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Monthly Archives: December 2017

Anthony Sabti

2017 Financial Planning Checklist

Until the end of the year, we’ll be deviating from the usual “weekly brief” format. We believe it is a good time to take a final stock – pardon the pun – of your overall financial planning situation. Below is a checklist of some of the items we try to cover with you at your meeting. If you want to confirm an item on this list has been addressed, please do not hesitate to contact us. Our office will remain open during the holidays.

Investing

  • Portfolio mix. Different investments are taxed at different tax rates. If you invest in both registered and non-registered accounts, ensure you optimize your portfolio mix to ensure maximum tax-efficiency
  • The amount added to the TFSA room on January 1st, 2018 will be $5,500. This will bring the lifetime amount to $57,500. Consider putting funds into your TFSA to the extent you can make contributions (or via a transfer from your non-registered account). Ensure you don’t exceed your contribution room due to the significant penalty on over-contributions. If you have authorized us for CRA access, we can confirm your TFSA limit.
  • If you were planning on withdrawing from your TFSA, do so by the end of the year. The amount you withdraw will be added to your TFSA room at the start of 2018. If you withdraw in January 2018, you won’t get the room back until January 2019.
  • If you have investments in a non-registered account in a capital loss position, consider triggering the capital loss to offset capital gains realized during the year.
  • For non-registered accounts, delay purchases until January 2018 to minimize your allocation of taxable income for 2017 (after year-end distributions). For similar reasons, consider selling your mutual fund in a non-registered account before year-end as well (prior to year end-distributions).

Taxes

  • Any donations you want to claim on your 2017 tax return must be made by December 31, 2017.  Donations must be made to a registered charity. Contributions above $200 result in a 29% federal tax credit. Keep the donation receipts! The CRA was more aggressive in requesting documentation to prove the donations were actually made.
  • If you are a first-time donor, you can claim an additional 25% credit on up to $1,000 of donations made after March 20, 2013.  2017 is the final year in which this credit can be claimed.
  • Public transit tax credit. This credit will be eliminated following the 2017 tax year. You can claim on your 2017 income tax return, only the cost pertaining of monthly passes for transit services for the period January 1 to June 30, 2017.
  • If you are over 65 with no private pension, consider withdrawing $2,000 from a RRIF account to trigger the $2,000 pension credit.
  • Home accessibility tax credits. If you incur eligible expenses of up to $10,000 to increase the mobility or safety of a senior, you will be able to claim the federal home accessibility home credit and BC senior’s home renovation tax credit.

RRSP

  • The deadline to make an RRSP contribution for the 2017 tax year is March 1, 2018. If you have authorized us for CRA access, we can confirm your RRSP limit, factoring in any contributions you’ve made with us. An RRSP contribution has a tax savings potential of anywhere between 20%-47.7% for BC residents.
  • If you turned 71 this year, this is the final year you can contribute to an RRSP. Consider making an RRSP contribution in December of the year you turned 71 if your income in 2017 is higher than what you expect in later years.
    • If you turned 71 this year, you must wind up your RRSP by the end of the year. For most people, this means a conversion to a RRIF account with minimum annual withdrawals starting the following year.
  • Consider withdrawing funds from your RRSP if you have low income for the year.

Self-Employment / Business / Corporations

  • Consider 2017 income splitting opportunities (spouse, children, parents, etc.) as the rule changes that are likely to come for corporations in 2018 may eliminate this strategy moving forward.
  • The new rules will grandfather any existing passive investment income currently held in a corporation.  They will also allow passive income of up to $50,000 not subject to higher taxation. This means that under the new regime, you could add $1,000,000 (in addition to any grandfathered assets) generating income of 5% a year and be exempt.
  • If you are self-employed, consider purchasing capital assets before year-end. If the asset is available for use before the end of the year, you can claim one-half of the usual tax amortization for the year.
  • Consider paying a salary or bonus from your corporation to yourself in December. Usually, the payroll tax for this is due by January 15th (may be sooner depending on your remitter type).

Children

  • If you have an RESP and your child has turned 17 in 2017, this is the final year of his/her grant eligibility.  If you have grant room remaining, you can contribute up to $5,000 in the final year, generating a $1,000 grant.
  • Pay child-care expenses for 2017 by December 31st, 2017 and get a receipt. Remember that boarding school and camp fees qualify for the child care deduction.
  • If your child qualifies for the disability tax credit, and if RDSP assets or income will not disqualify him/her from receiving provincial income support, consider setting up an RDSP to qualify for the Canada Disability Savings Bond (CDSB – lifetime maximum of $20,000 per child). Contributions to an RDSP qualify for the Canada Disability Savings Grant (CDSG – lifetime maximum of $70,000 per child)
  • Children’s fitness and art credit. Sadly, these tax credits have been completely phased out, and you won’t receive a credit for these costs on your 2017 return.

