Tag Archives: capital gains tax

Budget 2017: No capital gains tax hike for investors, Age Credit for seniors remains intact

Seniors and affluent investors who were bracing for a hike in capital gains taxes or other attacks on investment income can breathe easy, at least for a few months as Ottawa monitors developments south of the border.  And homeowners will be relieved to know that there was no move to end the capital gains exemption for principal residences.

Bye bye CSBs, hello electronic T-4s

Budget 2017 hikes a few sin taxes, imposes a sales tax on Uber and did eliminate some tax credits. Oh, and they killed Canada Savings Bonds!  For full report, read this Globe & Mail summary. Or these 10 things you need to know. And Rob Carrick reviews ten ways the budget may affect our personal finances. (You may not be able to access the link if you’re not a G&M subscriber.) Among the points: the first-time donor’s super credit expires as planned in 2017, and Ottawa will review the use of private corporations by high earners to minimize taxes.Oh, and a 3-year pilot program that starts in 2018-2019 will make it easier for adults to qualify for Canada Student Loans and grants.

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Capital gains tax is one of the lowest you’ll ever pay

Hand with pen pointing to GAIN word on the paper - financial and investment conceptsThere are three forms of Investment Income in Canada: Interest, Dividends and Capital Gains. Each Is taxed differently. Here’s a reminder of how smart investors use their knowledge to taxation rates, especially tax on Capital Gains, to protect their returns.

With stocks, you only pay capital gains tax when you sell or “realize” the increase in the value of the stock over and above what you paid for it. (Although mutual funds generally pass on their realized capital gains each year.)

Several years ago, the Canadian government cut the capital gains inclusion rate (the percentage of gains you need to “take into income”) from 75% to 50%. For example, if an investor purchases stock for $1,000 and then sells that stock for $2,000, then they have a $1,000 capital gain. Investors pay Canadian capital gains tax on 50% of the capital gain amount. This means that if you earn $1,000 in capital gains, and you are in the highest tax bracket in, say, Ontario (49.53%), you will pay $247.65 in Canadian capital gains tax on the $1,000 in gains.

The other forms of investment income are interest and dividends. Interest income is 100% taxable in Canada, while dividend income is eligible for a dividend tax credit in Canada. In the 49.53% tax bracket, you’ll pay $495.30 in taxes on $1,000 in interest income, and you will pay $295.20 on $1,000 in dividend income.

Three capital-gains strategies

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Leave an inheritance of cottage relaxation, not taxation

Cottage On The Carpenter Lake, CanadaBy Tarsem Basraon, TD Wealth 

Special to the Financial Independence Hub

The summer is quickly approaching and for many Canadians that means one thing: cottage season.

While many parents envision leaving the family cottage as part of their inheritance one day, with the value of cottages often appreciating since purchase, there’s also the risk of bestowing the legacy of a large tax bill.

To help make sure you’re leaving an inheritance of cottage relaxation and not taxation, here are three strategies you can discuss with your financial advisor when planning your cottage legacy. These strategies are available to you while you are alive, and there are various other strategies that can be implemented on your death in your will.

• Co-own with your Kids

Adding your children to the deed and making them co-owners of your cottage could help defer capital gains tax and save money. For example, if your cottage value has increased over time, it would trigger a capital gain on the portion of the cottage that your children now own and you would pay the tax on that now. Down the road, your kids would only pay tax on the capital gains owing on the remaining portion of the cottage you own when you die. There is,  however, a risk with this approach. Continue Reading…

Wealthy investors dodge capital gains bullet but little else to cheer about in Budget

motley-fool-logoHere’s my latest blog for Motley Fool Canada: Investors dodge bullet on capital gains but little else to cheer about in Budget 2016.

Note the paragraph about the the roadblocks put in the way of two strategies involving life insurance, often used by business owners. You can find more detail about this in yesterday’s Hub guest blog by Robert Kepes: Budget closes two life insurance planning strategies.

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Jamie Golombek

Little good news for the wealthy

In today’s Financial Post, CIBC Wealth’s Jamie Golombek also provides a fine overview of the Budget’s impact on the wealthy.

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