recent years to litigate the smallest of crashes (I have first-hand experience with seeing the bullshit associated with this). Whatever is needed to reasonably bring these costs down should be pursued.

#118 Ponzius Pilatus on 10.28.19 at 11:29 am

#109 IHCTD9 on 10.28.19 at 9:58 am
#88 Dragonslayer on 10.28.19 at 1:33 am
#72- crowdedelevatorfartz

Sigh. So many misconceptions.
————

Fartz pays 2400.00/yr with ICBC

I pay 650.00/yr in Ontario (private insurance)

We are both of similar age, with near perfect records, and both drive pickups.

ICBC has come off the rails and will not get fixed. When have you heard of government fixing problems related to excessive costs?

I have had excellent experiences with the private Ins CO’s here in Ontario, none of the scary things you say happen actually do for the most part.
—————
IHTC
Here’s the deal:
Attach a copy of your Insurance bill on your next post.
So can see and weep. Simple.
BTW, did you watch Mountain Men?

#119 Eks dee Siple on 10.28.19 at 11:33 am

Hey BillieBoob: Kirchner is Versace of Italian fame. Same hot chick and spouse of the actor playing the Pope. That’s why she’s still really always in power. The news is fake my friend, and you’ve been duped.

#120 Yukon Elvis on 10.28.19 at 12:11 pm

MONTREAL ― A Toronto-based investment research firm has pinpointed what it sees as the key risk to Canada’s housing market: Money-losing investor-owners.
In an informal poll of its clientele earlier this month, Veritas found that only half of those who own real estate as an investment are cash-flow positive, earning more money than the property costs them.
About 18 per cent are breaking even, while 33 per cent said they are losing money on their investments. Presumably, they are counting on rising house prices to turn a profit; the Veritas survey showed 84 per cent of investors don’t plan on selling for now.

https://www.huffingtonpost.ca/entry/condo-investors-losing-money_ca_5db46899e4b006d4916f8837?utm_hp_ref=ca-business

#121 Jesse on 10.28.19 at 12:21 pm

How do the Libs expect Canada to compete with the US if they keep scaring away capital investment?

#122 not 1st on 10.28.19 at 12:22 pm

Funny Garth hasn’t pointed this out already. Tax on CG is actually a tax on inflation and speculation which the govt creates with fiscal policy in the name of fake growth.

Not only do they make life unaffordable for you, they tax the other end as well. You cant make this stuff up.

basically we have all been part of the new home buyers equity plan for the past 25 yrs. Just didn’t know it.

And yes that includes equities as well, because they have a speculation and bubble components as well.

Sick system. Hamster on the wheel is better off.

#123 Don Ibane on 10.28.19 at 1:06 pm

The biggest ripoff of all is how they reduced interest rates to peanuts. GIC’s and other fixed income was in the 8-9% compared to 2.5% to 3.25% today.

This destroyed the whole point of compound interest in an RRSP for over 20-30 years now. I calculated that every $50,000 in RRSP is now worth $281,000 less today, $150,000 versus $431,000.

Talk about being ripped off. Now, what is left is higher taxes, capital gains, carbon taxes, other consumption taxes, fees etc, from all governments. When is teh limit, bankruptcy of everyone.

#124 Jon ON on 10.28.19 at 1:12 pm

#27 AlbertaGuy in AB on 10.27.19 at 5:29 pm
Someone said “Time to prep”…

– A nifty way to get funds out of our corp tax free

You aren’t getting funds out tax-free, you’re simply deferring taxes. If the corp sells the home, that chunk of corporate cash still has to be taxed personally on withdrawal from corp.

#125 Jon ON on 10.28.19 at 1:19 pm

#43 Curious on 10.27.19 at 6:44 pm

Look up ‘recapture’

#126 pt on 10.28.19 at 1:24 pm

Cue the NDP/Liberal social welfare spending

https://www.bnnbloomberg.ca/canadians-drowning-in-debt-as-47-struggle-to-cover-costs-mnp-1.1338497

#127 Sail Away on 10.28.19 at 1:53 pm

#27 AlbertaGuy in AB on 10.27.19 at 5:29 pm
Someone said “Time to prep”…

Lets say you have retained earnings in your CCPC and you also own a primary residence personally. Why not sell the PR to your corp at assessed/market value and then lease it back on long term lease?

– A nifty way to get funds out of our corp tax free

————————————

I wouldn’t do this for a couple of reasons:

1. It complicates corp logistics, especially if the corp is taking out a mortgage to do it
2. The home becomes a corp asset, and at risk if sued
3. I don’t see any actual tax savings, similar to JonON’s comment

#128 kommykim on 10.28.19 at 1:56 pm

RE:#8 Shawn Allen on 10.27.19 at 4:30 pm
Capital Gains inclusion rate

If I recall correctly there was a time when the rate was calculated as 0% for gains prior to “Valuation Day” circa 1971, then I believe 50% for gains up to another date (1990) and 75% for gains past that date.

