Show Transcript
Print Transcript
[theme music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, Nicole Ewing is going to walk us through some of the new details we are getting about the proposed changes to the capital gains tax.
MoneyTalk's Anthony Okolie is going to have a look at the latest Canadian housing starts data.
Can we meet demand? Anthony will let us know in a little while. And in today's education segment, Hiren Amin is going to show us how you can make conditional orders on Advanced Dashboard.
Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to the guest of the day, let's get you an update on the markets.
First trading day of the week, starting on a bit of a down note in Toronto.
Nothing too dramatic, we are down about three quarters of a percent, 156 points on the TSX Composite Index. Among the most notable movers include Shopify, giving back some today.
Last time I checked it was down to the tune of about 3%. Indeed, about 3.3% for Shopify now, just breaking below $90 per share. I noticed weakness in energy names earlier in the day. Canadian Natural Resources it down right now a little shy of a full percent. $45.70 per share. South of the border, the S&P 500, record-setting closers last week. We had a lot going on, inflation report, the Fed. Today is a bit calmer but there is some green on the screen. Your up a little shy of a fifth of a percent for the S&P 500. As far as the NASDAQ goes, let's he was keeping pace with the broader market. Pretty much just bang on, up 32 points, a little shy of a fit of a percent.
Nvidia is down about 1%, its rival AMD is down a little more than 2% and that is your market update.
We are getting more clarity around those proposed changes to the capital gains tax rules and joining us now to help break down his Nicole Ewing, director of tax and estate planning at TD Wealth. It was great to have you.
>> Great to be here.
>> Now we actually have legislation that we can go through. And by we I mean someone like you who understands it can go through and start to break it down. What are we learning from this?
>> 59 pages of legislation, proposed legislation, and when we think about, for those of us who want to understand what the rules actually say, the way that that's written it would have say substitute this clause with this clause and in section B remove this and insert that. So you are experts in the space are actually needing to go through and compare the old language with the new language so this is a bit of an exercise that we have been going through for the last week. The timelines are very short on this so we have been crunching as much as we can to get as much clarity as we can.
What we know, of course, is that the new rules will kick in as of June 25, so all trades, all activities must be done by the 24th, must have been done and cleared by the 24th. There was some hope that there would be an opportunity to make an election or to otherwise crystallize a gain without actually needing to dispose of the property.
That, the legislation clarified that that is not going to happen so you must actually dispose of it for tax purposes, which means no longer having beneficial title to it and then you can purchase a back if you like, being mindful about loss rules as well so we can chat about that a bit. But everything must be done by the 24th which really means must be done now.
Today is the day that must be done. And to clarify, just to level set for everyone, the new rules say that the first $250,000 of realized gains for individuals will be subject to a one half or 50% inclusion rate, amounts over that will be subjected to the two thirds inclusion rate and for corporations, that two thirds inclusion rate will check in on the first dollar.
For most trusts, it will kick in on the first dollar but we did get clarity in legislation that there are some carveouts for that.
So a qualified disability trust and a graduated rate is state, which is a trust for tax purposes, will also get the benefit of that $250,000 lower exemption amount on the lower amounts which is a little bit of a relief, I think, for some folks who are dealing with those sorts of trusts.
>> Interesting details there. You mention the fact, of course, that people, for other purposes, you come to the end of the calendar year, you do some tax-loss selling, there are rules about when you can buy that security back. You are not forbidding from ever owning it again but there are rules. How does that work into this?
>> So if we are disposing of our assets I will say three the 24th, I say the 25th but the 25th is when the new rates apply.
So by the 24th, if you dispose of your property and then repurchase it within the 30 days, either before or after, if you have a loss, that will be treated as a superficial loss and it will be denied, essentially. That will also apply between you and your spouse. So if you are selling something and they are purchasing something during this time, you will want to make sure that your coordinated around because your loss might be denied or your gain might be treated differently than you expected, so make sure you are coordinating with your spouse on that.
Some other things, particularly with the gains, if people are dealing with real property, for example, and wanting to dispose of their real property before the June 24 deadline, they should be aware of those anti-flipping rules that say that if you dispose of a real property within a year of acquiring it, it will be treated as, fully as income, and he will get the benefit of a principal residence exemption or any of the other rules that would apply, such as making sure that you are aware of some of those potential other ways that you might be tripping up in this situation. You also want to you, if you are a business owner, for example, there are some cautions here to be aware of.
If you were to trigger your gains, that would be treated as passive income for tax purposes within a corporation.
You have a limit of, there is some math that's done, but essentially, if you have more than 150,000 of passive income within your corporation, you are going to have a clawback on your small business rate, and you will no longer be able to get the benefit of that small business deduction, which is pretty significant. So making sure that whatever you are doing now is not going to trip you up for next tax year, so that's the small business deduction, it's also the alternative minimum tax which, again, is sort of a new thing for people to be thinking about, it might not have been on the radar before but whatever you are doing now, if you are realizing significant gains in advance of that deadline on the 24th, then you will potentially receive some challenges come next year as well.
