Move over RRSP, TFSA: Here are 7 strategies for maximizing investment returns you might not know about

By Jason Heath

Investors tend to focus first and foremost on gross returns. Since an investor only gets to keep their net return after-tax, tax should be an important factor when it comes to investment decisions. The most basic example of this is to make the most of available tax shelters. Most people are aware of tax shelters like RRSPs, TFSAs and RESPs, but, if you are self-employed, you can even create your own tax shelter by incorporating and leaving some of your income in a corporation, paying a lower tax rate than you would otherwise pay personally. Jason Heath outlines seven more considerations for how to make your investments more tax-efficient.

How the wealthy can beat Ottawa’s new rules by becoming low-income to save big on their taxes

A new tax strategy for high-income earners: Ted Rechtshaffen outlines how a family can maintain their $180,000-lifestyle on taxable income of just $30,000.

  1. Investors with RRSPs and TFSAs may think that they don’t need to worry about the tax implications of their investments, but that isn’t true: foreign dividends earned in a TFSA are subject to withholding tax from the source country, and Canadian mutual funds or Canadian-listed exchange-traded funds that own foreign stocks are also subject to withholding tax on the dividends earned in an RRSP. Furthermore, RRSP withdrawals will be taxable someday, so how big to grow an RRSP and when to take withdrawals is another important tax consideration for registered accounts.

U.S. stocks that trade on a U.S. stock exchange are not subject to withholding tax when held in an RRSP — but they are in a TFSA. So RRSPs may be a better option than TFSAs for U.S. stocks. But where you hold non-U.S. foreign stocks depends on your overall asset allocation and whether you have non-registered investments as well.

  1. 2. Investors with non-registered investments should consider leaning more towards earning capital gains or Canadian dividend income. Capital gains are only 50 per cent taxable in a non-registered account. Canadian dividends are taxed at a lower rate than interest or foreign dividends, but the exact tax rate varies depending on your tax bracket.
  2. Real estate investment trusts (REITs) and limited partnerships (LPs) generally pay out distributions to investors that take different forms. While some of the income may be considered taxable dividend income, some portion may also be considered return of capital. Tax is not immediately payable on return of capital, but will reduce your cost base on an investment and increase the taxable capital gain when you ultimately sell it. REITs and LPs can boost after-tax returns in a taxable account.
  3. 4. In the ETF space, Purpose Investments’ corporate class ETFs currently allow investors to switch between different funds without incurring taxable capital gains. Horizons Exchange Traded Funds offers swap-based ETFs that convert taxable interest and dividends into deferred capital gains.

Corporate-class mutual funds have higher fees and promote active management versus their lower-fee, passive ETF cousins, but can also reduce tax on non-registered investments. CI Investments is the largest in the corporate class mutual fund industry in Canada, with over 60 offerings. But, the recent federal budget will do away with the tax-free switching option available to corporate-class investors later this year, so the clock is ticking on this particular corporate class tax efficiency.

  1. Universal life insurance has a savings feature that can be allocated into various active and passive investment options that grow tax-free. Fees tend to be higher than non-insurance solutions, so fees and tax savings need to be compared. Whole life insurance invests some of your premiums on a tax-free basis by the insurance company into unique asset classes, such as private placement bonds, residential and commercial mortgages, private equity and policy loans to other policyholders. Commissions are generally high up-front, so a whole life policy should not be a short-term commitment.
  2. Rental real estate can be extremely tax-efficient. Mortgage interest is tax-deductible and a financed rental property can sometimes create tax refunds. Even cash flow positive properties can have income sheltered from tax by claiming depreciation on your tax return.
  3. Flow-through shares can earn tax-effective returns and create tax refunds in excess of 50 per cent of your investment. The government incentivizes investors to buy flow-through shares issued by junior resource companies. These shares are especially risky and that is why tax refunds are used to attract investors.

In summary, there are many different tax-efficient ways to invest, but keep in mind that tax should never be the primary decision-making factor. A thorough understanding of retirement and estate objectives should be a starting point for any investment plan. From there, seek out tax-efficient returns, because when all is said and done, you only get to keep the after-tax amount.

