Love money

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  By Guest Blogger Sinan Terzioglu
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Despite inflation at the highest level in decades and rising interest rates, the CRA prescribed rate on loans to family members remains set at 1% until at least June 30, 2022. For partners earning very different incomes, a spousal loan may be worth considering as it could reduce a households total taxes and save a significant amount over the long term.  The strategy involves a higher income-earning spouse lending money to a lower income-earning spouse with the goal of the investment income being taxed at the lower-income spouse’s tax bracket.

How to implement the strategy

Susan and John just got married. She’s an executive earning over $250,000 per year and John is employed by the government earning $75,000.  Susan has accumulated $1 million in a non-registered investment account in her name and since she is in a higher tax bracket wonders if a spousal loan would make sense for them.

To establish a spousal loan strategy a promissory note must be drawn up clearly stating the amount of the loan, interest rate, beginning date, interest payment due dates and be signed by both Susan and John. Hiring a lawyer to look over the loan is not necessary but would help ensure all the terms are clearly stated and avoid any potential issues with the CRA. All investment income and interest payments would need to be clearly tracked and when interest payments are made from John to Susan they should come from an account that belongs only to John and paid to an account that belongs only to Susan.

Once a spousal loan is set up it can stay in place indefinitely at the agreed upon interest rate even if the CRA increases the prescribed rate in the future. That rate will very likely increase at some point so right now is an ideal time to establish the spousal loan strategy for those that can benefit from it over the long term.

In order for there to be a net benefit the annual investment income generated by the loaned funds must exceed the annual interest rate charged on the loan. The interest payment made by John would be tax-deductible and must be paid at least annually by no later than January 30 of the following year. The interest on the loan received by Susan must be included in her income in the year she receives it.

How the numbers work

Let’s assume two scenarios:

Scenario 1:  Susan continues to invest her $1 million in a non-registered account in her name only and earn a total return of 6% with $25,000 coming from interest income.  At her marginal rate of 53.53% Susan would have to pay $13,382.50 in tax so her net investment income would be $11,617.50.

Scenario 2: Susan and John agree to set up a spousal loan.  Susan lends $1 million to John at the CRA’s prescribed rate of 1% and John invests the funds in the same way as scenario 1 so he earns $25,000 interest income. Susan would receive $10,000 in interest on the loan from John ($1 million x 1%) and her taxes payable on the interest received would be $5,353 ($10,000 x 53.53%). Her net income from the interest received would be $4,647.  John would be able to deduct the $10,000 interest cost of the loan so his taxable investment income would be $15,000.  Since John’s marginal tax rate is 29.65% his total taxes payable on the investment income would be $4,447.50 and result in a net investment income of $10,552.50.

By implementing the spousal loan strategy Susan and John would together generate total net investment income of $15,199.50 ($4,647 net interest income for Susan + $10,552.50 net investment income for John) resulting in a tax savings of $3,582 for the couple.

Does a spousal loan make sense for you and your partner?

For most the spousal loan strategy should only be considered after tax advantaged accounts like TFSAs, RRSPs/Spousal RRSPs and RESPs have been maxed, and high interest debts paid. Another consideration is how long you expect there to be a big income disparity between paerners because the strategy may not be worth all the effort for just a couple of years especially if you’re planning to retire in the near future.

Holding assets in a non-registered account in only one partner’s name means if the account holder passes away the loan would be treated like any other outstanding loan in the estate. But if the assets were held in a joint non-registered account, the assets would not have to go through probate and automatically become the property of the surviving partner. If the lending partner dies while the loan is in place, it can be forgiven in the Will of the deceased but this may not be as easy if there are multiple beneficiaries and other outstanding debts.

The types of investments held in the account must be taken into consideration with the couple’s goals and overall asset allocation because not all types of income are taxed equally.  If the borrowed funds are used to invest in only growth assets generating no distributions, there would be no income generated to cover the interest payment.  Also, since the loan is a demand loan, a breakdown in the relationship could force an unwinding of the investment strategy at an inopportune time.