***********************
I might be totally wrong on that.

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

I think what you are referring to is how to use capital losses carried forward from those years when the inclusion rate was different. I believe the capital gains you must pay are only triggered when you sell and are payable at the current rate at the time of sale.

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-127-capital-gains/you-calculate-your-capital-gain-loss/inclusion-rates-previous-years.html

#129 Sail Away on 10.28.19 at 1:56 pm

#119 Jesse on 10.28.19 at 12:21 pm

How do the Libs expect Canada to compete with the US if they keep scaring away capital investment

————————————-

You’re assuming they care. How invested is anyone in a temporary job?

#130 Shawn Allen on 10.28.19 at 2:29 pm

Virtue Signaling with Cash

#114 Remembrancer on 10.28.19 at 11:15 am responded:

Yep paying bills with a credit card and not being able to pay your credit card bill are two separate things…

Those transaction / merchant fees are already baked in, so virtue signaling with cash isn’t helping anyone…

************************
Far from virtue signaling I feel a bit odd paying with more than say $100 cash these days. Those around me, including the clerk, are probably more likely to think I am involved in something shady rather than am someone wealthy.

Paper cash is fast becoming obsolete.

#131 jess on 10.28.19 at 2:44 pm

taxpayers lost billions of dollars

A German Tax Case Is Putting the Entire Finance Industry on Trial -dividends that resulted in more than 400 million euros ($443 million) in tax losses.

Banker Calls Out Barclays, ICAP Among Players in Cum-Ex Scandal
https://www.bloomberg.com/news/articles/2019-09-18/london-banker-expresses-regret-for-role-in-german-tax-scandal
https://www.icap.com/who-we-are.aspx

The cum-ex scheme gaining notoriety in recent years, concerns an aggressive form of dividend arbitrage employed in Germany and various other EU-countries.

The cum-ex scandal allegedly started in 2001 and was first discovered in Germany in 2012.
http://www.europarl.europa.eu/cmsdata/158435/2018-11-26%20-%20Information%20paper%20on%20Cum-ex%20-%20Cum-cum.pdf

Merrill Lynch Hid Profits From Cum-Ex Deals, Ex-Trader Tells Court
By Karin Matussek
October 2, 2019, 9:20 AM EDT Updated on October 2, 2019, 12:40 PM EDT

Banks acting as prime brokers got fixed share, Darren T. says
Money was hidden as service fees, former trader tells judges
https://www.bloomberg.com/news/articles/2019-10-02/merrill-lynch-hid-cum-ex-profits-ex-trader-tells-court

#132 Sandy Cantor on 10.28.19 at 3:28 pm

My solution to the post about 40% of adults in Canada do not pay any income taxes but can vote is simple.

If you pay at least $5,000 a year in income taxes annually you get to vote and your vote is worth 3 votes. If you pay no income taxes, your vote is worth 1. This way contributing to the country actually means something.

#133 Linda on 10.28.19 at 3:56 pm

#47 ‘Treasure’ – given the reported stats – half of Canadians have nothing saved for retirement; mortgage & HELOC debt is ‘exploding’ in the plus 65 age cohort, increased longevity & the fact that a high percentage of Boomers wealth is apparently due to property ownership. So the wealth is not accessible unless sold or unless the equity is sucked off via HELOC or reverse mortgage. Anyone from a younger generation who expects an inheritance is likely indulging in some product from the local weed emporium. Yes, some wealth will eventually be transferred but I doubt it will be anywhere near the amounts dreamed of by most who are counting on an inheritance. Given recent taxation musing by various levels of government what may be inherited by most is a whopping tax bill.

#134 Dave Thames on 10.28.19 at 4:01 pm

The comment about how interest rates that have been cut to the bone is true but what is even more true is that it actually hurts the small guy, lower middle income person, small investor the most. Here is why and how it does. Those that can save $10,000, $15,000 or more per year of their income will have alot more for retirement than say someone able to save the maximum of TFSA $6,000 per year.

The $6,000 per year saved at 4% versus 8% rates over 35 years is huge in lost compound interest. It is a $594,000 less in a TFSA or RRSP. Now the TFSA has helped a little for this loss on an after income tax basis but this is still not close to this huge loss.

This is why i see the high tax, socialism policies of the NDP, Liberals, Greens as an attack of self sufficiency and more independence is what they don’t want.

They want more dependence and reliance on the welfare state, government and make people believe it is too hard to make their own decisions for their own good and their family’s good.

#135 Jack Manning on 10.28.19 at 7:29 pm

Linda, it already is highly taxed inherited money, capital gains taxes on cottage, other secondary properties, stocks, mutual funds, Equity and other ETF’s, REIT’s etc.
Huge tax bill up to 55% on RRSP’s, RRIF’s, RESP’s, LIF’s, LRIF’s etc. Now, it is looking like a very high probbaly primary residences are under attack too with capital gains taxes. This all can add up to a loss of $400,000 to $800,000 in total estate on say $1.5 million.