Jason Heath is an advice-only / fee-only Certified Financial Planner (CFP) and income tax professional at Objective Financial Partners Inc. in Toronto

 

Man pays $400 a month to sleep in wooden box in friends’ San Francisco living room

Yanan Wang, Washington Post

By now, the high price of rent in and around San Francisco has become at once a familiar lament and an easy punchline. In 2014, BuzzFeed highlighted nine private islands that cost less than an apartment in the California tech capital; a year later, a local website found the same of five castles.

Along with the cheeky comparisons came clever workarounds: a backyard tent in Mountain View, a garage in Palo Alto, a refurbished FedEx van at San Francisco University.

In October, The Washington Post even spoke with a Google engineer who has made his home in a truck at company headquarters.

With the median rent for a one-bedroom apartment at $3,670 a month, the city’s housing crisis has pushed frugal renters to the edge of their comfort limits.

From tents to trucks, the next logical step in San Francisco has taken shape — in the form of a literal box.

This makeshift bedroom, which its owner prefers to call a pod, is no larger than a wide bookshelf and inconspicuously stationed at one corner of an apartment living room in the Sunset District neighborhood. Its exterior resembles a large crate, while its inside houses a twin bed, a fold-up desk and some LEDs.

Couresty of Peter Berkowitz

Couresty of Peter BerkowitzPeter Berkowitz’s makeshift bedroom, which its owner prefers to call a pod, is no larger than a wide bookshelf and inconspicuously stationed at one corner of an apartment living room.

At 8 feet long and 4.5 feet tall, the wooden box requires Peter Berkowitz to duck to get inside, but he assured The Post in a phone interview Monday night that his new home is “honestly very comfortable.”

“I really don’t feel like I’ve taken a hit in terms of my quality of life,” said Berkowitz, 25. “I don’t really notice I live in the pod anymore.”

Berkowitz moved into the box two weeks ago, after an attempt to find affordable housing in the city proved futile. Fortunately, he had “very generous” friends who allowed him set up “this contraption” in their living room.

The box sits in an apartment where the roommates living in conventional bedrooms pay about $1000 for rent. For $400, Berkowitz lives in his pod and has full access to the amenities. Constructing the pod cost $1,300.

The freelance illustrator and University of Chicago graduate moved to San Francisco after working as a cook at New York’s Gramercy Tavern. He grew up outside New York City, where admittedly “the real estate hunt isn’t fun” either.

But for Berkowitz, whose work has appeared in the New Yorker, the box isn’t so much a sign of desperation as it is a creative solution. He isn’t in “dire straits,” and his decision wasn’t “fueled by poverty.”

“It seems silly, and people have this dystopian take on it, like, ‘Is this what it’s come to?’” he said. “But I firmly believe that it makes a lot of sense. There should be some kind of middle ground between having a bedroom and sleeping on a couch.”

I firmly believe that it makes a lot of sense. There should be some kind of middle ground between having a bedroom and sleeping on a couch

The design of Berkowitz’s pod was inspired by Japanese “capsule” hotels, inexpensive lodgings the size of cubicles. When he was 12 years old, Berkowitz climbed inside a capsule hotel model in an exhibition at the Smithsonian’s Cooper Hewitt Museum, in New York, and the experience has stuck with him ever since.

Despite its location in a living room, the pod offers ample privacy, Berkowitz said, and he is working on fully soundproofing its walls because he is “pretty neurotic.” A fan and built-in ventilation help air travel through.

The most difficult part of the endeavor so far has been perfecting a method for putting his pants on without standing up.

As for sharing the humble abode, Berkowitz said he is currently single and promised to direct any visitors to The Post for comment. “When I have an overnight guest, I’ll let you know,” he said.

He anticipates living in the box for “the foreseeable future.” If he ends up building another pod, though, he plans on making it at least as tall as he is.

What’s new for this tax-filing season?

Vancouver, British Columbia, March 30, 2016…The Canada Revenue Agency (CRA) would like to remind Canadians of new or improved tax relief measures and online services available for the 2015 tax-filing season.