Summary

A spousal loan can be a very beneficial tax savings strategy for some households but careful consideration must be given to potential complications and whether it makes sense for your family without impacting the overall asset allocation of your portfolio because not all types of investment income are taxed the same way.  It’s important to ensure your overall portfolio remains balanced and diversified and you do not over allocate to certain investments because they provide a larger tax efficient income to benefit from the spousal loan strategy.  While saving just a few thousand dollars may not seem like it is worth the effort over long periods of time the savings can add up to a significant amount be used to contribute to TFSAs and RESPs further compounding the tax benefits for your family.

Sinan Terzioglu, CFA, CIM, is a financial advisor with Turner Investments, Private Client Group, Raymond James Ltd.  He served as vice-president of RBC Capital markets in New York City and VP with Credit Suisse in Toronto.

 

55 comments ↓

#1 THE DANDADA on 04.15.22 at 12:23 pm

Now that’s information we can BANK on!!

#2 Dr V on 04.15.22 at 12:47 pm

Gov’t job?
Gold plated pension?
Wife making $250k??

I want the John deal.

Maybe I’ll get a T-shirt that says “I want to be a John”

#3 Capital on 04.15.22 at 12:55 pm

Can you lend appreciated securities to your spouse to effect this? Or do you need to trigger a capital gain first?

I assume its the latter which means I can’t really make this worthwhile for me… but it seems interesting.

#4 Bdwy on 04.15.22 at 12:57 pm

I guess this is the right way. Never tried it.
My money is hers and hers mine. We have always simply moved the cash to the desired acct to invest. No issues with cra yet!

#5 Millennial Surrealist on 04.15.22 at 1:07 pm

What’s hers is hers and what’s mine is hers…. so not sure what this is all about.

#6 Quintilian on 04.15.22 at 1:18 pm

Spoken like a true numbers man Sinan, but I find the whole premise of your advice somewhat disturbing.

Here is a couple that benefits greatly from the environment created by the government which is supported by taxpayers, and yet striving to minimize their contribution to the public trough.

#7 WTF on 04.15.22 at 1:21 pm

Excellent strategy

Works great, been doing it probably 6-7 yrs. Subscribed At the 1% rate, it has helped reduce our taxes as indicated above. Didn’t need a lawyer to draw up the document, followed a template.

As advised, Keep records of the initial agreement and subsequent annual payments, very important!

Never been questioned by Rev Can.

#8 TurnerNation on 04.15.22 at 1:21 pm

#134 Shawn on 04.13.22 at 9:12 pm

^A publically traded AB liquor retailer. Symbol RUM. Penny stock.
Roll up the Rum to win?


— This must be kept going in our mind. Fear. Even Blog TO acknowledges the sales job.
In Kanada Mayors give blanket medical advice to all!

https://www.blogto.com/city/2022/04/john-tory-tests-positive-covid-19-public-appearances/
“The mayor is said to be feeling fine and isolating at home, and will be taking all his meetings virtually for the time being.
He has, of course, used his diagnosis as a chance to further push residents to get their third and even fourth doses of the vaccine if they are eligible to do so.”

— Life in Kanada. So close to normal! Comrade obey your Prefecture’s Block Captain. In the People’s Republic of Fizer. Our rulers need us fearful at all times.

“Ottawa Public Health encouraging people to limit holiday gatherings”
https://ottawacitizen.com/news/local-news/ottawa-public-health-encouraging-people-to-limit-holiday-gatherings

#9 Bdwy on 04.15.22 at 1:24 pm

Tough luck quint. They are playing by the rules. And paying for a dozen freeloaders with the tax they pay. Are you one?

#10 Ballingsford on 04.15.22 at 1:33 pm

I dont think I’ll ever need to use that strategy unless I meet up and have a loving relationship with Susan’s sister.

#11 Parksville Prankster on 04.15.22 at 1:38 pm

Love is the most natural, beautiful, amazing thing that money can buy.

#12 Sinan Terzioglu on 04.15.22 at 1:43 pm

#3 Capital – Can you lend appreciated securities to your spouse to effect this? Or do you need to trigger a capital gain first?

