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  #3361  
Old 04-03-2024, 09:37 AM
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Interesting personal note...I bought a bunch of Argonaut Gold, see they are getting bought/merging with Alamos Gold, stock has gone up 66.6% in the last month. Never owned stock of a company that was bought out/merged with another. Guess I need to wade though the intricacies to see what the merger deal is regarding Argonaut shareholders. Yay!
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  #3362  
Old 04-03-2024, 10:29 AM
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Quote:
Originally Posted by Trochu View Post
Interesting personal note...I bought a bunch of Argonaut Gold, see they are getting bought/merging with Alamos Gold, stock has gone up 66.6% in the last month. Never owned stock of a company that was bought out/merged with another. Guess I need to wade though the intricacies to see what the merger deal is regarding Argonaut shareholders. Yay!
I’ve been through a few mergers, you’ll likely just get an amount of stocks in the purchasing company that equals the amount you have invested in the company being bought. Basically a straight swap over.


GTE for me is starting to creep back up. A solid Canadian oil company operating in Columbia and Ecuador.
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  #3363  
Old 04-03-2024, 10:40 AM
tranq78 tranq78 is offline
 
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Originally Posted by Drewski Canuck View Post
Who really needs that kind of growth in their Portfolio. Justin and Friends will take care of you from Cradle to Grave and even feed your kids lunch at School, (something you will not be able to do at home once Justin and Friends are done with you),

SO PLEASE THINK ABOUT THE CHILDREN!!!!

Drewski

Ya know Drewski, school programs are a provincial responsibility not a federal one -- that includes Alberta lunch programs. And provinces, including Alberta, already has this plan.

Trudeau/Freeland's announcement of a child food program was done with zero consultation with the provinces. The provinces weren't even told ahead of time, not even the liberal/NDP provinces.

Good sound bites though for CBC to let us know how well the feds are taking care of us. Don't mention the already existing nasty UCP school nutrition program, a lunch program must be a totally different thing. See how doublespeak and willful ignorance works?

=========

Back to investing topics.

Oil and gas companies are benefitting from the unintended consequences of Trudeau trying to kill the industry.

The surviving energy co's have stopped growth spending. They are just spending enough to replace the reserves they used up while at the same time demand continues to grow even under Trudeau as our population is growing.

This means the current energy cycle is going to continue for a way longer time than past cycles.

Now hush, stop talking about it. You'll let everyone in on the secret and we can't have that!
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  #3364  
Old 04-03-2024, 02:05 PM
Drewski Canuck Drewski Canuck is offline
 
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Quote:
Originally Posted by tranq78 View Post
Ya know Drewski, school programs are a provincial responsibility not a federal one -- that includes Alberta lunch programs. And provinces, including Alberta, already has this plan.

Trudeau/Freeland's announcement of a child food program was done with zero consultation with the provinces. The provinces weren't even told ahead of time, not even the liberal/NDP provinces.

Good sound bites though for CBC to let us know how well the feds are taking care of us. Don't mention the already existing nasty UCP school nutrition program, a lunch program must be a totally different thing. See how doublespeak and willful ignorance works?

=========

Back to investing topics.

Oil and gas companies are benefitting from the unintended consequences of Trudeau trying to kill the industry.

The surviving energy co's have stopped growth spending. They are just spending enough to replace the reserves they used up while at the same time demand continues to grow even under Trudeau as our population is growing.

This means the current energy cycle is going to continue for a way longer time than past cycles.

Now hush, stop talking about it. You'll let everyone in on the secret and we can't have that!
Oh Brother I know your pain!!! But it was not Trudeau's policies, it is also the US Democrats who created this crisis in the Oil Markets.

The Majors are all that is left in North America due to mergers in the US Industry. They are not investing in North America, and are only harvesting profits. They are waiting for a change in political climate before proceeding to re invest.

But they are working off shore in places like Guyana. This is why big players like Exxon, Chevron, Shell are going up 1- 3 % per week right now.

The Canadian Oil Space has seen small and mid level producers fail or be bought out from 2015 forward. The Majors still play in our Patch through big Oil Sand Plays for the simple reason that they own the Refineries on the US Gulf Coast that are set up to process this heavy oil, bought at a steep discount of course!!! The so called Differential was well known to the Liberals / NDP, who let this heavy oil discount continue for so long and allowed the US Multi Nationals get very rich on our expense. The fix was in from 2015 forward. The US Multi Nationals paid very little Tax in Canada, as the Discounted Canadian Heavy Crude Oil was sold to the US Refineries where the Processing resulted in a huge Value Added finished product and profit, for the US.

Things are now changing in Alberta. The Heartland Upgrader is taking Bitumen ROYALTY In Kind (BRIK) and making Alberta money.

Trans X is now running and there will be an alternative market for our heavy Oil forcing the US Multi Nationals to compete for our Heavy Oil and driving up the prices.

Now all that we need is for Domestic small and medium sized producers be Incorporated, start working in the Western Canadian Oil Patch, and start drilling for conventional oil. That is what creates the jobs and creates the wealth for Alberta.