 Important facts

  • Updated notice of assessment – The Canada Revenue Agency (CRA) has improved the notice of assessment! The new, simpler format provides the most important information about your assessment on the first page. This is part of the CRA’s effort to improve its correspondence with individuals. Online tax records are as official as a paper record.
  • Auto-fill my return – The CRA’s “Auto-fill my return” service is now available through some certified tax software. This service allows you to automatically fill in certain parts of your income tax and benefit return. To use the Auto-fill my return service, you must be fully registered for My Account.
  • Online mail – Online mail is the fast, easy and secure way to manage your tax correspondence. Get statements such as your notice of assessment online in My Account, instead of in the mail. To register, provide us with an email address on your income tax and benefit return or register directly online at www.cra.gc.ca/myaccount. New correspondence, such as benefits statements (summer 2016), will be added this year!
  • Universal child care benefit (UCCB) – For the 2015 tax year, under the UCCB, families will receive $160 per month for each child under 6 and $60 per month for each child aged 6 through 17.
  • Disability Tax Credit – This year, Canadians claiming the Disability Tax Credit (DTC) will be able to file their T1 return online regardless of whether or not their Form T2201, Disability Tax Credit Certificate has been submitted to the CRA for that tax year.
  • Children’s fitness amount – As of January 1, 2015, this is now a refundable tax credit available to families with children enrolled in a prescribed program of physical activity. For tax years prior to 2015, this credit was non-refundable.
  • Child Care Expense Deduction limits – As of the 2015 tax year, the Child Care Expense Deduction dollar limits have increased by $1,000. The maximum amounts that can be claimed have increased to $8,000 for children under age seven, to $5,000 for children aged seven through 16, and to $11,000 for children who are eligible for the Disability Tax Credit.
  • MyCRA mobile app – Get your tax information anytime, anywhere, on your mobile device! In October 2015, new features were added to the MyCRA mobile app such as personalized benefit payment information, enhanced tax return status, and Canada child tax benefit application status. Starting February 2016, you will also be able to update your address, manage your online mail with the CRA, and sign up for direct deposit.

To get started on your tax return, go to www.cra.gc.ca/getready.

Former Liberal MLA Barry Penner named ICBC chairman

VICTORIA – Former Liberal MLA Barry Penner is the new chairman of the Insurance Corporation of B.C.

Penner will start the job March 31, on a three year term, ICBC announced Tuesday.

“I’m honoured to have been asked to take on this challenging and important role,” he said in a statement.

“I’m looking forward to serving the people of British Columbia once again.”

Penner was B.C.’s longest-serving environment minister, and also held the roles of Attorney General and Minister of Aboriginal Relations during 16 years as the Liberal MLA for Chilliwack-Hope. He resigned in early 2012 to join a law firm, and then briefly moved to Myanmar.

Most recently, government had tapped him to review a contentious harbour dock proposal in Pender Harbour.

ICBC has been grappling with rising rates, caused in part by the increased cost of claims from crashes as well as fraud. The government has expressed disappointment at the continued rate hikes, and has in the past sharply criticized the Crown auto insurance agency for unacceptable proposals to raise rates before looking within the corporation for savings.

“Mr. Penner’s deep commitment to public and community service led him to accept the government’s request that he take on this challenging position,” said Transportation Minister Todd Stone.

“His extensive experience with government and the private sector will make him an excellent fit for this important role.”

Penner replaces accountant Ronald Olynyk, who had served as interim ICBC chairman since December after the retirement of Walter Gray.

Vancouver Sun

Premier Clark announces upcoming changes to the public service

Premier Christy Clark announced upcoming changes to key positions in the BC Public Service:

After 27 years of serving the Province, John Dyble, deputy minister to the Premier, cabinet secretary and head of the public service, will retire effective March 24, 2016.

Dyble’s public service career started in Smithers in 1980, as an engineering student on a survey crew.  Nine years later, after working as a consulting engineer in the developing world, Dyble formally joined the BC Public Service. Establishing himself as a leader on major B.C. infrastructure projects, Dyble rose to become deputy minister of transportation and infrastructure. He was deputy minister of health, responsible for developing and delivering government’s health innovation agenda, when appointed deputy minister to Premier Clark in 2011.