You cannot lend appreciated securities to your spouse so you would have to trigger gains in order to lend the funds – Sinan

#13 crossbordershopper on 04.15.22 at 1:49 pm

with a million bucks i can buy business that nets hundreds of thousands why are they exchanging money amongst themselves for a tax rate differential on the investments.
they should work together to make 300K a year on the million, not exchanging dinner bill.
Its april 15th, americans taxes are due and for many of them they pay a lot less than implementing stupid strategies like loaning your wife your own money. like really. like anyone who is married, is the lawn mower mine because i bought it, is the milk in the fridge hers because she does the shopping. So, yes you can do this, you can write up an agreement, and put it in the lower taxed spouse name, net of interest and taxes the FAMILY will be ahead. I am just saying there are simpler easier ways to make good money and not have all this to worry about.
I think canada is getting too complicated with nickels and dimes, the carbon tax rebates, alongside the GST cheques quarterly, the new home buyer plan , the tfsa. In the usa, there is nothing like this to worry about, simple straight lower taxes.

#14 Flop… on 04.15.22 at 1:57 pm

Yeah, this is all well and good, but I probably would have preferred if you had written an article publicly shaming Mrs Flop into giving me my TFSA money back, so I can buy another gas guzzler.

Guess I’m more into Tough Love…

M47BC

#15 Linda on 04.15.22 at 1:58 pm

The whole point of this advice is to minimize taxes paid via legal means. Cue the cries of outrage, but make sure that when expressing that outrage you have never benefitted from a tax break, government program or benefit paid for by tax revenues. If the outrage is due to the fact only those in high income brackets could benefit from said strategy, consider that there are all sorts of tax benefits that benefit select segments of the population. No children? Can’t get the CCB. Make too much income in retirement? OAS is clawed back. Not poor enough? Can’t qualify for GIS.

#16 Flop… on 04.15.22 at 2:10 pm

I wasn’t expecting any Easter presents after the landlord booked the yard guys to cut the grass earlier this morning and disturbed the neighborhood peace, but I just opened a brown envelope and for once it wasn’t asking for money.

This is a novelty for someone who has largely been self-employed since living in this great nation.

It’s only a thousand dollars returned after I transitioned to employee and gave the government too much in tax instalments last year.

It’s still probably less than someone with 4 kids gets by noon on a Monday…

M47BC

#17 Dr V on 04.15.22 at 2:12 pm

6 Q

“Here is a couple that benefits greatly from the environment created by the government which is supported by taxpayers, and yet striving to minimize their contribution to the public trough.”
———————————————–

I’m not sure what great benefits they get from govt other than the ones most other people do.

Without deductions, in BC this couple will pay over $100k in tax. So with John’s govt job, they are more than self supporting!

Quite a bit more than what you pay I suspect.

Happy Easter Q.

#18 Big Jim on 04.15.22 at 2:18 pm

Did this 10 years ago via a family trust. If you have children, you can loan capital to the trust – and allocate $18,500 per child (I believe this is a provincial rule) for the money to be used for education, training or activities. With three kids, it reduces my taxable income by $55K.

#19 Spelling countz on 04.15.22 at 2:19 pm

Sinan with a plan.

Quick. While Garth’s not looking … sneak into the WordPress administator console.

Click on Plugins and select the Add New option on the left-hand admin panel.

Search for WP Spell Check in the available search box.
Scroll down until you find the WP Spell Check plugin and click on the “Install Now” button and activate the plugin for use.

I knew you could do it.

(Of course, if you don’t have access to the admin console, then just send Garth a polite prompt.

————————————————————–
The strategy involves a higher income -arning spouse

#20 Diharv on 04.15.22 at 2:37 pm

What’s mine is ours and what’s hers is ours. We haven’t made any money yet in a non reg investment account having just set things up last year so this is moot at this point though I have to wonder that if the CRA has no interest or manpower in going after the big fish evaders, how are they going to patrol Mr and Mrs Joe Average for attribution rule violations? Seems complicated and cumbersome to bother with to me. Maybe for couples with six and seven figure discrepancies?

#21 Roncey on 04.15.22 at 2:38 pm

The spouse-free (a large and growing segment of the population) are tremendously disadvantaged by the various spouse-related tax minimizing strategies. It is dismaying that this inequity is disregarded by governments.