>> You covered a lot of ground. If you like there is more groundcover. Employee stock options, their implications here.
>> There are, and said that rule as well, the two thirds inclusion rule, you are sharing that limit, the $250,000 limit, between your employee stock options and your capital gains that you are realizing and so if you are somebody who has significant employee stock options as part of your income, be very careful about what you are doing or perhaps have already done because you need to coordinate those two things together. You don't get a separate limit $250,000 limit for your stock options and a $250,000 limit for your capital gains, those are going to be treated together for the purposes of the threshold. So again, if we are making any sort of plans or changes to the way that we might want to be taking in income, and I want to caution as well, there has been a lot of talk about whether or not people should realize gains in advance of the deadline. We have done a bunch of math and figured out certain circumstances where it makes more or less sense. Really, for those who are not planning on touching this money for, and depending on the amounts in question, we could be looking at anywhere between five and eight years-ish, if you are not touching that money between now and then, generally speaking, the best advice is hold tight, don't be realizing your gains in advance because you are essentially accelerating your tax. You are prepaying tax that otherwise wouldn't have needed to be paid and you are losing that deferral advantage of keeping the funds invested.
And so we don't want to be doing sort of knee-jerk reactions to selling. If you were planning already on selling those assets before the end of the year, sure, accelerating that before the 25th might make sense for you but otherwise, if you are planning to do this and we have seen a lot of just nervous behaviour I think over the last little while, people not really understanding where the rules might be impacting them, but generally speaking, if your advisors have not, at this point, come to, if you've been talking with them, say there's something significant, you should be thinking or doing, then you're probably fine.
>> That's an important one to because these are complicated situations that we have outlined.
You have outlined them beautifully and simply but the average person would say, I might need to talk to someone if I think there's an implication for me before you have that knee-jerk reaction, speak to someone.
>> You should be speaking to somebody but the challenge right now is that there is nobody available to speak to because advisors, those who are managing portfolios, there are deadlines in terms of when we can put those trades through and they need the time to be able to analyse and process those but so to you accountants who are helping clients navigate this, they have essentially turned to the sign on the door to close.
We cannot take on any more clients during this time.
So don't make that fear of not having access to the experts, not being able to get their advice, make you do something yourself. Rest assured that, generally speaking, most people in this situation are not going to be terribly put off side by these rules. Now, one of the conversations a lot of people are having is around losses and how losses will be treated and will I have losses from last year and I want to carry them forward or if I realize losses now, what does that mean in terms of the future? Generally speaking, again, there's going to be a formula that needs to be applied, but an equivalent amount of gains and losses will be able to offset each other regardless of what period they were incurred, so if you had a $6000 gain and a $6000 loss, regardless of what that inclusion rate is, they should generally be cancelling each other out.
Again, we need to get into the specifics of each situation to see what would make sense with that.
But that is going to be just really for this year what we have two periods, so we will have the pre-June 25 period where your gains and losses are calculated at the 50% inclusion rate and then we'll have the post amount were you will have the $250,000 limit and threshold and then you will have the additional inclusion beyond that.
After, when we go into next year, the losses from this year to the extent that you can carry them forward would be, they would be adjusted and able to offset an equivalent amount of gains in a future year.
>> We have the right person to walk us through it all. A great start to the program. We will get to your questions about tax and estate planning for Nicole Ewing in just a moment's time.
A reminder, of course, that you can get in touch with us at any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
There is a management shakeup at Corus Entertainment.
Doug Murphy is retiring as president and CEO after more than two decades at the parent company of Global Television. To Corus veterans, Troy Reeb and John Gossling, are going to be the co-chief executives. Corus, which also owns radio stations and specialty TV stations, has seen its stock price under pressure, evidenced by this chart. Most recently on news that Rogers skipped away the rights to HDTV and other properties from Corus.
Berkshire Hathaway continues to trim its stake in Chinese EV maker BYD, an investment they initially made in 2008 that has been quite lucrative for Warren Buffet's Kong Walmart. Filing show Berkshire recently sold more than 1 million shares of BYD. They sold more than half of their initial investment in recent years, over 2022, and 2023, as shares BYD soard.
It was a big opening weekend for Disney and Pixar's Inside Out 2. The animated film is estimate or to have taken $155 million in the US, the first movie to bring in more than $100 million for the opening weekend since last summer's blockbuster Barbie.
We will see how it performs going forward.
Quick check in all the markets. We'll start here at home on Bay Street with the TSX Composite Index. First trading day of the week.
We are down to the tune of 131 points, a little more than half a percent.
South of the border, the S&P 500, that and the NASDAQ book made new highs last week.
Today the S&P 500 is up modestly, about 10 points, 11 points.
We are back with Nicole Ewing. Five corporate investments with 190% gain, is it better to make an in-kind donation to charity before or after the capital gains rate changes?