During his five-year tenure as lead deputy, Dyble helped manage and deliver key government priorities such as successive balanced budgets, the BC Jobs Plan, Crown corporation reviews and long-term labour agreements. As head of the public service, Dyble has worked to build a strong corporate executive and maintain the BC Public Service as one of Canada’s top employers.

“John’s work, over a remarkable career, has literally spanned and helped to build our province,” said Premier Clark. “I thank John for what he has accomplished for British Columbia, and I am honoured to have had him as my partner in the public service for the past five years. He leaves the BC Public Service in excellent hands.”

Kim Henderson, currently deputy minister of finance and secretary to treasury board, will become deputy minister to the Premier, cabinet secretary and head of the public service effective March 25, 2016.

Henderson joined the BC Public Service in 1996. Before her appointment to the Ministry of Finance, Henderson was deputy minister of corporate initiatives (Office of the Premier) where she provided leadership on numerous cross-ministry files and served as the public service lead for the government’s Core Review initiative. Previously, Henderson served as deputy minister of labour and deputy minister of citizens’ services and open government (now the Ministry of Technology and Citizen Services) leading the development of B.C.’s open government strategy which won the IPAC/Deloitte Public Sector Leadership Award. Henderson holds a master’s degree in public administration from the University of Victoria.

Athana Mentzelopoulos, currently deputy minister of jobs, tourism, and skills training and ministry responsible for labour (JTST), will become deputy minister of finance and secretary to treasury board effective March 25, 2016.

Mentzelopoulos first joined the BC Public Service in 2004, serving as deputy minister responsible for intergovernmental relations, public affairs and board resourcing and development (BRDO) until 2009. After serving as director general of consumer product safety for the government of Canada, she rejoined the BC Public Service in 2011 as deputy minister of strategic priorities (Office of the Premier), followed by deputy minister for government communications and public engagement (including responsibility for intergovernmental relations and BRDO).

Mentzelopoulos was appointed deputy minister of JTST in 2014, responsible for developing government’s economic development policy. She holds a master of arts degree from the University of Victoria.

Cherries Jubilee! B.C. celebrates record year for cherry exports

British Columbia’s cherry exports  business has had a remarkable increase in 2015, says minister of  Agriculture.

“Today, I am pleased to report in 2015, B.C. cherry exports have increased dramatically from the previous year to 13,600 metric tonnes (56% increase) to a value of $91.7 million (70% increase), says British Columbia’s Agriculture Minister Norm Letnick, in his statement regarding 2015 export statistics.

“The data also includes a significant rise in sour cherry exports from $2.7 million in 2014 to $11.2 million in 2015,says  Minister Norm Letnick.  “Focusing on high-value B.C. products like late-season cherries is key to growing the B.C. government’s agrifood sector to a $15-billion-a-year industry by 2020.

“In 2014, I was honoured to lead the B.C. delegation with B.C. cherry industry representatives on a federal trade mission to China that led to full, unimpeded access for fresh cherries into China. As a direct result of our efforts, the export value of fresh, sweet cherries to China has more than doubled from 2014 to 2015, rising from $9.9 million to $24 million.

“We are going to build on this momentum. Thanks to the close working relationship with our provincial cherry industry, we look forward to exploring new opportunities with Pacific Rim countries that recently signed the Trans Pacific Partnership.

“British Columbians have always known about this tasty, sweet fruit from the Okanagan. The secret is out. Together we want to share B.C. cherries with the world.”

Shaw to sell Global TV network, specialty channels to Corus for $2.65 billion

BY THE CANADIAN PRESS

CALGARY – Shaw Communications is selling its media division to Corus Entertainment for $2.65 billion — a deal that will help fund the telecom company’s purchase of Wind Mobile.

Shaw Media includes the Global Television network and 19 specialty channels including HGTV Canada, Food Network Canada and Showcase — formerly part of the Canwest business group before it was split up.

Corus already owns a number of other specialty TV channels as well as a network of radio stations and the Nelvana animation studio.

Both companies are controlled by the Shaw family through its voting shares. Shaw Communications will become a large shareholder in Corus as a result of the deal, which involves both cash and shares.

“Through this transaction we are able to crystalize an attractive value for Shaw Media and realize substantial value creation for Shaw shareholders since acquiring CanWest in 2010,” said Shaw director Paul Pew, chair of a special board committee.