#22 Quintilian on 04.15.22 at 2:52 pm

“I’m not sure what great benefits they get from govt other than the ones most other people do.”

Government facilitates, at taxpayer’s expense, the construction of infrastructure and a host of other machinery that higher earners benefit disproportionately.

The Gov paid for most of my education which the lesser fortunate could not take advantage of is one example.

When shams such as the Olympics and FIFA, come to town, mostly supported by government, the super-rich make huge profits, but yeah, I know the waitresses get more tips when tourism is ramped up right?

Happy Easter Dr V

#23 Summertime on 04.15.22 at 2:56 pm

I have not seen any of these idiocies/petty tricks anywhere else and yet housing almost everywhere is much more affordable.

Spouse loans, gifts, tax efficiency etc.

#24 Shawn on 04.15.22 at 3:03 pm

Cross border says buy highly profitable business

#13 crossbordershopper on 04.15.22 at 1:49 pm
with a million bucks i can buy business that nets hundreds of thousands.

*****************
What sort of businesses do you have in mind? The couple in question both work full-time so it has to be a business that spits off as you said several hundred thousand per year and it only costs $1 million. Are you anticipating debt financing? (So a $2 million business maybe).

Genuinely curious.
P.S. have you actually done this adn if not why not?

P.P.S. Anyone want to buy a large Motel property in Cape Breton? About $3 to $3.5 million for 38 rooms, three cottages and five nearby houses. Large property. Includes a large busy restaurant. Mostly commercial trade. Year-round business. Older but well maintained. Serious.

#25 Flop... on 04.15.22 at 3:31 pm

#24 Shawn on 04.15.22 at 3:03 pm

P.P.S. Anyone want to buy a large Motel property in Cape Breton? About $3 to $3.5 million for 38 rooms, three cottages and five nearby houses. Large property. Includes a large busy restaurant. Mostly commercial trade. Year-round business. Older but well maintained. Serious

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

I should be able to clobber together some sort of West Coast consortium.

It’s been 20 years since I’ve been to Nova Scotia but I miss the place and the friendly people.

To keep costs down Uncle Crowdie will be head of maintenance.

Ponzie will be doing the books, but said he’s only in if we can change the name from The Clansman.

Ustabe will be head of the kitchen.

My job will probably be the same as on here.

Emotional Support Animal…

M47BC

#26 Jennifer on 04.15.22 at 3:37 pm

What Sinan is telling us, is what is available to do
“legally” when you have money and time.

So, for the rest of us , we should have priorities. By the way, that does NOT involve joining the rest of herd by
overpaying for your shelter. Have most Canadians lost their minds to think? Do just one simple act for your brains to start working. Stand in front of a house that is asking price of $1 million for example. Look at the house really closely. What do you see? A trashy house
that deserve a 1 million price tag? If you said yes, then go home and phone your doctor for appointment.
You no longer have a functional brain. You have other disorders. Is it fear that you are now having hard time to deal with.

Anyhow, for the rest of us renters, or people who bought years ago and did not join HELOC….

For average self controlled person there are things you can save taxes on.

I give you my family list. Both of us are retired and over 65 years old.

1. Pension income splitting
2. Disability tax credit
3. TFSA
4. Age amount
5. Pension income amount
6. Lower capital gains
7. Interest expense deductions ( to earn income)
8. Foreign tax credit
9. RRSP ( Hopefully reduce it by purchasing TFFHSA)
10.Other (gst, pst… if you qualify).

Now, come on! You have enough goodies also. Get going, and stop whining about the other ” Richer goodies that you cannot take advantage of”. Unless you want to open business…. then so far things are not too shabby. Mind you, our Governments deficits are growing, we shall have other things to worry about in the future.

#27 crowdedelevatorfartz on 04.15.22 at 3:50 pm

@#24 Shawn
“Anyone want to buy a large Motel property in Cape Breton? About $3 to $3.5 million for 38 rooms, three cottages and five nearby houses. Large property. Includes a large busy restaurant. Mostly commercial trade. Year-round business. Older but well maintained. Serious.”