A lot of people are thinking about this one.
>> With charitable donations, we are able to offset the full amount, if you donate securities and kind, you are able to offset the full amount. I have not said that well.
[laughing] The inclusion rate for donated securities is zero.
So it zero before June 25 and it's zero after June 25 so you won't have an inclusion rate… >> It's not part of the calculation.
>> Exactly.
Again, for those that don't know, generating securities and kind is a very effective way of making a charitable donation because you not only get the full-- zero inclusion rate but you also get that full charitable tax receipt on the full amount.
Corporations are deductions and individuals receive a credit for that but ultimately it's one of the most effective ways of donating.
>> Now apart from the inclusion rate question, would you said does not apply here in this situation, from a tax planning perspective, what do people need to be keeping in mind if they are thinking about donating securities and kind?
You said it's a very effective strategy, but what more do you need to think about?
>> When you are donating securities and kind, you want to be looking at your portfolio and seeing those that have significant gains on them. If there are significant gains, then you are able to provide a large donation to a charity, they get the benefit of that amount. You are not paying any tax on it.
And you are getting either the deduction or credit to be able to still offset other taxes that may have otherwise been payable.
Being careful again, those loss rules are going to kick in, they can kick in and a sneaky way. If you're buying or selling those, be mindful there.
Working with the-- there's a few different ways to do it. Most charities are set up to allow for that to be an effective transfer. They like receiving securities and they are set up to be able to do that but there is going to be some time that they need in order for those traits to go through. I really effective way sometimes is if you can combine making the donation, the securities to be able to fund an insurance policy, the company or charity can then fund through that, that's a way of doing it. Lots of really useful ways to effectively give and maximize that gift.
In advance.
Now is a good time to think about your year end donations.
>> There you go. Summer holiday, let's talk at the end of the year.
>> That's where the time crunch really starts to come in so it's a good idea to be thinking about that throughout the year, may be realizing or donating some of those on a regular basis as opposed to waiting for the bank… >> It gets busy near the end of the year, social schedule. It fills up.
>> There are others issues as well. A lot of people think about donating securities through their will and there are additional considerations to make sure you're doing that effectively. There is a tax event that you are able to use those credits to offset gains in the appropriate year and sometimes there is a mismatch between when you are realizing the gain and when you are receiving the credit and so if you are planning on making significant donations through your will, make sure you are getting that in beforehand as well, it might make sense to advance some of those gifts and be doing that before he passed away to make the biggest impact for yourself and for the charity as well.
>> Interesting that you mention wills. At next question from the audience is, my uncle has passed away and donated all his stocks in-kind. Do we have to first pay the income taxes and then ask for a refund after the charity gives him his receipt?
>> Okay, so, if uncle has made this donation, so I'm going to assume that this was in the will that the uncle has established that they want to make a charitable gift.
There are different rules that apply on death for charitable gifting so you are able to donate up to 100% of your net income where his during life it's up to 75%, and it's 100% of your net income both for the year past and the year prior to that as well. When you are completing the forms, and depending on presumably this is going to be made, after 2016, it's not treated as though the donation is made by the estate if it is through a will, the estate itself is on this responsible for making the tax returns and making sure those were filed.
If you are making that donation, that would all be done in the tax return and so that your net amount owing would be zero.
For easy math, let's say it wipes out the debt or the tax completely. You don't need to pre-pay that tax and then apply for the credit.
You fill out the form and it says how much you have for income and you have your credits and your deductions and the net amount owing would be zero. So what the estate ultimately would be then is in a position to be able to distribute the after-tax proceeds to beneficiaries but CRA will always get any amounts that it is owing before anybody else.
>> Interesting stuff. We have another question here about old age security. The viewer says, my OAS has been clawed back completely this year. If my income goes down and I am eligible for OAS, do I have to apply for it or will the CRA automatically pay me?
>> What's interesting about the OAS clawback is that it's actually recovery tax and so it's clawing back what you've already been paid in a previous year and so when you, if you have not, if your income is such that you now do not receive OAS or it was fully clawback this year, next year, January, when you are sent the form, the OAS recovery tax form I think is the name of the form.
>> Aptly named.
>> That you need to complete, and that needs to be filed with April 30 deadline generally with your other taxes. And that will indicate there how much you were paid, how much OAS was paid out to you, how much other income you had and that will determine whether or not that will lead to, whether the government is going to recover some of those taxes. If it does determine that you are essentially overpaid last year, it will recover those taxes by dividing it over the number of months by reducing your next month's payment by the amount of the recovery. If you don't file that form by April 30, we often speak about the importance of filing your income tax returns on time, this is one of the reasons for that because if you file that on time with this form, then there will not be any interruption in your entitlement and your payments and if you no longer have the income that there would be a clawback, then he would be able to receive those funds which I believe would start in July. If you don't complete that form and you don't send it in, then you will not receive your old age security payments, whether or not you received them last year or not. Make sure you complete your form, due in January, have it sent in by April 30 and if you are in a positive position, then you will continue to receive your OAS.
