Monthly Archives: March 2016

Odette Morin

Price to Rent ratio: Is it best to rent or buy a home?


A common metric to determine whether it is better to buy a home or continue renting is to use the Price to Rent ratio.

Price of property you think of buying divided by a similar property’s annual rent.

A ratio of less than 1-15 = Better to buy than rent except if planning to live in the home for less than 5 years.
A ratio of more than 16-20 = typically better to buy than rent
A ratio of more than 20 = Better to rent than buy unless planning to live in the home for 15+ years

$500,000 property divided by $2000 x 12 month rent $24,000 = 20.8
It is therefore better to rent than buy UNLESS you plan to live in the home for a very long time.

This is just a rule of thumb and you must consider many more variables like your cash flow, mortgage amortization, age to retirement and what will you do with the housing cost difference between renting and owning a home, will you invest the funds or just spend them.

We advocate a more in-depth analysis of your personal situation but the ratio is indeed an interesting metric to consider as part of a thorough analysis.

For interest sake, an analysis made in 2012 about the Price to Rent ratio for Vancouver, BC and Seattle, Washington show interesting results. Why Seattle? Because it’s probably the most comparable city to Vancouver: both coastal, with similar populations, climates, culture, lifestyle, natural beauty and incomes.

The average price-to-rent ratio in Seattle it is 14.5. According to the Price to Rent ratio guidelines, buying is probably the better option for anyone planning to keep the home more than a few years.

However, in Vancouver the ratio is a staggering 36.9. Considering that the guidelines recommends renting anytime the ratio is above 20, most rational investors wouldn’t even consider buying here UNLESS they plan to live in the home for a very long time.

Food for thought!  Here is the article and analysis.




Odette Morin

2016 Federal Budget Highlights

Federal Budget Highlights

The Trudeau Liberal federal government tabled its first budget. Here are the highlights of the so called middle-class focused budget:

  • Canada Child Benefit: New monthly tax-free payments starts July 1 to replace UCCB and other tax measures.  The new benefit will pay up to $6,400 a year per child under 6, and $5,400 those aged 6 to 18. But this amount begins to claw back for households with an income over $30,000 and is eliminated entirely for incomes over $190,000.  You can use this calculator to see how it will affect your child benefit.
  • Elimination of tax credits –tax splitting for couples with children, as well as children’s fitness and arts credits are being phased out by 2017.
  • Seniors: Guaranteed Income Supplement increased by up to $947 annually.
  • OAS: the benefit eligibility has been restored to age 65 from age 67.
  • Student grants: Increased 50%, to $3,000 for low-income and $1,200 for middle-income students.
  • Teachers get a $150 credit for teaching materials.
  • EI: Changes make it easier to qualify for benefits, and extends benefits for workers in 12 hard-hit regions. Plus: a bigger-than-expected cut in EI premiums next January.
  • Infrastructure: $120 billion over 10 years, focusing first on public transit, water, waste management and housing infrastructure.
  • Indigenous Peoples: $8.4 billion over five years, with $2.6 of that to improve primary and secondary education on reserves. Other funding for drinking water and housing, as well as family and child services.
  • Arts: $1.9 billion over five years for arts and culture organizations, including the Canada Council, Telefilm Canada and the National Arts Centre. $675 million to “modernize and revitalize CBC/Radio-Canada in the digital era.”
  • Veterans: Reopens nine service offices, increases amounts payable to injured veterans and indexes some benefits to inflation.

How much will it cost?

  • Deficit: $29.4 billion this year, $29 billion the next before falling – but no surplus forecast before the next election.
  • Debt: Expected to grow by $113 billion by 2020-21, but debt-to-GDP ratio to stay mostly flat at around 32 per cent.
  • Growth: Deficit based on 0.4% annual growth – much lower than economists predict.

Where does the money go?

  • $11.9 billion over five years to modernize and upgrade infrastructure systems, including transit and water
  • $23 billion in 2016-17 to administer the new Canada Child Benefit
  • $8.4 billion over 5 years for Canada’s indigenous people and their communities
  • $40 million over two years for the inquiry into missing and murdered indigenous women
  • $2 billion over three years for a new post-secondary strategic investment fund

What is not in the budget?

  • No changes to the capital gains rates
  • No changes to corporate tax rates

Source: CBC, CTV, BNN, Yahoo finance.


Terry Broaders

Weekly Update March 21 2016

“Spring Is Nature’s Way of Saying “Let’s Party”” – Robin Williams


Declining Gold, Oil Prices Push TSX, Loonie Lower

Declining commodity prices pushed the Toronto stock market to a lower close Friday, while south of the border investors remained buoyed by recent news that the U.S. Federal Reserve will likely slow its pace of interest rate hikes. The Toronto Stock Exchange’s S&P/TSX composite index lost some 124 points to about 13,497 as oil and gold prices trended lower. The loonie also traded lower, down 0.29 of a U.S. cent at 76.70 cents US.

In commodities, the April contract for North American benchmark crude oil was down 76 cents at US$39.44 a barrel, while the much more heavily traded May contract fell 52 cents to $41.14.
May natural gas shed two cents to $1.99 per mmBtu, April gold lost $10.70 to US$1,254.30 an ounce, while May copper slipped one cent to US$2.28 a pound. In New York, the Dow Jones industrial average rose 120.81 points to 17,602.30, while the broader S&P 500 added 8.99 points to 2,049.58 and the Nasdaq advanced 20.66 points to 4,795.65.