+++
You’re advertising on the wrong blog.
Unfortunately no Canadians want to become Capers.
And Capers don’t want to become entrepreneurs while the Liberal govt of Buttz is handing out money like snowflakes in Winnipeg..
So.
Try advertising in Asia and or Eastern Europe in countries bordering the latest conflict.

There might be some takers that want to immigrate.
Serious.

#28 WTF on 04.15.22 at 4:28 pm

Hey Shawn, regarding housing and inflation, bit more info that I think helps clarify?

From Steve Punwasi on his Better Dwelling blog when asked if CPI includes housing?

“Sort of, but it might be the opposite from what people think. It factors mortgage financing costs, so as mortgage rates fall it lowers inflation even if home prices rise”.

#29 Shawn on 04.15.22 at 4:55 pm

CPI and Houses

#28 WTF on 04.15.22 at 4:28 pm
Hey Shawn, regarding housing and inflation, bit more info that I think helps clarify?

From Steve Punwasi on his Better Dwelling blog when asked if CPI includes housing?

“Sort of, but it might be the opposite from what people think. It factors mortgage financing costs, so as mortgage rates fall it lowers inflation even if home prices rise”.

*******************
Sounds like an incomplete characterization. Housing is weighted 31% in CPI. Explain that based on the above sentence.

I gave you links to the horses mouth data.

Again:

https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2018016-eng.htm

And to explain exactly how housing costs are in CPI and why they use the method they do see:

https://www150.statcan.gc.ca/n1/pub/62f0014m/62f0014m2017001-eng.htm

#30 Shawn on 04.15.22 at 5:02 pm

The Spousal RRSP

This is a huge savings for a one income couple.

Not my situation, but for big earners with stay-at-home spouses, it’s a big opportunity.

The spouse can get out $50k a year at a 25% marginal tax rate in Alberta and Ontario. Contributions probably got at least a 35% refund. mathematically, this beats the TFSA meaning it is negative tax on the RRSP growth. Simply put in enough to build up a $1 million spousal RRSP.

#31 WTF on 04.15.22 at 5:10 pm

If u r a hockey fan, This is gold

https://www.theplayerstribune.com/articles/letter-to-my-younger-self-mike-bossy

#32 Ponzius Pilatus on 04.15.22 at 5:24 pm

#11 Parksville Prankster on 04.15.22 at 1:38 pm
Love is the most natural, beautiful, amazing thing that money can buy.
————————-
Oops,
Love is the most natural, beautiful, amazing thing that money “can’t” buy.
The Beatles were right.

#33 SW on 04.15.22 at 6:01 pm

#27 crowdedelevatorfartz on 04.15.22 at 3:50 pm
“…Unfortunately no Canadians want to become Capers…”

Well, that’s just silly. I know quite a few Ontarians who just moved to NS, and three couples have moved to CB. And one of them was just boasting that trout season has just opened on the river at the foot of his many acre backyard…

Unless you’re saying Ontarians aren’t Canadians?

#34 Jack on 04.15.22 at 6:08 pm

The next time the TFSA will be gutted and interest expenses paid will be non deductible and many more tax preferences like dividend tax credit gutted too.

#35 Dr V on 04.15.22 at 6:08 pm

22 Q

“Government facilitates, at taxpayer’s expense, the
construction of infrastructure and a host of other
machinery that higher earners benefit disproportionately.”
————————————————-

This argument is highly convoluted at best. People in abject poverty may receive government assistance and still benefit from public transportation and a highway system that allows for efficient delivery of goods.

Poor people often have health issues and require more medical treatment as well. Tragically, they tend to die at an earlier age.

Unless homeless, they also benefit from the same potable water and electrical systems as wealthier people
do.

If you want to argue that richer people use some of
these systems more, then I will counter that they pay more in vehicle/fuel taxes, water and electrical bills,
property taxes, all paid for with dollars which have been more heavily taxed to start with.

“When shams such as the Olympics and FIFA, come to
town, mostly supported by government….”

I find this a valid argument, though costs are imbedded in so many goods and services, I feel the best approach is for an individual to consider where any money they provide directly to these events winds up. So I dont buy pro jerseys, but I pay for TV rights by subscribing to cable.