>> Interesting stuff. The lessons we learned when were young, get your homework and on time.
As always, make sure you do your own research before making any investment decisions.
will get back your questions for Nicole Ewing on tax and estate planning in just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get our educational segment of the day.
In today's education segment, we are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
Hiren Amin, Senior client education instructor with TD Direct Investing has this look at how to use conditional orders on the platform.
>> Hello and welcome to today's education hit. We are going to be talking about our platform advanced dashboard here today.
Specifically, we are going to look at how to place conditional orders on our trading platform. Now, those are ones we are going to be looking at how to do profit taking orders and ones on how you can limit losses.
Now, conditional orders in general at a certain level of automation to traders for their trade and it helps them execute on those trading plans and stay disciplined but it also helps us take out the emotions of trading and we all know that you can get caught up with those, especially when it comes to money.
So let's hop into our platform today, Advanced Dashboard. We will bring up the tool and show you how you can go about doing this. I've got Advanced Dashboard pulled up and you could be on any screen, really. We are going to get to the order entry but for me to do that first, I'm going to pick a security.
So I'm on the markets tab over here, you can see all of the major indices we have, so I'm going to focus on one of the Dow 30 companies. You can see the Dow Jones here, I'm going to expand that list to populate the companies. The one I'm going to pick today as we are going to go with Nike. So let's open up the bubble here and enter our by order. Now, with this order set up, I'm going to minimize the indices as well so we can just focus on the order entry box, so what we are going to do here is we want to add both a profit taking order as well as a loss minimizing order. We can do either or and I will show you how to do that. First of all, we are looking to buy Nike, maybe we will queue this down to 10 shares and put in the limit price of $100, if it does get to that price. Then, you will notice is little function here that says attach profit loss exits. Let's click on that. Once you do that, it's going to open up additional sets of orders you can input. Now, it is up to you whether you want to choose to do a profit taking order, see you can click the top half or you can click the bottom half to do a stoploss which is going to minimize losses.
Or both.
So let's show you how you can do just the one first and we call this simply a one triggers another order. Let's do a profit loss order. Let's assume that we get to buy our Nike had 100 bucks and we just want to put in an order now to sell that at a profit. Maybe I will say if I can get it at 100, let's see if we can run up to about hundred and 10, we want to take our profits and take that $10s off the table and booked that.
By the same token as well, we are also going to do what we call a first triggers another order in which we are going to attach a stoploss. So what we are seeing now is we are going to get this order first bought and then it's either going to get us our profit taking order or stoploss. The way stoploss works is we are going to set a trigger limit price. Let's say this is on the downside so in case the stock falls, if it falls to $90, alert me or get this order activated and at the very least, I want a minimum price of will go just about a dollar below and call that $89. At the very least, get my $89 as my limit price once this order gets activated at the $90 threshold. So what this is basically saying is we are going to by the order and then set both of these up together and which of the price goes to first, whichever direction Nike heads to first, if it goes to the limit price on the profit, if it goes south on us, we are going to get out of the stock and lock in our losses at that $10 threshold that we have or $11 in this case.
And that is a look at how you can place these profit and minimizing loss taking orders using the Advanced Dashboard platform.
It's especially useful and I would highly recommend or have traders consider this, especially during heightened market volatility or to give you peace of mind if you happen to be away, relaxing on a sunny beach, you know those orders are going to be taking care for you when you are taking some time off the market appeared that's it for a hit today.
>> Thanks to Hiren Amin, Senior client education instructor with TD Direct Investing. And a reminder that June is Options Education Month at TD Direct Investing.
[upbeat music] And if you want more information about Options Education Month, you can scan this QR code.
Okay, we are back with Nicole Ewing, taking your questions about tax and estate planning. Lots coming in. Do you have any advice for someone who has owned a hobby farm for 40 years and intends to sell it in the near future?
We can give advice here on the platform but we can definitely talk about the situation and its applications.
>> Work with an expert in this because when it comes to farming and when it comes to hobby farming, the rules around what can be deducted and claimed and how it's been treated in the past and what sorts of benefits or credits or deductions you may have already claimed with respect to the property is going to be very relevant. So this is one of those areas where… >> There's not a simple rule.
>> There is no rule of thumb, it really, truly is best to work with somebody who works with this sort of question all the time, so not just a tax accountant but one who specializes in hobby farming.
>> Thanks for sending in that question.
Another one here. If you are saying, as I approach the age of 71, I am drawing down my registered accounts to reduce the minimum withdrawal amounts.
What considerations should I keep in mind?
>> Well, the primary one is, what are your goals? So yes, you want to reduce the taxes perhaps by having the income being not having to pull out as much RIF income.
As long as you don't need more in order to fund your lifestyle.