Drewski
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  #3365  
Old 04-09-2024, 08:38 AM
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These are American numbers but pretty clear the reported CPI numbers are pure B.S., as I have said many times. Food inflation in Canada has actually been even worse.

7) Is CPI Understating Food Inflation?
A WSJ analysis found that a commonly purchased basket of supermarket goods has increased in price by 36.5% over the past 4 years (+8.1% per year). This is much higher than the US Government CPI figures which show food price inflation of 25.2% over the last 4 years (+5.8%/year).



Meanwhile, average hourly earnings in the US have increased 21% over the past 4 years (+4.9% per year). This is one reason why many Americans, particularly those with lower incomes, feel like they’re falling behind.


For all of you that believe the highest income earners pay next to no tax, or far below their fair share, this might be of interest.

The top 1% of income earners in America made 26% of the country’s total income in 2021 and paid 46% of total income taxes (their avg tax rate: 26%). The bottom 50% of income earners made 10% of total income and paid 2% of total income taxes (their avg tax rate: 3%).

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  #3366  
Old 04-09-2024, 09:30 AM
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So the other 49% of the schmucks in the middle brackets paid 52% of the total income tax, in other words.
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  #3367  
Old 04-09-2024, 09:48 AM
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Originally Posted by Buckhead View Post
So the other 49% of the schmucks in the middle brackets paid 52% of the total income tax, in other words.
It would be more accurate to say that the top 10% of earners paid 76% of the income tax collected. The other 90% of earners paid the remaining 24% and the bottom 50% were only about 3% of the 24%. Thus the top 11% to 50% paid 21% of the total tax collected, with the 25% to 50% contributing only 8% of that.

What this demonstrates is the top earners pay a very large amount of the total tax paid, despite them being a quite small number of income earners.

Last edited by Dean2; 04-09-2024 at 09:53 AM.
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  #3368  
Old 04-09-2024, 12:07 PM
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One more point, in case it wasn't clear. The vast majority of those that work, being 75% of the income earning population, only accounts for 11% of total tax collected. These are American numbers, in Canada, the load on the top earners is even higher than it is in the States.

If you run off the high paying jobs, and the people who are in those high paying jobs, like Canada has been so ruthlessly trying to do for the past 8 years, then the tax burden falls more and more on the lower income earners. This is what the carbon tax, sales taxes, taxes on alcohol, cigarettes, cannabis, inflation, property taxes, school taxes and all the other new levies and tax increases are in the process of doing.

If you think we have a productivity problem in Canada now, and it is already REALLY bad, it will only get progressively worse if the Liberals keep killing off the high paying jobs in our economy. If they manage to shut down Oil and Gas, 30% of our GDP would disappear. there is a reason why high tech doesn't thrive in Canada, no one wants to suffer the tax burden here when they can get paid in the States and pay half the tax.
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  #3369  
Old 04-09-2024, 09:14 PM
Drewski Canuck Drewski Canuck is offline
 
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What people and politicians forget is that wealthy people are the ones who have the capital to invest, innovate, and lead the economy.

High wage earners are professionals, as well as Business people.

The reason for a brain drain from Canada is the opportunity to make and KEEP more elsewhere. Once the business professional class leaves, it takes generations for a new group to rise up into this role.

What is so funny is that alot of the Laurentien Liberal Elite are families that have already moved their wealth and businesses off shore. Yet these are the same Politicians trying to tax the average Canadian to poverty.

If Pierre Polievre wants a Campaign Slogan, it is blatantly clear: Canada, lets PROSPER.

There is no other message that has to be communicated. Right now, Justin and Friends are squandering our chance at prosperity.

Drewski
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  #3370  
Old 04-10-2024, 04:45 PM
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Was reading today that one of the financial gurus is predicting our loonie will drop to $.50 US by the end of this year… If that’s a case- we are going to be in a deep poop! Gold is over $2200 so the actual inflation is closer to 50% in the last two years…
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  #3371  
Old 04-11-2024, 08:56 AM
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A little more information on Productivity. I find it interesting that this is starting to be a regular discussion piece. It should already have been for at least the last 6 years.



Mark Parsons, ATB ECONOMICS | April 11, 2024

The productivity imperative:

Talk of Canada's sluggish productivity performance has been trending. Senior Deputy Governor Carolyn Rogers recently said the need to bolster productivity is “an emergency - it’s time to break the glass”.

Productivity is the ability to convert resources (raw materials, people and capital) into output. It ultimately determines a jurisdiction’s living standards. Nobel Prize-winning economist Paul Krugman once remarked: “Productivity isn’t everything, but, in the long-run, it is almost everything”.

While that sounds important, it also sounds a bit theoretical. It’s easy to dismiss productivity as an abstract academic concept.

Incomes are more relatable. In a Hub article released last week, University of Calgary professor Trevor Tombe shows a clear connection between declining real earnings growth and weak productivity, warning the “Great Canadian Slump” is back.

Another way to make the productivity-wage connection is by looking at industries. Statistics Canada maintains detailed productivity accounts for individual industries. As shown in the below figure, there is a strong relationship between the productivity of workers in an industry and the wages it pays.