File Tax On Time

Tax day, otherwise known as “scramble to punch in those last few numbers” day, falls on a Saturday, meaning Canadians get a two day grace period until Monday May 2, to file their taxes. But take a day too long and you could wind up with a hefty tax bill. Late filers will be hit with a penalty of five per cent of their 2015 balance owing and an additional one per cent of the balance owing for each full month the tax return is late up to a maximum of 12 months. Repeat offenders, those who’ve been hit with a late-filing penalty on previous returns for 2012, 2013, or 2014, could get hit with a 10 per cent late fee plus an additional two per cent of the 2015 balance owing for each full month the return is late up to 20 months.
According to the latest figures from the Canada Revenue Agency, 18 million Canadians, nearly two thirds of the tax filers in 2013, collectively owed more than $185 million in taxes.
Here’s a tip: Don’t lie
False statements or omissions can also get you into trouble. According to the CRA, you may have to pay a penalty if you “knowingly or under circumstances amounting to gross negligence, have made a false statement or omission on your 2015 return.” The penalty starts at $100 but can go up to 50 per cent of the understated tax and/or “the overstated credits related to the false statement or omission.” But there can be relief for some late or non-filers in the form of the Voluntary Disclosures Program.
As long as CRA is not looking for the return, hasn’t demanded it be filed or sent out any correspondence or indicated that they’ve been looking for any money or payment you could file the return under the Voluntary Disclosure Program.


Blog Posts

Market Recovery Brings Hope

Possible Changes to Capital Gains Inclusion Tax Rate ?

OAS Restored To Age 65


Weekly Market Wrap Up as of March 18 2016

North America
The TSX closed at 13497, down -25 points or -0.18% over the past week. YTD the TSX is up 3.92%.
The DOW closed at 17602, up 389 points or 2.26% over the past week. YTD the DOW is up 1.02%.
The S&P closed at 2050, up 28 points or 1.38% over the past week. YTD the S&P is up 0.29%.
The Nasdaq closed at 4796, up 47 points or 0.99% over the past week. YTD the Nasdaq is down -4.21%.
Gold closed at 1256, up -10.00 points or 0.32% over the past week. YTD gold is up 18.60%.
Oil closed at 41.13, up 2.66 points or 6.91% over the past week. YTD oil is up 11.01%.
The USD/CAD closed at 1.300634, down -0.0227 points or -1.72% over the past week. YTD the USD/CAD is down -6.00%.


The MSCI closed at 1643, up 46 points or 2.88% over the past week. YTD the MSCI is down -1.20%.
The Euro Stoxx 50 closed at 3060, down -14 points or -0.46% over the past week. YTD the Euro Stoxx 50 is down -6.36%.
The FTSE closed at 6190, up 50 points or 0.81% over the past week. YTD the FTSE is down -0.83%.
The CAC closed at 4463, down -30 points or -0.67% over the past week. YTD the CAC is down -3.75%.
DAX closed at 9951, up 120.00 points or 1.22% over the past week. YTD DAX is down -7.37%.
Nikkei closed at 16725, down -214.00 points or -1.26% over the past week. YTD Nikkei is down -12.13%.
The Shanghai closed at 2955, up 145.0000 points or 5.16% over the past week. YTD the Shanghai is down -16.50%.


Sources: Bloomberg; Investment Executive;,

Odette Morin

Possible changes to the Capital Gains tax rate, should you trigger gains before Tuesday?

tax increase


There is talk that Tuesday’s 2016 Federal Budget will announce changes to the capital gains tax rate. Currently, only 50% of capital gains are taxable. The new government is facing a larger deficit than anticipated and may be on the look out to get more tax revenues. Some speculate that the capital gains rate may be increased to 66.67% or even 75% like it used to be. Should you take action now and trigger your gains to take advantage of the lower taxable gains?

We do not recommend taking action based on speculation. These are just rumours and triggering a taxable gain today may not be necessary. In any event, deferring a gain is most often better even if it means a bigger taxable gain in several years from now. Here is some information about other potential tax changes that may affect you.

Stay tuned, we will have a summary of all actual changes on Tuesday!

Read the article here

Odette Morin

OAS restored to age 65

Trudeau oas


Justin Trudeau announced yesterday that next week’s federal budget will restore eligibility for Old Age Security to age 65 from age 67.

“We are keeping the old retirement age at 65,” Mr. Trudeau told the room of journalists and businesspeople. “How we care for our most vulnerable in society is really important.”

He said his predecessor, Stephen Harper, was wrong to move the Old Age Security eligibility to 67 from 65. Mr. Harper raised the age in the 2012 budget, making it effective for 2023.

“We think that was a mistake,” Mr. Trudeau said.

We are delighted by this news for all our younger clients born after 1958. The benefit is currently $570 per month indexed quarterly.

We will have a summary of the 2016 budget highlights on Tuesday. Stay tuned!


Odette Morin

Market Recovery Brings Hope

oil price up


The price of oil just jumped in the past few weeks from its $30 a barrel lows to $41 today Friday March 18 and have taken the equity markets to new highs. Both the TSX and Dow are now in positive territory year-to-date. The Canadian dollars is also up from its 70 cents and flirted with a 77 cents dollar yesterday.

Three main events triggered the recovery from these oversold markets. OPEC agreed on a supply floor, China is doing better than anticipated and the Feds delayed raising interest rates, even hinting that 2 rates hike maybe more in order instead of 4 hikes. This brings hope that the worst may be over and sets the stage for the recovery to continue. Global stocks posted today their longest streak of growth in two years.

Don’t expect too much for returns this year. Growth is very sluggish and any ascent will likely be volatile but we certainly feel more positive for the year ahead.