Entries from January 2022 ↓

Shifting gears

Enough about truckers. Enough angst. Enough protest. The utter pointlessness of the last few days is lamentable. Nobody’s life was made better for the confusion, partying and antisocial belligerent honkfest in Ottawa.

Today resolve to do something positive. For example, there’s but a single, short month left to mine the greatest tax shelter in Canadian history. So if you’re an indie dude with some contracts and a big belching Peterbilt who really wants to stick it to The Man (without going to jail or having a CBC mic up your nose) here’s your chance. So, gear down, pull over, shut up and focus.

Instead of railing against the government, work to make your own life and family finances better. Slash taxes. Work towards a secure future. Especially if you lack one of those public sector defined benefit pensions (like most working Canadians and, uh, MPs). In exactly four weeks the deadline for moving money into a registered account and deducting it from your working income for 2021 will be gone. What a shame that will be.

The rules are clear and hugely to your benefit. Almost a fifth (18%) of earnings in any one year can be deposited into a registered retirement account and with exactly that same amount erased from the taxable amount on your April 30th return. This is a gift. And not a fair one – like the TFSA, which everybody gets equally. Instead, the more earned, the less tax payable. Those making a lot (over $250,000, for example) end up paying at least ten thousand dollars less a year simply by doing this.

The facts are simple. Contribute by March 1 and deduct the amount from 2021 income. The maximum is $27,830 for last year and just over $29,000 for 2022. Actual cash is not needed, since a contribution in kind means assets already owned can be used for the contribution. Borrow to invest. The interest isn’t deductible, but it still makes sense when the refund can be used to repay a hunk of the loan. Of course, you can plop money into a spousal plan, get the full deduction from your income but the funds become his/her props after three years. If the squeeze earns less, the money comes out with reduced tax.

On the notice of assessment (NOA) the revenue people send you annually the available RRSP room is listed. It builds up when not utilized. It never goes away. So it may make sense to save it up in early-career, lower-income years to use as a tax-blaster in later life. Or if you commute a pension upon retirement and need RRSP room to lower the bite on a taxable portion. Or maybe sell a rental property where capital gains can be offset by using room.

Also know RRSPs can be raided to buy s house or go back to school. No tax on withdrawals but the funds must be paid back into the plan over time. Of course if you take a down payment, dump it into a RRSP for 60 days then take it out under the HBP, there’s a tax refund. Nice to cover closing costs, courtesy of the feds. Also remember RRSP contributions made routinely throughout the year can result in an employer reducing withholding tax. To pull that off, use form 1213. It’s like a tax refund every pay period. Cool.

The biggest advantage of this shelter (like the TFSA) is asset growth free of tax. The range of things possible to own is huge, including ETFs, stocks, bonds, options or even a mortgage on your house (that one is complicated, but interesting). No tax on interest, dividends or capital gains. But all withdrawals from an RRSP are taxable – so try to make them in a low-income year, like a layoff, sabbatical, mat leave or incarceration. As mentioned, withdrawals from a spousal plan are at your partner’s tax rate (not yours) and he/she can still contribute to his/her own plan.

Ultimately an RRSP morphs in a RRIF so after 71 a small amount must be removed and added to annual taxable income. As you wither, the percentage increases. That can affect OAS clawback, and push people with DB pensions into a higher bracket. If that’s you, spend years plumping up your TFSA instead since income flowing from that is not counted by the CRA with zero impact on government pogey.

Let’s summarize. Save some money, invest it for tax-free growth, reduce your taxable income and pay less to Justin/Chrystia. Or take assets you already have and use them. Or borrow the dough and let a refund pay part of it back. Or invest through a spouse who earns less and still reduce your taxes. Or use RRSP room to offset tax on an annual bonus, or capital gain or pension lump sum. Or if you’re an independent trucker with no pension, this allows faster growth of what you’ve got plus lower overhead now and the ability in retirement to control your own income and taxes.

Or, you can complain about Canada and call everyone else a sheep. B-a-a-a-a-d move.

About the picture: “Here’s our newest member of the family, Scarlett,” writes Jenn.  “She is four months old and a Cavalier King Charles Spaniel. I met her breeder 3 years ago at a horse show and waited a long time for her. She joins my Golden x rescue and Hound x as part of the pack. We paid a pre-Covid price for her and I have been to the breeder’s house 3 times, met the puppy’s  father and mother and the rest of the puppies. Your blog has taught me more than any other source about personal finance and that’s saying a lot given that I have read well over 50 books on the subject over the years. Thanks for all that you do.”


