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December 27, 2017 | It’s Time

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Those on the left see government as the solution. On the right, it’s viewed as the problem. Most moisters are lefties. Most wrinklies aren’t. People without wealth want big taxes (on others) and more services. The affluent want to keep more of what they made, and think penalizing success is moronic.

So in a world where income disparity is widening, we have conflict. Righties and tax-cutters currently rule America. Lefties and tax-hikers reign here. Taxes, spending and the size of government in Canada have all bloated lately. The T2 government believes this is what its base wants, and voted for. Probably correct. With a federal election in 2019 pitting Justin against Jagmeet for the same demographic, the less-government crowd could be squished. Let’s see how young Scheer deals with that.

In the meantime, strap a bandana on your forehead, smear on the face camo and grab a carbine. The resistance, she is here.

Sick of being milked? There are dozens and dozens of actions individuals and families can take to reduce, shunt, defer, avoid or escape tax – all of which are completely legal and, if widely known, would seriously twist socialists’ shorts. So I am begging you, do not circulate this post. If captured, deny it. If tortured, we never met.

Herewith, Ten Things the PM Does Not want You to Know:

< 1 > You can get free money to educate your children simply by opening an RESP using cash the government sent you because you have children. The guaranteed return on investment is 20%, which beats buying a semi in Toronto. The rules allow you to go back and make up missed contributions (collecting the grant a year at a time), and if your kid becomes a rock legend instead of a dentist most of the tax-free growth can be wrapped inside your RRSP.

< 2 > If you think income-splitting is kaput, you’re mistaken. You and your lower-income squeeze have a plethora of ways to starve Mr. Socks. If you make more money, pay your spouse’s taxes so s/he can invest at their lower tax rate. Ditto for the household expenses. You can certainly open a spousal RRSP, writing off the contribution against your high taxes but making the money the property of your less-taxed spouse. Open a joint investment account, splitting taxable gains instead of paying them at your fat rate. And lend your spouse money to invest at the CRA’s proscribed and silly rate of 1%. So long as s/he pays you interest (tax-deductible) no money made by the investments will be attributed back to you.

< 3 > Next week, Tuesday, max your TFSA contribution for the year – which is $5,500. Do not put your tax-free account money into a HISA or a GIC or anything else [email protected] suggests. She’s seductive but toxic. Instead insist on a healthy mix of growth-oriented, equity-based exchange traded funds, then resist the urge to diddle with them every time markets gyrate. Remember that when you retire your bloated TFSA will generate a steady stream of cash flow to fund your life, and not a sous will be counted as taxable income. No OAS clawback. Take that, Billy!

< 4 > Speaking of tax-free accounts, your accumulated limit for 2018 will be $57,500. Starting to be serious money, especially when a couple can double that. So don’t just fill up your own TFSA, gift money to your spouse so s/he can do that same. None of the gains will be attributed back to you for tax purposes. Also, if you trust your adult children (Warning: they could be commies), then fund their accounts as well – no attribution, but you may have to use force at a later date.

< 5 > Don’t forget the registered retirement account, either, which is actually more of a tax deferral device than a way to fund your later years. RRSP room jumps with your income, so it’s of greatest benefit to those old, rich, high-earning guys that everyone currently hates. Revenge. Sweet. Having a ton of RRSP room sure helps if you get a retirement package or a pension to commute, so bear that in mind. Meanwhile you can borrow money to invest, then use the refund to pay down the loan, ending up with free equity. Or just transfer assets you already own into an RRSP (called a ‘contribution in kind’) and Justin will send you money for selling yourself something you already owned. There are no words.

< 6 > Yes, effective Monday, Bill Morneau is dropping the hammer on sprinking. Business owners will no longer be able to split income with their spouses, but girlfriends and professional escorts are okay. So your wife or husband may have taken an equal risk and contributed financially, but they can no longer collect tax-efficient dividends or an income stream unless employed. So, hire them, and do it by Friday.

< 7 > If you’re an investor who bought a turkey asset and lost money, the rules let you deduct that mistake from the proceeds of an investment that did work out. Try that anywhere else in life. Tax losses can be carried forward indefinitely but if you wanted to sell and deduct the loss from a profit you made on something in 2017, you’re reading this one day too late. Remember next year you need to dump the loser at least two days before the calendar runs out.

< 8 > Turning 71 next year? Don’t fret. It’s the new 51, but this means you’ll have to convert your RRSP into an income-producing thing called a RRIF. Going forward this income will be added to all other money you make and could affect your ability to collect government pogey. But you get a final piece of revenge. The RRIF conversion need not happen until the end of the year and meanwhile you can make an RRSP contribution that will more than wipe out the impact for the next year or two. Plus if you married a babe younger than you, contribute in her name.

< 9 > Borrowing to invest increases risk, but it sure is tempting. A secured line of credit against your house costs 3.7% and the interest is 100% tax-deductible. Meanwhile a balanced portfolio in 2017 returned 11%. Last year it was 8.5%. Looks like more is coming. So you can keep all that equity sitting in a house doing diddly, or put it to work. Just promise me you will not buy Bitcoin.

< 10 > Move to Nunavut. Seriously. Where you live in this frozen beaver sanctuary affects your overall income tax rate, since provinces have different amounts they layer on top of the federal take. Nunavutians therefore pay more than 6% less than Canadians in many other jurisdictions. Alberta used to be cheap, too, but then the socialists took over.


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December 27th, 2017

Posted In: The Greater Fool

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