Energy-related industries have among the highest levels of productivity and wages in Canada. We recently showed that the majority of Alberta’s higher overall labour productivity (vs. the national average) is due to the province having a higher concentration of workers in these industries.

Bottom line: Productivity shouldn’t be dismissed as a theoretical or academic concern. When labour productivity suffers on a sustained basis, it ultimately translates into lower overall wages for workers.


Owl chart Apr 11 2024

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  #3372  
Old 04-19-2024, 07:12 PM
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Tech had a very rough day , probably just want to beat the line up for the sell in May and go away .
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  #3373  
Old 04-22-2024, 09:34 AM
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Quote:
Originally Posted by Dean2 View Post
It would be more accurate to say that the top 10% of earners paid 76% of the income tax collected. The other 90% of earners paid the remaining 24% and the bottom 50% were only about 3% of the 24%. Thus the top 11% to 50% paid 21% of the total tax collected, with the 25% to 50% contributing only 8% of that.

What this demonstrates is the top earners pay a very large amount of the total tax paid, despite them being a quite small number of income earners.
Does this take into account all of the income earners with personal corporations that pay themselves relatively low incomes?

I certainly understand why people use corporations to avoid extra tax because of how insane our tax rates are, but I am curious about how that factors into these statistics.
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  #3374  
Old 04-27-2024, 10:18 AM
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So in case any of you were inclined to believe the drivel from the Government or the Central Banks, of late there are more and more experts now predicting that U.S. interest rates may go up more, before they come down. Reasons cited, economy still growing, inflation still well above the 2% target, more jobs than workers etc.

I find it interesting that in Canada, despite record immigration, the GDP is shrinking, productivity is dropping, house and rent prices continue to sore and almost every service, including health services, food banks and government services, despite the number of federal of employees having grown 50% in the last 4 years,, are massively over subscribed.

Anyone expecting relief from higher interest rates, surging food, fuel and everyday costs inflation needs to take another look at their plans for the next 12 to 24 months, because it is likely to get worse, or at minimum not get any better, any time soon.

I don't say this to be negative or to depress folks but it goes back to the theme I have advocated for a long time; Reduce debt, invest in things that grow faster than inflation and produce an income, and make sure you have a VERY firm grip on your monthly and annual personal budget.

All you have to look at is what has happened to the cost of gas in the last few months, up 60%. Groceries, taxes, if you live in Edmonton property taxes alone are going up 25% in the next 3 years, mortgage payments when you go from 1.5% at renewal to 5 or 6%, apartment rent is jumping at every annual renewal etc. If you are currently living from paycheck to paycheck, you need to find a way to bring in more income, or reduce expenses, or both, because your current costs are 10% less than they will be 12 months from now.

Best of luck to all.
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  #3375  
Old 04-27-2024, 10:24 AM
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Quote:
Originally Posted by trailraat View Post
Does this take into account all of the income earners with personal corporations that pay themselves relatively low incomes?

I certainly understand why people use corporations to avoid extra tax because of how insane our tax rates are, but I am curious about how that factors into these statistics.
Just saw this post. Paying yourself through a corporation is only partially effective in mitigating tax. Long and short, highest earners are getting heavily taxed no matter how they earn the money.

https://wtcca.com/corporate-tax-rate...tes-in-canada/


Quote:
What is the Corporate Tax Rate in Canada?

Based on the Income Tax Act, the Federal corporate tax rate starts at 38%. This rate has an offsetting 10% Federal income tax abatement and an additional 13% general tax reduction. All of this places the net corporate tax rate at 15%.

This tax rate applies to general corporations, which are corporations that are not Canadian-controlled private corporations (CCPCs). Typically, these corporations are public companies with resident subsidiaries in Canada and private companies controlled by foreigners or non-residents.

Several factors determine how much corporate tax your business must pay in Canada. The corporate tax rate in Canada depends on which province your business is located in, the size of the company (how much revenue is earned), and income sources, that is, whether or not the business earns active income or passive income.

Note that active income is income from your ordinary business activities, excluding amounts generated from passive income, a specified investment business, or a personal services business. Investment income is income generated from interest, dividends, rent, and capital gains.

Here is a breakdown of the general corporate income tax rate by province:
2023 General Corporate Tax Rates
Federal 15%
Ontario 11.50%
British Columbia 12%
Alberta 8%
Manitoba 12%
New Brunswick 14%
Prince Edward Island 16%
Nova Scotia 14%
Newfoundland & Labrador 15%
Nunavut 12%
Northwest Territories 11.50%
Yukon 12%
Saskatchewan 12%
Quebec 11.50%
What is the Small Business Tax Rate in Canada?

Small businesses that are located in Canada pay different tax rates based on how the business is set up and how much revenue the business earns.

A Canadian small business is defined as having less than $500,000 in annual taxable income.

Canadian-controlled private corporations (CCPCs) can use the Federal small business deduction (SBD) to reduce the corporate income tax rate on the company’s active business income with all primarily activities being carried on in Canada. A CCPC is a corporation owned by either Canadian residents or a company controlled by Canadian residents. To be defined as a CCPC, your corporation must be incorporated in Canada, a private corporation, and it is not publicly traded on any stock exchange.