Shaw Communications chief executive Brad Shaw added that “we are grateful to our colleagues at Shaw Media for their contributions to Shaw’s success over the past five years . . .”

It’s the second major deal for Shaw Communications (TSX:SJR.B) in recent weeks. The Calgary-based cable, Internet and satellite TV company announced on Dec. 16 that it’s buying Wind Mobile in a deal worth $1.6 billion.

The sale of Shaw Media to Toronto-based Corus will move about $1.85 billion in cash to Shaw Communications, which will also receive about 71 million Corus non-voting class B shares (TSX:CJR.B).

After the deal closes, Shaw Communications will own about 39 per cent of the equity in Corus, including both class A and B shares, but focus its own business on communications infrastructure rather than media content.

“With the previously announced acquisition of Wind and sale of Shaw Media, Shaw will be focused on delivering consumer and small business broadband communications supported by its best-in-class wireline, WiFi and wireless infrastructure,” Brad Shaw said in a joint statement.

Corus CEO Doug Murphy said the purchase of Shaw Media “positions the combined business as one of Canada’s leading media and content companies with significantly enhanced scale and growth prospects going forward.”

The Shaw Media deal is subject to approval by Corus shareholders, including those with non-voting shares not hold by interested parties. It is expected to close by the end of Shaw’s third quarter ending May 31. The Wind deal is also expected to be closed by about the same time.

Corus announced separately Wednesday that its revenue for the first quarter of fiscal 2016 was $228.3 million, up from $228.1 million a year earlier. The increase was mainly due to its television division, which offset a decline in radio. Total net income was $41.3 million, down from 51.9 million in the comparable period.

Note to readers: This is a corrected story, An earlier version said $1.85 million in cash would go to Shaw rather than $1.85 billion.

 

South Asian history initiative helps Royal Columbian cardiac care

100 Year Journey supports campaign to upgrade hospital’s cardiac cath lab

New Westminster, B.C. – {December 10, 2015} – An effort to preserve and share the stories of South Asian pioneers to Canada has also resulted in generous support to BC’s busiest cardiac care centre.

Proceeds from the 2nd annual 100 Year Journey gala are included in a $30,000 donation presented to Royal Columbian Hospital Foundation’s Cardiac Care Campaign.

The gift to the Foundation will help bring the latest technology and equipment to Royal Columbian Hospital’s cardiac catheterization lab – the busiest in the province and serving the entire Fraser Health region.

“Royal Columbian’s cath lab serves one in every three British Columbians, including one of the country’s largest populations of South Asians,” notes entrepreneur Rana Vig, who launched the 100 Year Journey last year and joined the board of Royal Columbian Hospital Foundation this past June. “In light of concerns about heart disease in the South Asian community, my family knows a donation to the cath lab will help save lives.”

The 100 Year Journey aims to provide Canadians with a better understanding of the South Asian community and the contributions they have made to the country. A 150-page book was released on November 29, 2014, sharing the history of 100 South Asian pioneers to Canada. The 2nd annual gala was held on October 3, 2015.

“Royal Columbian Hospital’s origins, just like the pioneers of the South Asian community, go back more than a century in this province,” notes Royal Columbian Hospital Foundation President and CEO Jeff Norris. “It’s an honour to be associated with such a worthy and informative project as the 100 Year Journey.”

The Foundation’s Cardiac Care Campaign has a $3.3 million dollar fundraising goal to upgrade Royal Columbian Hospital’s two cath lab suites, which are available 24/7 for cardiac emergencies like acute heart attacks. The interventional cardiology team performs high-levels of angioplasty to restore blood flow to blocked arteries and conducts angiograms to diagnose heart disease and other cardiac problems.

Donations from individuals, businesses, community groups and foundations will help replace the cath lab’s imaging equipment and hemodynamic monitoring technology. Both are essential components of the lab and work in tandem to provide accurate information for safe and efficient patient care.

Those suffering from heart attacks across the health region are regularly rushed from their homes straight to Royal Columbian’s cath lab, at times arriving by air ambulance for immediate, emergency care. Annually, the interventional cardiology team performs 2,300 angioplasties and 3,100 diagnostic catheterizations – the most in the province.