#36 Dr V on 04.15.22 at 6:18 pm

21 Roncey

“The spouse-free (a large and growing segment of the population) are tremendously disadvantaged by the various spouse-related tax minimizing strategies.”
————————————————-

This is true. But the main culprit isnt the rules that allow
this. Rather it is the progessive tax system.

#37 Dr V on 04.15.22 at 6:29 pm

22 Q

“The Gov paid for most of my education which the lesser
fortunate could not take advantage of is one example.”
—————————————-

How do you feel about RESPs? What I find ironic about them, is they most benefit those youngsters whose
parents were most likely to have saved anyways by
adding an additional government benefit.

Gotta be one of the worst ideas ever!

And mostly there to benefit the post-secondary industrial complex, and not the students.

So instead of RESPs, why not provide each child with “credits” that can be used for post-sec education or
training (no cash value, non-transferable) to a level of say 2 years college or tech/trade school. This way, everyone completing high school (or at least a certain level) has something they can start off with.

#38 Penny Henny on 04.15.22 at 6:30 pm

#31 WTF on 04.15.22 at 5:10 pm
If u r a hockey fan, This is gold

https://www.theplayerstribune.com/articles/letter-to-my-younger-self-mike-bossy
/////

Thanks for that!

#39 Graphics Girl on 04.15.22 at 7:27 pm

Why does the government have these plans that discriminated against single people?

#40 Nonplused on 04.15.22 at 7:40 pm

So now I hear tell that Trudeau is planning a “truck tax”. Something along the lines of up to $4,000 special tax on new trucks.

Now, if we assume that trucks are still gas hogs like in the old days truck owners are already paying through the nose with the double carbon taxes on fuel. But this idea is old school. Some of these new pickups are getting 30 mpg.

https://www.caranddriver.com/news/a29359403/2020-ram-1500-diesel-epa-fuel-economy/#:~:text=The%202020%20Ram%201500%20EcoDiesel,city%20and%2029%20mpg%20highway.

That’s certainly as good as a minivan, which isn’t proposed to be taxed!

Now there are some trucks that will never get 30 mpg, tow trucks, delivery trucks, big rigs, etc. But these are work trucks and slapping a $4,000 tax on them is just going to result in higher prices for all services that require a truck.

Also of note Alberta is about 10% of the population of Canada, but buys about 30% of the trucks. Why? Well, they are cool, but also for farming and oil patch work. So I think we can call this new tax the “farmer tax”. As if food wasn’t getting expensive enough. Somebody is going to have to pay that tax, and it ain’t going to be the farmer. Prices will rise. The carbon tax is going to do that too, because now you are talking about all the farm equipment as well.

It seems government cannot do anything without making matters worse, and the Trudeau government is an extreme example of that. It seems the man is incapable of thinking through consequences and has little to no self awareness. He just talks and he doesn’t care what he says.

So buy all the things. Especially a new truck if you can find one before the tax comes in.

#41 Nonplused on 04.15.22 at 8:00 pm

And of course while we are on the topic of Trudeau’s proposed “farmer tax” on new trucks, lets talk about food for a bit.

One thing that never seems to surprise me is how difficult a time many people have understanding scale, even if they can do math. I don’t know if the education system sucks that bad of if we have been habitualized in the grocery store age to just have no idea at all where our food comes from and what it takes to get it there.

For example, we know a large portion of the world’s wheat exports come from Russia and Ukraine. That looks to be a mess right now. The crops might not even get planted, at least in Ukraine. This means Africa is in deep doo-doo in about 3 months.

But yet if you go on the various social media, the solution seems obvious to many people: Eat more lentils because wheat isn’t good for you anyway. And maybe eggs. Ok, where are the lentils going to come from? Have we got some secret lentils farms somewhere growing huge amounts of lentils that have never been brought to market before? Did it ever cross your mind that the reason we don’t eat more lentils and instead eat wheat is because there was never enough lentils to begin with? Did it cross your mind that cropland good for wheat isn’t good for lentils? And anyway even if they could grow lentils there the same problems would exist.