So generally, we would want to be making those decisions with the entire retirement plan in mind, what are your goals, what is your tax rate currently, what is your tax rate in retirement, what are other sources of income that you have, will there be a change in the retirement years? Will you be spending earlier, will you be having significant upfront costs and then having a reduced need for cash flow later on? So by and large, just be careful that, yes, pulling that extra, that money out early will reduce the amount of RIF income that you need to bring into income and your retirement potentially reducing an OAS withdrawal or clawback, but don't miss the forest for the trees here. Make sure that you are making that decision knowing what the rest of your income sources are, what your expenses are and how you're going to be taking CPP and OAS and when, they need to be factored in together.
>> All part of the bigger plan. I have another audience question for you.
Does power of attorney mean different things in different provinces, for instance Québec?
>> Interesting.
There's different terminology. Generally speaking, the term that the industry folk would use is substitute decision-maker.
You have one both with respect to property and personal care. This may be the same person or different people.
In different provinces, that term can change. We can have a representation agreement, a mandate, a power of attorney, there are different terms that are used.
But what it does, most provinces, I believe all of them but I'm just cautious to say anything with certainty, but we accept the documents that have been paired in another province, provided they met the laws and requirements for signing within the province they were created in. They should allow you to use them in the other provinces but if you have the opportunity to you, if you have moved to a new province and you still have the capacity, I would highly recommend having documents prepared in that province and the jurisdiction in which you will need somebody to be using these because they are more familiar with seeing things the way they are used to seeing them. You may want to have different power of attorney documents prepared to deal with property in different jurisdictions, you may have more than one. Just making sure that you don't inadvertently avoid an earlier one because there are some rules, again, depending on the province about a later power of attorney perhaps avoiding one that was established earlier.
You will want to ensure they are all coordinated but each province has its own legislation, it is provincial, its own legislation to deal with substitute decision-makers and the terminology is a little bit different, some of the rules are a little bit different in terms of how many witnesses they need to have on the document, but it allows, generally speaking, the person you appoint to act on your behalf.
>> Interesting considerations there.
You're going to get back your questions for Nicole Ewing on tax and estate planning and just moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Homebuilders broke ground on a surprisingly healthy number of units last month, boosting housing starts will about pre-pandemic levels. The question is, are we building enough to meet our ambitious targets? Anthony Okolie has a new TD Economics report on all this and to take on the numbers. Louis Cinq-Mars >> It was a hot start in May. We saw housing starts up 10% month over month and when we look at the six month average, more than 4% from the April levels and this puts starts about 5% above the first quarter levels and above the pre-pandemic run rate.
Meanwhile, this will also add to the economic growth in the second quarter.
When we look at, regionally, where the strength was, it was really the Atlantic provinces as well as Québec and Ontario.
Within Québec and Ontario, these are the big cities that drew growth, in Montréal and here in Toronto, and the areas that saw growth were multifamily sector units.
Now, despite the strong start, we have started to see starts slowly falling from multi-decade highs that we saw in 2021 and 2022.
That was dragged down by Ontario and Québec across all housing types, with the exception of multifamily units. But even there, we are starting to see some weak presale activity, again, due to high borrowing costs and high construction costs. The big question is, can the government achieve its lofty goals following new policies in the provincial and federal budgets? We have seen some provincial governments introduce a number of new housing policies, we have seen them up being a amortization from 25 to 30 years for first-time homebuyers. TD Economics believes that these measures will only add marginally to the housing supply. That's because, number one, the federal government's targets vastly exceed historical completions. Hitting the targets for you homes means we are looking at building 550,000 new units per year, that's two times the historical max, as the chart shows.
Another reason is worker shortages. We are seeing a rapidly aging workforce for tradespeople. In addition to that, newcomers to Canada are entering the construction industry at a lesser rate than other sectors, according to a Bank of Canada analysis.
Finally, productivity in Canada's industry has lagged all other industries since the early 2000's. Capacity constraints in the construction sector will make it harder for the government of Canada to achieve those lofty targets.
>> Those are some of the challenges in the new home market. We also had numbers today about existing home sales. They were from May. I think they were little soft.
Of course, in the month of June, the Bank of Canada delivered a rate cut, the first of the cycle. Any thoughts on what that could mean going forward?
>> I want to touch on those numbers. We saw sales were down .6% month over month.
Now, they are running about 12% below pre-pandemic levels. As you mentioned, the Bank of Canada delivered a rate cut and TD Economics expect stronger performance as bond yields come down. Looking ahead, there are expectations that the Bank of Canada will continue to cut and that should boost housing activity and they believe you will see a much stronger performance in the second half of this year.
>> Interesting stuff. Thanks, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, let's get you updated on the markets.
We are going to jump into Advanced Dashboard, take a look at the heat map function, a view of the market movers.
This is the TSX 60, we are screening by price and volume.
What do we have on her hands today? We know the topline numbers in negative territory. Shopify showing some weakness, down about 3% at this hour.