Royal Columbian Hospital Foundation is appealing for your help today to renew the hospital’s two cath lab suites without further delay to ensure they continue to provide the most advanced care to those who urgently need it. Donate today to the Cardiac Care Campaign by visiting www.rchfoundation.com/heart or phoning 604.520.4438.

800,000 passengers passed through Port Metro as cruise season ends

News Talk 980 CKNW

More than 800,000 passengers passed through Port Metro Vancouver as yet another successful cruise season comes to a close.

Earlier this year Port Metro Vancouver completed improvements to the Canada Place cruise terminal, with more escalators and automated passport control kiosks.

Manager of cruise services, Carmen Ortega, says it’s not expected to slow down.

” We’re expecting another strong season next year, and a passenger forecast slightly higher than this year.”

Port Metro Vancouver is Canada’s largest port and the third largest in North America.

Province launches MRI strategy, funds increased number of scans

Demand for medical imaging in B.C. has never been greater. Premier Christy Clark and Health Minister Terry Lake today announced a new four-year strategy for magnetic resonance imaging (MRI) services to help health authorities increase patient access to MRI scans.

“With an ageing population, health authorities face increasing demand for medical imaging services,” said Premier Clark. “This is what having a strong, growing economy allows us to do – invest in a new strategy to address waitlists throughout the province, and continue to deliver the services British Columbians depend on.”

“We recognize that access to MRIs has been a challenge and this strategy will make sure we better meet the health care needs of British Columbians now and into the future,” said Health Minister Lake. “By improving how we manage MRI diagnostics, we can provide families with peace of mind that comes with faster diagnosis and treatment.”

The MRI strategy takes a two-pronged approach. The first priority is to increase the number of scans—adding up to 65,000 more annually by the end of four years to help address increasing demand and existing wait lists. The ministry and health authorities will also review the governance, service delivery and funding models for MRIs, to ensure an accessible, sustainable medical imaging system.

“We see the difference access to MRIs make in the lives of patients each and every day,” said Dr. Stuart Silver, clinical section head and acting medical director, medical imaging services, Island Health. “On the ground, we look forward to the strategy enhancing patient care and improving speed of diagnosis to get people back to their lives.”

Health authorities are currently finalizing plans for increasing their MRI volumes, including how quickly increases can be put in place. Health authorities have committed to increase the number of MRI exams performed annually by 45% by year four of the strategy. Budget allocations for MRIs will increase correspondingly, providing up to an additional $20 million in annual funding for these services by year four. Health authorities will also be developing plans for improving timeliness, ensuring appropriate referrals for service and increasing geographic access to MRIs in the future.

MRI scan volumes will be increased by extending operating hours for MRI machines, so more patients can be served each day. This means that some patients will be scheduled to receive their scans during evening or night-time hours. Health authorities may also contract private facilities to perform additional procedures.

British Columbia’s strong economic growth and fiscal discipline have enabled government to return a dividend to British Columbians by investing to further improve patient access throughout B.C. Over the past decade, B.C. has acquired 16 new MRI scanners for hospitals, for a total of 25 – a 178% increase. This has helped B.C. significantly increase the number of MRIs done in the public system over the past 10 years from 67,030 in 2004-05 to over 143,000 in 2014-15.

Health authorities will also provide more evidence-based guidance to physicians to ensure they order the best type of scan to meet each patient’s specific medical needs. MRI scans are important diagnostic tools; however different types of medical imaging can be used to diagnose certain conditions. In some cases, an x-ray, ultrasound, Computed tomography (CT) or Positron Emission Tomography (PET) scan may be more appropriate.

Ensuring the right advanced imaging service is provided to British Columbians in a timely fashion will help manage wait lists and provide for smarter, more effective service at the patient level. Today’s announcement supports government’s priority of timely and appropriate access to needed health services through a truly integrated health care system that works for patients.

Magnetic resonance imaging (MRI) is a safe and painless test that uses a magnetic field and radio waves to produce detailed pictures of the body’s organs and structures. MRIs are used to diagnose a number of medical conditions, including abnormalities of the brain, as well as tumours, cysts and soft-tissue injuries in other parts of the body.