The Federal small business deduction was designed with small businesses in mind to reduce the overall corporate income tax liability. In most provinces and territories, the maximum limit for preferential tax treatment is $500,000 in taxable income. This is also known as the small business limit for the corporation.

The preferential tax treatment of small business deduction helps small to medium enterprises, startups, and other smaller companies fulfill their tax obligations and provide valuable incentives to bigger, larger corporations.

The following chart shows the Federal and each province’s small business tax rates applicable to businesses claiming the SBD small business deduction. For CCPCs eligible for preferential tax treatment to claim the SBD small business deduction, the Federal corporate tax rate is 9%.
Business Limit Threshold 2023 Small Business Tax Rate (CCPC)
Federal $500,000 9%
Ontario $500,000 3.20%
British Columbia $500,000 2%
Alberta $500,000 2%
Manitoba $500,000 0%
New Brunswick $500,000 2.50%
Prince Edward Island $500,000 1%
Nova Scotia $500,000 2.50%
Newfoundland & Labrador $500,000 3%
Nunavut $500,000 3%
Northwest Territories $500,000 2%
Yukon $500,000 0%
Saskatchewan $600,000 0%
Quebec $500,000 3.20%
Combined Corporate Tax Rates in Canada

Not all provinces have the same corporate income tax rate. In some instances, there is a dual tax rate.

The dual tax rate consists of a lower rate and a higher rate. The lower rate is applied to income eligible for the Federal small business deduction (SBD), which is the income that meets or falls below the established Federal business limit threshold. The higher tax rate applies to all other income.

Here is an example of what this might look like:

ABC Company has a permanent business in Ontario and has a taxable income of $600,000. All income is earned from ordinary business activities carried on in Canada.

The small business deduction tax rate in Ontario is 3.2% and 9% at the Federal level, providing a combined total of 12.2%.

The General Corporate Tax Rate in Ontario is 11.5% and 15% at the Federal level, providing a combined total of 26.5%.

ABC Company would calculate corporate income taxes on the first $500,000 income (i.e. small business limit) using the Small Business Tax Rate of 12.2%. This equals $61,000. ABC Company would then calculate the corporate income taxes on the remaining $100,000 income using the General Corporate Tax Rate of 26.5%. This equals $26,500. The combined corporate income taxes payable are $61,000 plus $26,500 for a total of $87,500.

The following chart shows each province’s combined Federal and provincial corporate income tax rates on income eligible for Small Business Tax Rate and income subject to General Corporate Tax Rate.
Province/Territory 2023 Small Business Tax Rate (Lower Rate) 2023 General Corporate Tax Rate (Higher Rate)
Ontario 12.20% 26.50%
British Columbia 11% 27%
Alberta 11% 23%
Manitoba 9% 27%
New Brunswick 11.50% 29%
Prince Edward Island 10% 31%
Nova Scotia 11.50% 29%
Newfoundland & Labrador 12% 30%
Nunavut 12% 27%
Northwest Territories 11.50% 26.50%
Yukon 9% 27%
Saskatchewan 9% 27%
Quebec 12.20% 26.50%
What is the Corporate Investment Income Tax Rate?

In Canada, investment income is income generated primarily from investment assets, including interest, dividends, rentals, and capital gains. It is often considered passive income as it is not directly tied to or related to the corporation’s primary business income.

In 2019, the Canada Revenue Agency implemented changes to the way corporate investment income is taxed. These new rules dictate that if passive income crosses a $50,000 threshold in the tax year, the corporate tax rate on the corporation’s active business income will increase.

These rules were implemented to encourage businesses to reinvest passive income back into the business rather than let it sit and continue to grow as passive income. CCPCs, under this tax structure, don’t have the incentive to increase passive income if they wish to keep their tax rate at a lower level. In fact, the reduced Small Business Tax Rate is completely phased out if passive income exceeds $150,000. Historically, CCPCs may have invested this income in things like stocks and bonds to preserve assets and increase overall income.

CCPCs are subject to a Federal investment income tax rate of 28% (net of 10% Federal income tax abatement) plus a refundable 10⅔% for a total Federal income tax rate of 38⅔% or 38.70%.

Here is a breakdown of the Corporate Investment Tax Rates in Canada:
2023 Investment Tax Rate
Federal 38.70%
Ontario 11.50%
British Columbia 12%
Alberta 8%
Manitoba 12%
New Brunswick 14%
Prince Edward Island 16%
Nova Scotia 14%
Newfoundland & Labrador 15%
Nunavut 12%
Northwest Territories 11.50%
Yukon 12%
Quebec 11.50%
Saskatchewan 12%
Underused Housing Tax (UHT) Rate

For Canadian residential properties owned on or after December 31, 2022, a 1% tax on the value of the property may be levied if it is considered vacant or underused. You are required to file an Underused Housing Tax return if you are not an excluded owner, and you are required to pay the 1% tax if you do not qualify under one of the four categories of exemptions.
What is the Capital Gains Corporate Tax Rate?

A capital gain is earned through the sale of a passive investment asset. Passive investment assets can include shares of businesses, publicly traded stocks, goodwill, land, and other real properties. Capital gains must be declared as part of a corporation’s income.