Not a lot of impressive green on the screen, is there? Manulife up a little less than 1%, the financial bucket. The industrials, their CP rail up to the tune of about 2%.
Taking a look at the S&P 100 as well, want to see what's happening there. It's a bit of a slow start to the trading week. The last time I checked on the headline number for the S&P 500, we were positive. We are up about half of a percent now as I refresh my screen, it's lifting. We have has left a little more than 4%, Apple of about 2%.
So we got some interesting names there.
The chipmakers are not really participating today, Nvidia is flat and Nvidia is pulling back about 1 1/2%.
We are back with Nicole Ewing from TD Wealth, talking tax and estate planning.
Another question for you.
In preparing my taxes this year, I realized I made a minor mistake on a tax return from three years ago. I think it would result in me owing another $110 in tax.
Am I obligated to refile with the correct information?
>> So you are obligated to fully disclose all of your income. If you have noticed mistake, it is incumbent on you to update the CRA that you have, that you need to correct that area. You don't need to refile, this would be an amended return.
If you are doing things digitally online, it's a relatively straightforward process.
You are essentially changing a number on your return.
Assuming things have already been assessed, it's three years out, you would need to simply put new information in and you will be reassessed. Now, when you, if it was very significant numbers, we might be thinking about doing a voluntary disclosure, maybe where you are asking for penalties and interest to be waived, you are not going to get interest waived, but penalties, if there has been an error, but if you don't point this out and the CRA does have the opportunity to still reassess Seo, if they discovered the error on their own, then you will have those penalties that apply to you.
If you underreported your income, you will have a penalty plus interest and then if you do it again, that doubles and you will have an even more significant amount to pay. So even if this time it's $110 difference, if you were to do a similar mistake in a much more significant number, the penalties and interest that would apply to that could be much more significant.
So it should be a fairly straightforward process to amend your previously filed return and pay a small amount of tax with the not so small amount of interest.
>> Honesty is the best policy.
>> Better to be, better to do it than to be found out because there certainly are, again, those penalties that can really balloon and otherwise insignificant amount into something that's much more unwieldy to deal with. $110? Those are the type of mistakes I'd like to make.
[laughing] >> If my biggest mistake cost me hundred and 10 bucks, I be all right. Another question for you now. How to protect tax on registered money at joint death point, is it only insurance or other ways?
>> Here we are talking about on the death of an individual, they are deemed to have disposed of all of their assets and all of their registered money is, the funds are collapsed and included in their income.
If you have a spouse and you were able to leave those registered assets to your spouse, then we defer the tax liability until the death of the second spouse.
You could have 1/3 spouse enter the equation and so if before the second spouse were to pass, they were to remarry, they would have the opportunity, again, to name a beneficiary or successor holder on their accounts and have their spouse and that would actually continue to defer the taxes owing but otherwise, on the death of that second spouse, you are going to have the full amount included in income and, yes, it requires liquidity in order to be able to pay for that an insurance has been traditionally a very effective way that people plan for that, they know that they are going to have a tax bill and so they funded through usually a permanent insurance policy that would allow them to fund it at a more cost-effective way than if they were to be receiving it separately. There is really not an opportunity, this is about registered money.
An RSP is a registered savings plan. The RIF is the income fund. The intent is that it will eventually be paid out and taxed in your hands and if it's at death, that means you have had many years if not many decades of that tax deferral so the government does eventually want their share, there are some effective ways of funding that tax liability.
Be sure that your estate documents are updated accordingly. If, for example, you leave your RRSP or RIF to one child and a different account to another child and there is different tax liabilities owing there, it's ultimately the estate that's going to have to pay for the tax bill and that could impact what your children receive.
>> Always interesting to get your answers to these questions. I find it fascinating.
I think the audience finds a fascinating and we all look forward to the next time you're on.
>> Thank you for having me.
>> Our thanks to Nicole Ewing, director of tax and estate planning at TD Wealth. As always, make sure you do your own research before making any investment decisions. if we can get your question today, we will aim to get into future shows. Stay tuned for tomorrow show. Sam Damiani, director of equity research at TD Cowen will be our guest, he wants to take your questions about real estate investment trusts. You can get a head start with those questions.
Just email moneytalklive@td.com. That's all the time we have for the show today.
Thanks for watching.
We will see you tomorrow.
[theme music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, Nicole Ewing is going to walk us through some of the new details we are getting about the proposed changes to the capital gains tax.
MoneyTalk's Anthony Okolie is going to have a look at the latest Canadian housing starts data.
Can we meet demand? Anthony will let us know in a little while. And in today's education segment, Hiren Amin is going to show us how you can make conditional orders on Advanced Dashboard.
Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to the guest of the day, let's get you an update on the markets.
First trading day of the week, starting on a bit of a down note in Toronto.
Nothing too dramatic, we are down about three quarters of a percent, 156 points on the TSX Composite Index. Among the most notable movers include Shopify, giving back some today.
