Monthly Archives: June 2010

Anthony Sabti

HST Begins Tomorrow

As most of you know, the HST will take effect starting tomorrow (July 1st, 2010) in BC and Ontario.  The HST will replace the 8% provincial sales tax and 5% GST with a 13% HST in Ontario. and 12% in British Columbia.  HST will affect the prices of various goods and services in each province (even mutual fund fees are impacted).  Here are few links on the matter:

National Post summary of HST changes:

Comprehensive list of all affected goods and services by the Vancouver Sun

Here is a summary of the changes compiled by Dynamic Funds:

Mutual Fund Fees

Management fees and operating expenses associated with investment funds will be subject to HST.  As an example, a hypothethical fund with a management expense ratio (MER) of 2.31, a typical MER for a Canadian Equity Fund, will have a revised MER of 2.44.  This results in a MER increase of 0.13 percentage points.

Impact on Purchases

Those items that have no sales tax on them, such as basic groceries, municipal transit and prescription drugs, will continue to be purchased tax-free. Other products will be eligible for a point-of-sale rebate for the provincial part of the HST. This means you will only pay the 5% federal portion of the HST (equivalent to the current GST). These include print newspapers, books, diapers, children’s clothing and footwear, children’s car seats and booster seats, feminine hygiene products and diapers.

Around the House

Many household expenses that currently are not subject to the PST will be included under the HST. These include: basic cable TV, local residential phone, landscaping, lawn care, private snow removal, home renovations, and home service calls by an electrician, plumber or carpenter.

In addition, for new construction home purchases, the government of British Columbia will offer a rebate of 71.43% of the provincial portion of the proposed HST on the first $525,000 of the purchase price. This will provide a rebate of up to $26,250 for new homes across all price ranges. Resale homes are not affected. You will also have to pay HST on real estate commissions. Home insurance and mortgage interest costs remain tax-free.


HST will now be charged on taxi trips, hotel rooms and any domestic air, rail and bus travel originating in British Columbia, effectively making many vacations 7% more expensive.

Sports and Health

Beginning July 1st, you will be charged HST on gym and athletic memberships, green fees for golf, sports and fi tness lessons (ballet, karate, hockey, soccer, etc.), as well as hockey rink and hall rentals.  Massage therapy and fitness training are also subject to the HST.

Professional services

Accounting, veterinarian and esthetic services currently subject to just the GST, will be HST-taxable on July 1st. Funeral services will likewise be charging HST. These can present considerable additional expenses.

Tax Relief

Many British Columbians will be receiving supplemental taxfree payments from the BC government in order to help the transition to the HST:

* Individuals with incomes up to $20,000 will receive a $230 HST credit.

* Families with incomes up to $25,000 will receive a $230 HST credit per family member.

Source: Dynamic Funds, British Columbia’s New HST: What does it mean for your personal finances?


Anthony Sabti

Bullish on U.S., Bearish on China

These are the thoughts expressed by fund manager David Fingold in a Financial Post article last week.  Fingold manages the Dynamic Global Discovery Fund, a value-style global fund with 1 year, 3 year, and 5 year returns all in the top quartile amongst its peers (article contains detailed return figures).

David currently has no direct exposure to China.  In the short-term, he is concerned over Chinese exports to Europe since the Euro has recently dropped against the Chinese Renminbi.  22% of Chinese exports go to Europe.  However, he does points out that that the CPI in China has fallen recently.  Lower inflation would put the Chinese government in a position to stimulate the economy down the road. 

In the long-term, he believes that many people will be surprised by where the growth is.  He points to the stronger demographics in the U.S compared to China as a good reason to stay invested in the U.S.

For the full article, click here.


Anthony Sabti

Bank of Canada Announces Rate Hike

The Bank of Canada announced today that it will be increasing its key lending rate by a quarter percent to .50%.  In doing so, it becomes the first country in the G7 to increase its rates since the global recession started in 2008. 

Analysts predict that the over the next year, the Bank of Canada will gradually increase its rate another one 1-1.5%, a quarter basis point at a time.  Bank of Canada leader Mark Carney expressed that there is still considerable uncertainty in the global economic outlook, and that all future rate increases will have to be weighed carefully. 

Still, today’s announcement will mean higher borrowing costs for individuals and businesses that have loans linked to bank prime lending rates.

The next rate announcement will occur in July.