Now that the truckers and hangers-on have swarmed the capital and will soon dissipate in a cacophony of air horns, profanity and endorsements from Donald Trump, we should keep a few things in perspective. Like, numbers. There were not 50,000 trucks. Maybe it was a hundred, Or three hundred. Enough to paralyze the core of a city, for sure.

Ottawa cops say as many as 10,000 people tromped on Parliament Hill. That’s a lot. Impressive. But routinely 100,000 come to the same spot to celebrate Canada Day. And they don’t need a questionable $7 million GoFundMe campaign to do so.

Big crowds always attract morons. The BLM and January 6 people found that out. This was no exception. Some truckers parked on the Tomb of the Unknown Soldier, and their vehicles were ordered removed. Then others danced atop the tomb. A vid was widely published. How ironic that their freedom to be in Ottawa protesting the government was paid for by the blood and death of that soldier.

Some idiots turned the statue of Terry Fox into an anti-vax, anti-medicine monument. They stuck a placard in his arms, a ball cap on his head and an inverted Canadian flag in his hand. More irony. Fox is a hero for his crusade against cancer. Lately those afraid of vaccination have helped swell hospitalizations and cancel cancer treatments for so many people.

And hundreds, perhaps thousands (as appeared on social media) stormed the Rideau Centre, Ottawa’s big downtown mall, refusing to wear masks. That was an illegal act, thus the mall was forced to close. Small shops, takeouts, restaurants and large stores were shuttered. Brave people who work through the pandemic plus entrepreneurs trying to stay afloat were impacted. Ironic that independent truckers were so willing to trash the income of others.

Meanwhile “F*ck Trudeau” flags were everywhere, underscoring the intelligence level and civility of the crowd. There were some Confederate rebel flags, also. Even a swastika or two. Like I said, there is no shortage of morons. Many of them were provided by the Max Bernier movement. Others by the Maverick Party. The leaders of both are former Stephen Harper confidants and insiders. It’s a sad and confused time for Conservatives.

The Freedom Convoy will accomplish much. It will deepen and intensify the rift on the political right. As such, it’ll repel many centrist Canadians, 90% of whom think vaccines are the best idea to stop people from dying and overwhelming hospitals. That should help elect more Liberals. The convoy will vex Erin O’Toole. The tomb dancing and Fox desecration are lasting images. He was on the wrong side of this issue. Not radical enough for the fringe. Too rad for the rest.

Are you tired of the pandemic? Yeah, me too. Everyone is. Two years later Omicron was the last straw. So many new infections that governments stopped counting or seriously testing. One vaccine dose turned into two, then three. My mask not only bends my luxurious moustache, but fogs my glasses on frosty days. Hate it. Nobody likes this stuff. And think of all the people whose elective surgeries were scratched or disease treatments suspended. Getting a vax QR code is stressful. Airplanes are trouble. The subway seems dangerous. Remote learning sucks. And your dog has to be surrendered in the vet’s parking lot. More stress. But that pales in contrast to those who have had to lock up their restaurants three times and failed shopkeepers whose dreams are now dashed.

And let’s not forget the thirty thousand dead among us. Every time I hear a cowardly and selfish protestor diminish deaths because the victims were old folks – ‘who would die anyway’ – it makes me wonder about society.

But then I remember. These are not mainstream people. Over 85% of all truckers are vaccinated. In most major cities 90% of citizens are the same. On the streets of Toronto, Halifax, Ottawa or Vancouver almost everyone is masked to protect themselves, and each other. Most people put distance between them, respect the rules and understand that nurses, public health officials, doctors, paramedics and politicians have actually been doing their best.

We’re all pandemic-whacked. Yearning for the spring and more freedom from both risk and restrictions. The collective wisdom is that we’ll get to normal faster if we yield now. A little longer. It’s close.

Over the last few days I’ve taken flak for dissing the ‘freedom’ fighters, as I have consistently stated that the only path out of this epoch is through science and medicine. Not bullying and big machines. There will always be people who believe their interests supercede yours. They place their rights above those of society. They use vile language, intimidation, noise and antisocial acts to gain attention. It’s not about liberty. It’s about them. They lack your patience and trust.

I’ve run for office. Been elected. Done my best. Nobody I have ever met – even those I disagreed with mightily – went into public life to make things worse. The opposite. The government is not our enemy. Politicians are citizens who stepped up to try. None of them, like you, asked for a pandemic. And none deserve vulgarity, profanity or threats.

Freedom does not travel on a Kenworth or a Peterbilt. It comes with respect.

Go home. Give thanks you live in a country this open and forgiving.