Last time I checked it was down to the tune of about 3%. Indeed, about 3.3% for Shopify now, just breaking below $90 per share. I noticed weakness in energy names earlier in the day. Canadian Natural Resources it down right now a little shy of a full percent. $45.70 per share. South of the border, the S&P 500, record-setting closers last week. We had a lot going on, inflation report, the Fed. Today is a bit calmer but there is some green on the screen. Your up a little shy of a fifth of a percent for the S&P 500. As far as the NASDAQ goes, let's he was keeping pace with the broader market. Pretty much just bang on, up 32 points, a little shy of a fit of a percent.
Nvidia is down about 1%, its rival AMD is down a little more than 2% and that is your market update.
We are getting more clarity around those proposed changes to the capital gains tax rules and joining us now to help break down his Nicole Ewing, director of tax and estate planning at TD Wealth. It was great to have you.
>> Great to be here.
>> Now we actually have legislation that we can go through. And by we I mean someone like you who understands it can go through and start to break it down. What are we learning from this?
>> 59 pages of legislation, proposed legislation, and when we think about, for those of us who want to understand what the rules actually say, the way that that's written it would have say substitute this clause with this clause and in section B remove this and insert that. So you are experts in the space are actually needing to go through and compare the old language with the new language so this is a bit of an exercise that we have been going through for the last week. The timelines are very short on this so we have been crunching as much as we can to get as much clarity as we can.
What we know, of course, is that the new rules will kick in as of June 25, so all trades, all activities must be done by the 24th, must have been done and cleared by the 24th. There was some hope that there would be an opportunity to make an election or to otherwise crystallize a gain without actually needing to dispose of the property.
That, the legislation clarified that that is not going to happen so you must actually dispose of it for tax purposes, which means no longer having beneficial title to it and then you can purchase a back if you like, being mindful about loss rules as well so we can chat about that a bit. But everything must be done by the 24th which really means must be done now.
Today is the day that must be done. And to clarify, just to level set for everyone, the new rules say that the first $250,000 of realized gains for individuals will be subject to a one half or 50% inclusion rate, amounts over that will be subjected to the two thirds inclusion rate and for corporations, that two thirds inclusion rate will check in on the first dollar.
For most trusts, it will kick in on the first dollar but we did get clarity in legislation that there are some carveouts for that.
So a qualified disability trust and a graduated rate is state, which is a trust for tax purposes, will also get the benefit of that $250,000 lower exemption amount on the lower amounts which is a little bit of a relief, I think, for some folks who are dealing with those sorts of trusts.
>> Interesting details there. You mention the fact, of course, that people, for other purposes, you come to the end of the calendar year, you do some tax-loss selling, there are rules about when you can buy that security back. You are not forbidding from ever owning it again but there are rules. How does that work into this?
>> So if we are disposing of our assets I will say three the 24th, I say the 25th but the 25th is when the new rates apply.
So by the 24th, if you dispose of your property and then repurchase it within the 30 days, either before or after, if you have a loss, that will be treated as a superficial loss and it will be denied, essentially. That will also apply between you and your spouse. So if you are selling something and they are purchasing something during this time, you will want to make sure that your coordinated around because your loss might be denied or your gain might be treated differently than you expected, so make sure you are coordinating with your spouse on that.
Some other things, particularly with the gains, if people are dealing with real property, for example, and wanting to dispose of their real property before the June 24 deadline, they should be aware of those anti-flipping rules that say that if you dispose of a real property within a year of acquiring it, it will be treated as, fully as income, and he will get the benefit of a principal residence exemption or any of the other rules that would apply, such as making sure that you are aware of some of those potential other ways that you might be tripping up in this situation. You also want to you, if you are a business owner, for example, there are some cautions here to be aware of.
If you were to trigger your gains, that would be treated as passive income for tax purposes within a corporation.
You have a limit of, there is some math that's done, but essentially, if you have more than 150,000 of passive income within your corporation, you are going to have a clawback on your small business rate, and you will no longer be able to get the benefit of that small business deduction, which is pretty significant. So making sure that whatever you are doing now is not going to trip you up for next tax year, so that's the small business deduction, it's also the alternative minimum tax which, again, is sort of a new thing for people to be thinking about, it might not have been on the radar before but whatever you are doing now, if you are realizing significant gains in advance of that deadline on the 24th, then you will potentially receive some challenges come next year as well.
>> You covered a lot of ground. If you like there is more groundcover. Employee stock options, their implications here.