The good news, however, is that due to the capital gains inclusion rate, only half or 50% of a corporation’s capital gains need to be included in declared income.

Since only 50% of capital gain is subject to taxation, the corporate tax rate on capital gains is equal to 50% of the Investment Income Tax Rate.

If the assets held by the corporation have appreciated substantially in value, this may result in hefty tax liability at the time of sale. Any business with the potential for capital gains should speak with a professional corporate tax accountant to fully understand the implications and how these gains will be taxed.

After capital gains are reported, the business can take advantage of the Capital Dividend Account (CDA) to distribute the non-taxable portion of the capital gain. This is because only 50% of the capital gain is subject to taxation, and the other 50% can be distributed using the CDA on a tax-free basis.

Note that if the sale of assets results in a capital loss, it can be carried back 3 years to offset prior year capital gains and carried forward 20 years on any future capital gains. Capital losses cannot be used to offset ordinary active business income earned.

Here is a look at the Capital Gains Corporate Tax Rates in Canada.
2023 Capital Gains Corporate Tax Rate
Federal 19.35%
Ontario 5.75%
British Columbia 6%
Alberta 4%
Manitoba 6%
New Brunswick 7%
Prince Edward Island 8%
Nova Scotia 5.75%
Newfoundland & Labrador 7.50%
Nunavut 6%
Northwest Territories 7%
Yukon 6%
Saskatchewan 6%
Quebec 5.75%
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  #3376  
Old 04-27-2024, 05:34 PM
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Thanks for taking the time to post this.
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  #3377  
Old 04-28-2024, 12:42 AM
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Good post. It’s all speculative of course, but do you think that the BOC will be forced to cut rates (our economy seems to be tanking) while the US maintains? I’ve heard that our dollar might be “sacrificed” in this way.

On a side note… an interesting company I heard of: Terravest (TVK). They build storage and transportation units for LNG, as well as fertilizer, etc. Been growing and acquiring nonstop since their inception in 2014. With rates higher for longer, they might roll up more distressed businesses. They seem to be under the radar somewhat.
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  #3378  
Old 04-28-2024, 04:40 AM
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Quote:
Originally Posted by Fisherdan View Post
Good post. It’s all speculative of course, but do you think that the BOC will be forced to cut rates (our economy seems to be tanking) while the US maintains? I’ve heard that our dollar might be “sacrificed” in this way.

On a side note… an interesting company I heard of: Terravest (TVK). They build storage and transportation units for LNG, as well as fertilizer, etc. Been growing and acquiring nonstop since their inception in 2014. With rates higher for longer, they might roll up more distressed businesses. They seem to be under the radar somewhat.
It is entirely possible that BOC lowers rates before the Fed. That would have a very negative impact on the Canada/U.S. exchange rate. If you are going to need U.S. dollars any time soon, it would be prudent to get them now. Holding stock or cash in U.S. dollars is also a prudent hedge against devaluation of the Canadian dollar. If you live in Venezuela or Argentina you will wish you had converted most of your wealth to greenbacks many years ago. It we get another Liberal government that scenario is not out of the question here in Canada.

Even if BOC doesn't drop rates first, I really don't see the Canadian dollar getting stronger against any other major currencies. Our economic performance sucks VERY badly, see my previous posts on productivity, and the Liberal policies have made Canada next to un-investable. When you have to give Billions in subsidies to get anyone to setup a business here, you know you aren't a preferred location for investment.

We badly need a change of government, but even with one, it will take a few years to repair the massive damage that has already been done.

Last edited by Dean2; 04-28-2024 at 04:49 AM.
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  #3379  
Old 04-30-2024, 10:44 AM
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It occurred to me this morning that some of you may not know this:

Many Canadian stocks are also traded on New York in U.S. dollars. So for example, you can choose to hold Royal Bank in Canadian dollars in your RRSP, or hold them in U.S. dollars. If you already hold a bunch in Canadian dollars you can choose to have your brokerage do a journal entry to hold them in U.S. instead. So, today, that conversion would be done a .727, thus 10,000 Canadian book cost, would translate to 7270.00 U.S. book cost and the current value would go from $13,000 CDN to $9451 U.S.. Having it done as a Journal entry gets you a LOT better exchange rate than selling the Canadian stock, converting the proceeds to U.S. then buying the U.S. stock.

You can also chose to buy U.S. stocks like Amazon, Google etc. in your RRSP or TFSA in U.S. dollars, and you can buy index funds like HXS, as HXS.U which is the same S&P 500 index traded in U.S. dollars.