Other

  • Note that MSP premiums will be cut in half for all taxpayers in 2018. The provincial government intends to eliminate all MSP premiums within four years.
Frank Mueller

Weekly Update – December 8, 2017

“We make a living by what we get, but we make a life by what we give” – Winston Churchill

TSX Rises on to End Week on a Positive

The Toronto Stock Exchange’s S&P/TSX composite index rose by 80.39 points Friday, a 0.50 per cent gain, to close at 16,096.07. On the week, the TSX managed a gain of 57.10 points (0.36 per cent). Nine of the 10 main groups rose on Friday.

Gold dropped $3.90 USD per ounce on Friday (0.31 per cent) to close the week at $1,245.90 per ounce. On the week, this represents a drop of $33.80 an ounce (2.64 per cent).

Increasing Chinese demand for oil, coupled with potential supply-side issues out of Africa, led oil up on Friday; however, oil was down for the week overall. West Texas Intermediate (WTI) closed at $57.33 USD per barrel, up 64 cents (1.13 per cent), but was down 96 cents for the week, a drop of 1.65 per cent.

The Loonie sat at 77.87 cents to the Greenback on Friday (as of 2:14pm), a gain of 12 basis-points (0.17 per cent). On the week, the Canadian Dollar was down 1.02 cents (1.29 per cent).

U.S. Markets All Gain on Friday

Friday saw increases across the board on Wall Street. The Dow Jones Industrial Average (DJIA) was up was up 117.68 points (0.49 per cent) to close the week at 24,329.16.

The S&P 500 gained 14.52 points (0.55 per cent) to finish at 2,651.50.

The NASDAQ rose by 27.24 points (0.40 per cent) and settled at 6,840.08.

November jobs numbers propelled markets upward to end the week, a further signal of a strong economy. Analysts already expected a rate hike next week, and the strong jobs figures propelled this expectation.

CRA Confirms 2018 Tax-Free Savings Account Room

This week, the Canada Revenue Agency (CRA) announced the new Tax-Free Savings Account (TFSA) room for 2018 will be unchanged at $5,500.

How does this announcement affect your investment portfolio? Well, this is $5,500 of new space to shelter your investments from capital gains tax. Remember that you contribute net income to your TFSA because unlike the RRSP, you don’t get a tax savings on your contributions to a TFSA. However, you get the tax savings when you make withdrawals from your TFSA – you pay no capital gains whatsoever – and you also enjoy tax-sheltered growth while your money is in the TFSA itself.

If you have questions about how best to invest your money, be it to an RRSP, TFSA or to a Non-Registered account, give us a call and we can discuss your specific needs!

Weekly Market Wrap-Up

North America
The TSX closed at 16,097, up 58 points or 0.36% over the past week. YTD the TSX is up 5.37%.
The DOW closed at 24,329, up 97 points or 0.40% over the past week. YTD the DOW is up 23.10%.
The S&P closed at 2,652, up 10 points or 0.38% over the past week. YTD the S&P is up 18.45%.
The Nasdaq closed at 6,838, down -10 points or -0.15% over the past week. YTD the Nasdaq is up 27.03%.
Gold closed at 1,246, down -8.00 points or -2.88% over the past week. YTD gold is up 9.49%.
Oil closed at 57.34, down -1.00 points or -1.71% over the past week. YTD oil is up 9.80%.
The USD/CAD closed at 0.77714, down -0.0108 points or -1.37% over the past week. YTD the USD/CAD is up 4.75%.

Europe/Asia
The MSCI closed at 2064, down -13 points or -0.63% over the past week. YTD the MSCI is up 17.74%.
The Euro Stoxx 50 closed at 3592, up 64 points or 1.81% over the past week. YTD the Euro Stoxx 50 is up 9.15%.
The FTSE closed at 7394, up 93 points or 1.27% over the past week. YTD the FTSE is up 3.51%.
The CAC closed at 5399, up 82 points or 1.54% over the past week. YTD the CAC is up 11.04%.
DAX closed at 13154, up 292.00 points or 2.27% over the past week. YTD DAX is up 14.57%.
Nikkei closed at 22811, down -8.00 points or -0.04% over the past week. YTD Nikkei is up 19.34%.
The Shanghai closed at 3290, down -28.0000 points or -0.84% over the past week. YTD the Shanghai is up 5.99%.

Fixed Income
The 10-Yr Bond closed at 2.38, up 0.0200 points or 0.85% over the past week.YTD the 10-Yr Bond is down -2.86%.

Sources: Globe Advisor, Yahoo! Finance, cbc.ca, Bank of Canada, Dynamic

Frank Mueller

Weekly Update – December 1, 2017

“If inflation continues to soar, you’re going to have to work like a dog just to live like one” – George Gobel

TSX Down Slightly for the Week

The Toronto Stock Exchange’s S&P/TSX composite index dropped 28.51 points on Friday, a 0.18 per cent drop, to close at 16,038.97. On the week, the TSX was down 69.12 points (0.43 per cent). Gold miners and materials led the drop, while the financials and energy sectors gained on the day.