And where are we going to get more eggs? First of all you need more chickens, and also more chicken food. You can’t just suck the eggs out of the chicken’s butt at will!

You see the same problem with the solar power crowd. They can’t understand scale. Somehow they figure 4,000 watts of solar on the roof that only works in the day is going to power their house. Just the dryer uses that.

And then there is the lithium shortage. The scale of the mining operation required to get battery production up to where the greens want it boggles the mind. It makes the oil sands look like a small oil spill clean up. Lithium prices are up 4 times in the past few years and nothing really happened. Expect that to continue.

Or how about the Europeans falling over themselves to ban Russian oil, gas and coal? The fact is they have no choice but to buy it, and won’t for at least 5 years.

Buy all the things, especially non-perishable food. And maybe a generator so you don’t end up like Texas.

#42 Naga on 04.15.22 at 8:35 pm

Sinan, old saying KISS applies to investing as everything else in life. When two (Male and Female) decide to get married, they need to take out a joint bank account – assuming both work – paychecks get deposited. Everything else becomes equal, and no need for complicated investment strategies such as cross losns.

Just saying! Your effort today for the 0.001% on this blog!

#43 Dr V on 04.15.22 at 8:55 pm

34 Jack

“The next time the TFSA will be gutted and interest expenses paid will be non deductible and many more tax preferences like dividend tax credit gutted too.”
—————————————————

I enjoy discussing taxation. I only wish our host, a former Minister of National Revenue, could provide more comment, but I am sure he is sworn to secrecy.

Now any government has to be able to “sell” a tax or a change in the tax law. It has to appear the “rich” or “offenders” are paying.

So yes, the TFSA could get a lifetime limit on new contributions. $100k is coming up soon. Only the rich have managed to put $100k in TFSAs, right? This could be raised in the future for vote buying.

Considering the above, the cap gains inclusion rate could be increased, but the issue is that many people of modest means (think retired) employ this, so I could
see a small annual tax-free gain being allowed, maybe in the range of the current TFSA contribution.

RRSP contributions may only be allowed up to the wage
which allows the full limit. Earnings above that (currently about $160k) could be taxed fully. Again, only the “rich” earn more than $160k.

If you understand dividends and the dividend tax credit, you’ll know there is little the government could change as it represents full taxation of the corporate profit. It is also used by many small investors. Think truck convoy if they tried it.

Of course, if they just raised all the rates by 1% absolute, they wind up with another $100 per $10k earned. So I definitely see that one coming for us all….

#44 crowdedelevatorfartz on 04.15.22 at 8:58 pm

@#33SW
“Unless you’re saying Ontarians aren’t Canadians?”

+++
Iroically Canada isn’t big enough , most Ontarians consider themselves from….the center of the Universe.

Hopefully your friends in CB live on the Myra River….excellent trout fishing.

#45 Linda on 04.15.22 at 9:07 pm

#39 ‘Graphics’ – because the vast majority of Canadian households comprise of 2 or more people even now. Government always pays attention to voter demographics. Keep in mind that marriage is not just an emotional union but an economic one. So if you are trying to appeal to voters you provide incentives to sway the vote of the majority.

Single people don’t just face discrimination when it comes to government goodies. Ever try to book a trip with one of those travel companies? Ever notice the ‘single supplement’? That is the fee routinely charged to singles. You can circumvent it by having a travel buddy join you on whatever trip or by agreeing to share your room with a fellow traveler, but if you do decide to travel by yourself & want your own room be assured the price you pay will include that single supplement fee.

#46 Felix on 04.15.22 at 9:23 pm

Good Friday = Feline Friday, every week!

https://www.shutterstock.com/search/easter+cat

#47 crowdedelevatorfartz on 04.15.22 at 9:56 pm

@#31 WTF
If u r a hockey fan, This is gold

https://www.theplayerstribune.com/articles/letter-to-my-younger-self-mike-bossy

++++

Classic!

#48 yvr_lurker on 04.15.22 at 9:58 pm

#37 Dr V
How do you feel about RESPs? What I find ironic about them, is they most benefit those youngsters whose
parents were most likely to have saved anyways by
adding an additional government benefit.

