All posts by Financial Independence Hub

Corporate class mutual fund structure still strong despite changes in Budget

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Som Seif

By Som Seif,  Purpose Investments

Special to the Financial Independence Hub

As many of you have already heard, in its most recent budget, the federal government announced plans to alter the structure of the corporate class model.

Starting in September, switching between corporate class series funds will become a taxable event: just like that of a traditional mutual fund trust.

While this decision will affect retail investors’ ability to compound wealth over the long term and will likely result in some mutual fund manufacturers electing to abandon the corporate class structure, it has very little impact on the true benefit of the structure.

Structure still has tax-efficient distribution yields

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Debt is more than a four-letter word during your drawdown years

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Doug Dahmer

By Doug Dahmer, Emeritus Financial Strategies

Special to the Financial Independence Hub

 The month of April is always a particularly busy time for Retirement Income Specialists. One of our key roles is to provide each of our clients with a year-by-year draw-down recipe: outlining how much and where to source their annual cash flow needs.

The ultimate goal is not to minimize the amount of income tax they pay on any given year, but instead to minimize the amount of tax they pay over the balance of their lives. (Please note these two goals are frequently confused, and seldom accomplished simultaneously as often you will need to pay more tax sooner in order to pay significantly more later.)

One of our many sources of insight for the guidance we provide is found within our clients’ annual tax returns. At the same time our clients’ previous year’s tax returns act much like a report card, keeping them informed as to how well we performed our role over the previous year, as we endeavor to accomplish this important long term goal.

Debt can more than offset taxes

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Sensible Investing TV: final episode of How to win the Loser’s Game

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Screen Shot 2016-04-13 at 9.17.13 PMOur journey is almost done.

We’ve explained how the odds are heavily stacked against the ordinary investor – and how, by settling for an average return, and refusing to pay a small fortune in charges, you can end up as one of the winners, saving yourself a great deal of time, effort and worry in the process.

But there is a much bigger issue here. It’s not just we as individuals who are losing out. The whole world faces a pensions crisis. We’re living longer, and although most of us will work longer, there’ll be huge numbers of people retiring without enough funds to sustain them through their later lives.

How to cope with the looming global pension crisis

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What’s a Fiduciary? Why does it matter?

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Graham Bodel

By Graham Bodel, CFA 

Special to the Financial Independence Hub

There’s a lot of furor in the US right now over the Department of Labor’s proposed legislation to make all those providing retirement advice in the US actually act in the best interest of their clients (I know, a crazy concept).

Regulators in Canada are also pondering the issue and no doubt we’ll eventually see some change here too.  But interestingly most investors have no clue that there are two different standards (fiduciary vs suitability).

You’d think people would without question want to work with someone with their best interests at heart.  There are relatively few who give advice in the investment industry either side of the border who are currently required by law to act in their clients’ best interest.

It’s not like this is a crazy idea – think doctors and lawyers – all required to act as fiduciary.  Now clearly being an official “fiduciary” doesn’t mean you’re perfect and there are certainly many advisors who don’t technically have a fiduciary responsibility who still act in their clients’ best interests, but the incentives are strong and studies suggest there’s something to this.

The difference between fiduciary and suitability

Anyhow, I recently read an analogy written by Peter Lazaroff, a Forbes Online contributor, that I thought highlighted well the difference between fiduciary and suitability: Continue Reading…

Income Splitting Strategies – The Spousal Loan

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Matthew Ardrey

By Matthew Ardrey

Special to the Financial Independence Hub

With the recent changes in tax legislation at the federal level, married or common-law couples may now find there is a greater disparity in their marginal tax rates than ever before.

As both members of the relationship must file their taxes separately, it makes sense, where allowed, to place taxable investment income into the hands — and onto the tax return — of the lower-income spouse.

Unfortunately, straightforward gifts of investment property, typically cash or securities in-kind, will not accomplish this objective, as they invoke the income attribution rules.

The attribution rules state, that if one spouse gifts to the other for the purpose of investing, then all of the income and capital gains earned by the recipient spouse will be taxed in the hands of the gifting spouse. Essentially the attribution rules would eliminate any tax benefit available from the gift.

Conditions for loans that avoid attribution rules

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