Gold dropped this week to finish at $1,279.70 USD per ounce, although it was only $7.60 USD off last Friday’s $1,287.30 per ounce finish (0.59 per cent). However, the precious metal did mitigate the weekly loss on Friday with a gain of $6.50 (0.51 per cent).

U.S. light crude oil finished at $58.29 USD per barrel, down for the week versus last $58.95 USD per barrel close.

The Canadian dollar gained over a penny Friday versus the Greenback (1.36 cents USD, 1.7575 per cent) to finish at 78.89 cents USD.

U.S. Markets Unfazed by Continuing White House Turmoil, Michael Flynn News

The saga in and around the White House and beleaguered President Trump kept going full steam ahead this week. On Friday, former National Security Adviser Michael Flynn testified on his involvement in the 2016 Russia Election Scandal. While the details of his testimony haven’t been made public, Mr. Flynn did plead guilty to lying previously to the FBI on the subject. As part of his guilty plea, Flynn is apparently cooperating with Special Investigator Robert Mueller.

The Russian investigation could derail the Republicans’ planned tax legislation; failure to enact yet another core election promise could spell the end of the GOP majorities in the House of Representatives and/or the Senate. Further, such a failure could hurt markets and therefore investment portfolios, as the anticipated tax cuts would improve companies’ bottom lines, and thus their earnings.

If the tax cuts fall through, a market pullback is certainly possible, leading to reduced returns on portfolios’ US equities.

As far as this week was concerned, however, markets were unfazed. The Greenback and US Treasury yields dropped on the Flynn bombshell, but major US indexes S&P 500, the NASDAQ and the Dow Jones Industrial Average (DJIA) rebounded from sharp losses early to finish Friday with only minor setbacks.

The S&P 500 dropped 28.51 points (0.18 per cent) after being down as much as 1.26 per cent midday. The DJIA fell by 41.65 points, or 0.17 per cent, and finally the NASDAQ Composite dropped 26.39 points (0.38 per cent).

Canadian Inflation for October Eases Versus September Inflation

October inflation figures in Canada came in at 1.4 per cent in October, down from 1.6 per cent in October. Statistics Canada cited smaller-then-expected gasoline price increases. September saw a year-to-year gas price increase of 14.1 per cent, mainly on the heels of Hurricane Harvey. October came, supply rebounded, and the October year-to-year increase dropped to 6.5 per cent.

The tightrope that Central Banks like the Bank of Canada have is to keep inflation low, to ensure its currency retains value, while also allowing for some inflation to help the economy keep growing. The Bank of Canada’s stated aim is to keep inflation at the two per cent midpoint of the control range of one-to-three per cent.

How does inflation affect your investment portfolio? It is quite simple, really.

Inflation, in its basest form, is simply the depreciation of the purchasing power of currency. Stated another way, inflation is the increase in the cost of goods. However, inflation is also necessary in an economy to help it grow and expand, which helps increase job numbers and consumer spending (good for the companies and therefore, good for portfolio values). So, inflation numbers that are within the one-to-three per cent target range allows markets returns to grow, while helping your money retain its value.

Weekly Market Wrap-Up

North America
The TSX closed at 16039, down -69 points or -0.43% over the past week. YTD the TSX is up 4.99%.
The DOW closed at 24232, up 674 points or 2.86% over the past week. YTD the DOW is up 22.61%.
The S&P closed at 2642, up 40 points or 1.54% over the past week. YTD the S&P is up 18.00%.
The Nasdaq closed at 6848, down -41 points or -0.60% over the past week. YTD the Nasdaq is up 27.22%.
Gold closed at 1283, down -3.00 points or -0.62% over the past week. YTD gold is up 12.74%.
Oil closed at 58.34, down -0.61 points or -1.03% over the past week. YTD oil is up 11.72%.
The USD/CAD closed at 0.7879, up 0.0009 points or 0.11% over the past week. YTD the USD/CAD is up 6.20%.

Europe/Asia
The MSCI closed at 2077, up 17 points or 0.83% over the past week. YTD the MSCI is up 18.48%.
The Euro Stoxx 50 closed at 3528, down -53 points or -1.48% over the past week. YTD the Euro Stoxx 50 is up 7.20%.
The FTSE closed at 7301, down -109 points or -1.47% over the past week. YTD the FTSE is up 2.21%.
The CAC closed at 5317, down -74 points or -1.37% over the past week. YTD the CAC is up 9.36%.
DAX closed at 12862, down -198.00 points or -1.52% over the past week. YTD DAX is up 12.03%.
Nikkei closed at 22819, up 268.00 points or 1.19% over the past week. YTD Nikkei is up 19.38%.
The Shanghai closed at 3318, down -36.0000 points or -1.07% over the past week. YTD the Shanghai is up 6.89%.

Fixed Income
The 10-Yr Bond closed at 2.36, up 0.0200 points or 0.85% over the past week. YTD the 10-Yr Bond is down -3.67%.

Sources: Globe Advisor, Yahoo! Finance, cbc.ca, Bank of Canada, Dynamic