Gotta be one of the worst ideas ever!
————

In my view RESPS are a great way to save, even for those families who can’t max it out.

You seem to have a loathing of the higher education “complex”. Engineering, CPSC, and all sorts of professional programs usually lead to good outcomes for students to make a living in an interesting field. Gov’t should expand opportunities for apprenticeships and other training opportunities for the trades.

For me, I think that all of these income splitting opportunites that exist, for which one needs a tax advisor to sort out and advise on, should be cut back by the Gov’t. Including those very generous Gov’t benefits and tax breaks afforded to those who live on investments, capital gains, and often bogus “personal” corporations where family members can all be sprinkled with tax breaks.

#49 Sail Away on 04.15.22 at 10:02 pm

If Susan and squeeze were earning that in the States, they’d be saving $70k in taxes annually.

But then they wouldn’t get socialized health care. Oh my. Dealbreaker!

#50 crowdedelevatorfartz on 04.15.22 at 10:29 pm

@#49 Sail away
“But then they wouldn’t get socialized health care.”

+++
Sadly,
When the last General Practitioner MD leaves B.C. we’ll all be wishing we didn’t realize that “universal health care” ….. was a myth…

https://globalnews.ca/video/8763785/award-winning-b-c-family-doctor-warns-shes-at-breaking-point-over-massive-workload/

EVERY doctor that is quitting or retiring early in BC is complaining about govt bureaucracy and paperwork.

When the last GP in BC quits….will the ten overpaid, under worked, govt bureaucrats that manage that one portfolio ….cry any tears?

#51 Dr V on 04.15.22 at 10:58 pm

48 lurker – FYI I have an engineering degree, and made my living in a very interesting field.

#52 Sail Away on 04.15.22 at 11:04 pm

#130 Danny on 04.15.22 at 7:20 pm

Dale, I am in a very high income earning career and all I do is save in GICs, term deposits, RRSPs, TFSAs for myself. My house is all paid off and have no debts. I am half way through my long term plan of $10 million, $5 million in many financial institutions working with many deposit/GIC brokers so all within deposit insurance limits,

———

Oh, thanks Danny. You are clearly an immortal (vampire?) in order to accumulate $5M with GICs. Has that taken 200 years or 300?

And so astute keeping everything under the CDIC insured limits. How are those 50 bank accounts doing? Heck, I didn’t even know Canada had 50 banks.

Anyway, thanks for the helpful info.

#53 David W2 on 04.16.22 at 7:42 am

Great information, thank you!

#54 TurnerNation on 04.16.22 at 9:13 am

Control over our Feeding – via control of the fertilizer inputs. It’s like these big global corporations are all onside with our enslavement. Ask the folks in Shanghi how’s it going…

All famines are man-made (government-made via policy
But we are so close to normalcy guys!! It’s not like a global slave system kicked off March 2020 or anything.

https://www.zerohedge.com/commodities/black-swan-event-top-us-fertilizer-producer-hit-rail-delays-midwest

Straight, from a fertilizer company:

https://www.cfindustries.com/newsroom/2022/union-pacific-shipping-restrictions
CF Industries: Union Pacific Curtails Fertilizer Shipments, Delaying Deliveries and Preventing New Rail Orders from Being Taken

#55 Dharma Bum on 04.16.22 at 10:30 am

Sinan is the Mr. Spock of the Turner Financial Group.

Straight to the point.
Intellectual.
Logical.
Humourless.

Garth, of course, is Captain Kirk.
Smart.
Charming.
Handsome.
Chiselled shimmering abs.
Cool.
Witty.
Gets all the hot babes.

Ryan is Dr. McCoy.
“I’m an ANALYST dammit, not a writer!”

Doug is Scotty.
Good ol’ Mr.Scot. Garth keeps him around to make sure the lights stay on, the computers work and the toilets flush.
(Actually, I have no personality comparisons for that one, but, he’s all that’s left.)

Everything I know in life, I learned from Star Trek.

https://www.goodreads.com/book/show/141660.All_I_Really_Need_to_Know_I_Learned_from_Watching_Star_Trek