If anyone has questions, post them and I will try to answer them.
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  #3380  
Old 04-30-2024, 11:06 AM
doublehaul doublehaul is offline
 
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Thank you Dean2
For you many helpful tips!
Much appreciated for some of us that are fairly new to making personal finance decisions
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  #3381  
Old 04-30-2024, 02:56 PM
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So one point I didn't make clear enough is, once the Royal Bank shares are Journaled over to the U.S traded RY stock you can choose to sell that stock at any time in the future, leave the money as U.S. dollars and buy U.S. stocks like Google, Visa, Mastercard or Amazon, as just a few examples, that trade on New York or the Nasdag and do not trade on the TSX, so cannot be bought in Canadian dollars.
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  #3382  
Old 04-30-2024, 03:12 PM
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So one point I didn't make clear enough is, once the Royal Bank shares are Journaled over to the U.S traded RY stock you can choose to sell that stock at any time in the future, leave the money as U.S. dollars and buy U.S. stocks like Google, Visa, Mastercard or Amazon, as just a few examples, that trade on New York or the Nasdag and do not trade on the TSX, so cannot be bought in Canadian dollars.
Dean, I’m confused as how exactly it works. So let’s say I hold 200 RY shares in my Canadian dollars account. I need to call my trader and ask them to journal entry them into the US dollars account? And then do the trader transfers the shares or dollar value of shares into the US account?
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Old 04-30-2024, 03:33 PM
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Dean, I’m confused as how exactly it works. So let’s say I hold 200 RY shares in my Canadian dollars account. I need to call my trader and ask them to journal entry them into the US dollars account? And then do the trader transfers the shares or dollar value of shares into the US account?
Almost all accounts have both a Canadian and U.S.denominated side. Tfsa, rrsp and cash accounts all have the dual cuurency side, at least at the mjor bank brokerages and ones like Q trade. So yes, call the online support guy at your self directed account and have them do the journal entry. Make sure the exchange rate they are using for the calc matches the current quoted spot rate on say BNN or your trading account. That is how you avoid paying a 2 or 3 cent per dollar "commission" which I call a shave or undeclared fee on most fx transactions. Doesn't sound like much but it is 20 to 30,000 dollars per million exchanged.

Once the journal entry is done, the next day the shares will show up in U.S dollars on the U.S. side of the account.

Last edited by Dean2; 04-30-2024 at 03:39 PM.
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Old 05-01-2024, 07:22 AM
mac1983 mac1983 is offline
 
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It occurred to me this morning that some of you may not know this:

Many Canadian stocks are also traded on New York in U.S. dollars. So for example, you can choose to hold Royal Bank in Canadian dollars in your RRSP, or hold them in U.S. dollars. If you already hold a bunch in Canadian dollars you can choose to have your brokerage do a journal entry to hold them in U.S. instead. So, today, that conversion would be done a .727, thus 10,000 Canadian book cost, would translate to 7270.00 U.S. book cost and the current value would go from $13,000 CDN to $9451 U.S.. Having it done as a Journal entry gets you a LOT better exchange rate than selling the Canadian stock, converting the proceeds to U.S. then buying the U.S. stock.

You can also chose to buy U.S. stocks like Amazon, Google etc. in your RRSP or TFSA in U.S. dollars, and you can buy index funds like HXS, as HXS.U which is the same S&P 500 index traded in U.S. dollars.

If anyone has questions, post them and I will try to answer them.

Tax implications?
Does one have to file in the us if owning us stocks?
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Old 05-01-2024, 07:32 AM
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Tax implications?
Does one have to file in the us if owning us stocks?
Depends on whether you hold them in registered RRSP accounts or not. If you decide to go this way make sure you fully understand the implications tax wise.

Like I have said many times, I do not offer investment or tax advice, merely provide information based on what I am doing. Whether that makes sense for anyone else or not, really depends on individual circumstances.

Basic Overview I copied from an article on the net, but again, talk to an epxert who knows your entire situation.

Every Canadian resident with a Social Insurance Number (SIN) can open a TFSA account once they reach the age of majority whether they have income or not. Interest, dividends and capital gains from Canadian investments accrue in your TFSA tax-free. However, if you own U.S. stocks, the IRS requires that taxes are withheld regardless of the fact that the stocks are held in a tax-free account.

In determining if you should move your blue-chip stocks from your TFSA to your RRSP, here are some things to analyze and ponder.

First, the IRS levies a 15% withholding tax on Canadian investment accounts as part of Canada’s treaty with the U.S. Look at the return on your blue-chip stock after the withholding tax. After doing this analysis you may find that the numbers speak for themselves and your return after the withholding tax is better than the return on your Canadian investments.

Second, the IRS does not levy withholding taxes on U.S. investments held in an RRSP

Third, how much diversity are you looking for in your overall portfolio with your TFSA and RRSP? This will be somewhat determined by how soon you plan on withdrawing the funds in your RRSP and TFSA. If you are intending to hold for a long time, then moving your stocks to your RRSP account and holding Canadian investments in your TFSA may be a good strategy. On the other hand, if you are retiring soon, you may be looking for more diversity to spread your risk in which case leaving the stocks in your TFSA will make sense.

Finally, your province is a factor in this decision. Ask your accountant to calculate your taxes owing under each scenario so you are sure of the impact of your decision.

Another Article

Stocks and ETFs

When a non-resident invests in U.S stocks or U.S.-listed exchange traded funds (ETFs), the standard withholding tax on dividends is 30%. A Canadian resident is entitled to a lower withholding rate of 15% under a treaty between the two countries if they have filed a form W-8 BEN with the brokerage where they hold the investments.

The 15% withholding tax is generally the only tax obligation a Canadian investor has to the Internal Revenue Service (IRS) unless they are a U.S. citizen. (U.S. citizens who reside in Canada must file U.S. tax returns as well as Canadian tax returns.)

If a Canadian resident who is not a U.S. citizen sells a U.S. stock or ETF for a profit, realizing a capital gain, they do not pay tax on that gain to the U.S. government.
Dividends, interest, capital gains and other investment income

U.S. dividends, interest, capital gains and other sources of investment income are taxable on a Canadian resident’s T1 tax return because Canadians pay tax on their worldwide income.

Interest income earned in the U.S. generally has no withholding tax for a Canadian resident.

Any U.S. tax withheld on other sources of investment income is eligible to claim as a foreign tax credit. This generally reduces the Canadian tax otherwise payable dollar for dollar, and avoids double taxation.

U.S. dividends, interest, and capital gains must be reported in Canadian dollars based on the applicable foreign exchange rate. Most people use the average rate for the year to convert their income to Canadian dollars, but it is also acceptable to use the rate on the date of the transaction.

Capital gains are a little trickier than dividends and interest because you have at least two exchange rates to determine: the exchange rate on the date of purchase, and the exchange rate on the date of sale. Because exchange rates fluctuate, it is possible that the shift in exchange rates causes a much different capital gain or loss in Canadian dollars than in US dollars.

If an investor has purchased shares at different times, there is even more work involved. You need to figure out the exchange rate for each purchase in Canadian dollars to determine the adjusted cost base. This can be particularly challenging for someone who has a stock savings plan with a U.S.-based employer where they buy shares with each paycheque, for example.

Canadian-listed ETFs and Canadian mutual funds that own U.S. stocks are themselves considered to be Canadian residents, just like an individual taxpayer. They will be subject to withholding tax before a dividend is received by the fund. This withholding tax is generally reported on a T3 slip (or sometimes a T5 slip, depending on the fund) and can likewise be claimed for a foreign tax credit in Canada.

So far, these comments apply to non-registered, taxable investment accounts. There are slightly different implications if a Canadian buys U.S. stocks or ETFs in a different account.
Registered investment accounts

Tax-free savings accounts (TFSAs), registered education savings plans (RESPs), and registered disability savings plans (RDSPs) generally have the same withholding tax implications by the IRS as a taxable account. However, because these accounts are tax-free or tax-deferred, there are no tax implications for a Canadian beyond the withholding tax.

Does this mean you should not own U.S. stocks in a TFSA, RESP or RDSP? No, but it does mean there is a slight cost to doing so, albeit for the benefit of holding a more diversified investment portfolio.

A registered retirement savings plan (RRSP) or similar tax-deferred retirement savings account gets special treatment by the IRS. There is generally no withholding tax if you own U.S. stocks or U.S.-listed ETFs. However, if you own a Canadian-listed ETF or Canadian mutual fund that owns US stocks, the tax is withheld before it gets to the fund or to your RRSP.

For a Canadian taxpayer, the tax implications are identical whether you have an account in Canada or the U.S. The physical location of the account does not matter.
Real estate

Canadians who invest in U.S. real estate face different implications depending upon whether the property is for personal use or is a rental property.

A personal-use property generally has no annual tax filing requirements, whereas a rental property must be reported in both Canada and the U.S. each year.

Rental income and expenses should be reported on both a Canadian and a U.S. tax return. A Canadian resident with a U.S. rental property must file a 1040-NR tax return to report the U.S. source income to the IRS. Any U.S. tax payable can generally be claimed in Canada as a foreign tax credit to reduce Canadian tax otherwise payable.

Upon sale, there may be a capital gain or loss in Canada and the U.S. The Canadian gain or loss depends on the purchase price in Canadian dollars and the sale price in Canadian dollars, based on the exchange rates in effect at the time of each transaction. Purchase and sale costs, as well as any renovations, may reduce a capital gain (or increase a loss).

A Canadian is generally subject to 15% withholding tax on the gross proceeds of U.S. real estate, unless they file for a withholding certificate prior to closing to reduce the tax based on the estimated capital gain. U.S. capital gains tax paid is eligible to claim in Canada as a foreign tax credit.

If a Canadian taxpayer has more than $100,000 in foreign assets, including U.S. stocks, ETFs, rental real estate, or other investments, they need to file the T1135 Foreign Income Verification Statement form with their Canadian tax return. The $100,000 limit relates to the cost, in Canadian dollars, for the investments. Personal-use foreign real estate, as well as tax-sheltered RRSPs or tax-free TFSAs, do not need to be reported.

Last edited by Dean2; 05-01-2024 at 07:52 AM.
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Old 05-02-2024, 09:26 PM
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I have to say that thanks to Dean2, this is by far the best discussion on the forum.

Tons of good solid advice and facts for those that take the time to read through it!
Thx Dean.
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Old 05-02-2024, 09:45 PM
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I have to say that thanks to Dean2, this is by far the best discussion on the forum.

Tons of good solid advice and facts for those that take the time to read through it!
Thx Dean.
I'll second that, what an awesome wealth of information for us schmucks to use the generosity of the man taking a bunch of his time to help us!!
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Old 05-02-2024, 10:30 PM
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I'll second that, what an awesome wealth of information for us schmucks to use the generosity of the man taking a bunch of his time to help us!!

Totally agree. Thanks for sticking with us, Dean!
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Old 05-03-2024, 05:16 AM
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Appreciate the thank yous. I post a fair amount on this thread because it is a subject I spend a lot of time on, and I hope what I have learned gets passed on and is helpful to others who might not have the same access to information and 45 years of experience. I also find it quite interesting to have so much information written down in one thread, and to be able to go back over the posts from the beginning and look at how things have evolved over the past 4 years. I have started at post one and read all the way through a couple of times; truly a very interesting exercise.

I have always believed the very best thing you can do for your children is to make them financially literate. Starting to invest young is far and away the easiest way to end up wealthy. Our schools should be doing a much better job of teaching kids that. Even university fails miserably at teaching financial literacy to their students. I have guest lectured a large number of MBA classes, and was initially amazed that most students didn't even know what the Rule of 72 is, let alone many more complicated investment principles.

The other reason is to give people a perspective to perhaps evaluate the information they are getting from their financial advisors. There are good advisors out there, and a great many mediocre to bad ones. We all need a way to try to be able to separate them without going through 3 years of zero or negative returns to determine if they are any good.

Something I posted on another thread that relates to the posts above about U.S. dollar investments -

For larger quantities of U.S. dollars, say over 5000, Knightsbridge is worth checking out. Also worth checking is AMA and the Snow Birds Club. For small amounts of cash I just use the Bank.

In my case, when I travel I have a U.S. dollar credit card, that gets paid out of my U.S. dollar bank account automatically. U.S. dollar investments are sold to add cash to the U.S. dollar account. I hold a fairly large chunk of investments in U.S. dollars. That way I am not subject to the fluctuating exchange rate and am insulated from Trudeau's drive to make the Canadian dollar worth 25 cents..

https://www.knightsbridgefx.com/?msc...52e9b0106d85d4

These guys are well worth being a member of if you travel a lot.

https://www.snowbirds.org/

APRIL 2024 Exchange Rate

USD/CAD = 1.3674
( *$1 USD will cost you $1.3674 CAD )

CAD/USD = 0.7313

Last edited by Dean2; 05-03-2024 at 05:27 AM.
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Old 05-03-2024, 10:08 AM
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A few have asked if I think a 25 cent Canadian dollar is really possible, yes I do. The South African Rand, used to trade at Par with the U.S. dollar. It's economy has been in a steady downtrend for years. Four years ago it was 12/1, their economy has tanked even more and it trades now at 18.5/1. Venezuelan Bolivar 2018 2.5/1, currently trading at 35/1, has been as low as 1,250,000/1. The only reason it trades where it does now is 2 massive currency adjustments. Just imagine what this has done to the purchasing power of South Africans, let alone a Venezuelan.


Quote:
The bolívar [boˈliβaɾ] is the official currency of Venezuela. Named after the hero of South American independence Simón Bolívar, it was introduced following the monetary reform in 1879, before which the venezolano was circulating. Due to its decades-long reliance on silver and gold standards, and then on a peg to the United States dollar, it was considered among the most stable currencies and was internationally accepted until 1964, when the government decided to adopt a floating exchange rate instead.

Since 1983, the currency has experienced a prolonged period of high inflation, losing value almost 500-fold against the US dollar in the process. The depreciation became manageable in the mid-2000s, but it still stayed in double digits.[6] It was then, on 1 January 2008, that the hard bolívar (bolívar fuerte in Spanish, sign: Bs.F, code: VEF) replaced the original bolívar (sign: Bs; code: VEB) at a rate of Bs.F 1 to Bs. 1,000[1][7] (the abbreviation Bs. is due to the first and the final letters of the plural form of the currency's name, bolívares).

The value of the hard bolívar, pegged to the US dollar, did not stay stable for long despite attempts to institute capital controls. Venezuela entered another period of abnormally high inflation in 2012, which the country has not exited as of April 2023. The central bank stuck to the pegged subsidised exchange rate until January 2018, which was overpriced so people began using parallel exchange rates despite a ban on publishing them. From 2016 to 2019 and again in 2020, the currency experienced hyperinflation for a total period of 38 months.[8]

The rampant inflation prompted two redenominations. The first occurred in August 2018, when Bs.F 100,000 were exchanged for 1 sovereign bolívar (bolívar soberano in Spanish, sign: Bs.S, code: VES),[9] and another one happened on 1 October 2021, but called "Nueva expresión monetaria" or new monetary expression, which removes 6 zeros from the currency without affecting its denomination but did introduce a new ISO code VED[10][a] at a rate of Bs.S 1,000,000 = Bs.D 1,[11] thus making Bs.D 1 worth Bs. 100,000,000,000,000 (1014, or Bs. 100 trillion in short scale).

Both currencies are in circulation,[12] though the economy has undergone extensive currency substitution, so the majority of transactions happen in US dollars, or, to a lesser extent, the Colombian peso.[8][11][13]
Remember when the Canadian dollar traded for more than the U.S. dollar, wasn't all that many years ago. Those who fail to learn from history are bound to repeat it.
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