>> There are, and said that rule as well, the two thirds inclusion rule, you are sharing that limit, the $250,000 limit, between your employee stock options and your capital gains that you are realizing and so if you are somebody who has significant employee stock options as part of your income, be very careful about what you are doing or perhaps have already done because you need to coordinate those two things together. You don't get a separate limit $250,000 limit for your stock options and a $250,000 limit for your capital gains, those are going to be treated together for the purposes of the threshold. So again, if we are making any sort of plans or changes to the way that we might want to be taking in income, and I want to caution as well, there has been a lot of talk about whether or not people should realize gains in advance of the deadline. We have done a bunch of math and figured out certain circumstances where it makes more or less sense. Really, for those who are not planning on touching this money for, and depending on the amounts in question, we could be looking at anywhere between five and eight years-ish, if you are not touching that money between now and then, generally speaking, the best advice is hold tight, don't be realizing your gains in advance because you are essentially accelerating your tax. You are prepaying tax that otherwise wouldn't have needed to be paid and you are losing that deferral advantage of keeping the funds invested.
And so we don't want to be doing sort of knee-jerk reactions to selling. If you were planning already on selling those assets before the end of the year, sure, accelerating that before the 25th might make sense for you but otherwise, if you are planning to do this and we have seen a lot of just nervous behaviour I think over the last little while, people not really understanding where the rules might be impacting them, but generally speaking, if your advisors have not, at this point, come to, if you've been talking with them, say there's something significant, you should be thinking or doing, then you're probably fine.
>> That's an important one to because these are complicated situations that we have outlined.
You have outlined them beautifully and simply but the average person would say, I might need to talk to someone if I think there's an implication for me before you have that knee-jerk reaction, speak to someone.
>> You should be speaking to somebody but the challenge right now is that there is nobody available to speak to because advisors, those who are managing portfolios, there are deadlines in terms of when we can put those trades through and they need the time to be able to analyse and process those but so to you accountants who are helping clients navigate this, they have essentially turned to the sign on the door to close.
We cannot take on any more clients during this time.
So don't make that fear of not having access to the experts, not being able to get their advice, make you do something yourself. Rest assured that, generally speaking, most people in this situation are not going to be terribly put off side by these rules. Now, one of the conversations a lot of people are having is around losses and how losses will be treated and will I have losses from last year and I want to carry them forward or if I realize losses now, what does that mean in terms of the future? Generally speaking, again, there's going to be a formula that needs to be applied, but an equivalent amount of gains and losses will be able to offset each other regardless of what period they were incurred, so if you had a $6000 gain and a $6000 loss, regardless of what that inclusion rate is, they should generally be cancelling each other out.
Again, we need to get into the specifics of each situation to see what would make sense with that.
But that is going to be just really for this year what we have two periods, so we will have the pre-June 25 period where your gains and losses are calculated at the 50% inclusion rate and then we'll have the post amount were you will have the $250,000 limit and threshold and then you will have the additional inclusion beyond that.
After, when we go into next year, the losses from this year to the extent that you can carry them forward would be, they would be adjusted and able to offset an equivalent amount of gains in a future year.
>> We have the right person to walk us through it all. A great start to the program. We will get to your questions about tax and estate planning for Nicole Ewing in just a moment's time.
A reminder, of course, that you can get in touch with us at any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
There is a management shakeup at Corus Entertainment.
Doug Murphy is retiring as president and CEO after more than two decades at the parent company of Global Television. To Corus veterans, Troy Reeb and John Gossling, are going to be the co-chief executives. Corus, which also owns radio stations and specialty TV stations, has seen its stock price under pressure, evidenced by this chart. Most recently on news that Rogers skipped away the rights to HDTV and other properties from Corus.
Berkshire Hathaway continues to trim its stake in Chinese EV maker BYD, an investment they initially made in 2008 that has been quite lucrative for Warren Buffet's Kong Walmart. Filing show Berkshire recently sold more than 1 million shares of BYD. They sold more than half of their initial investment in recent years, over 2022, and 2023, as shares BYD soard.
It was a big opening weekend for Disney and Pixar's Inside Out 2. The animated film is estimate or to have taken $155 million in the US, the first movie to bring in more than $100 million for the opening weekend since last summer's blockbuster Barbie.
We will see how it performs going forward.
Quick check in all the markets. We'll start here at home on Bay Street with the TSX Composite Index. First trading day of the week.
We are down to the tune of 131 points, a little more than half a percent.
South of the border, the S&P 500, that and the NASDAQ book made new highs last week.
Today the S&P 500 is up modestly, about 10 points, 11 points.
We are back with Nicole Ewing. Five corporate investments with 190% gain, is it better to make an in-kind donation to charity before or after the capital gains rate changes?
A lot of people are thinking about this one.
>> With charitable donations, we are able to offset the full amount, if you donate securities and kind, you are able to offset the full amount. I have not said that well.
[laughing] The inclusion rate for donated securities is zero.
So it zero before June 25 and it's zero after June 25 so you won't have an inclusion rate… >> It's not part of the calculation.
>> Exactly.
Again, for those that don't know, generating securities and kind is a very effective way of making a charitable donation because you not only get the full-- zero inclusion rate but you also get that full charitable tax receipt on the full amount.
Corporations are deductions and individuals receive a credit for that but ultimately it's one of the most effective ways of donating.
>> Now apart from the inclusion rate question, would you said does not apply here in this situation, from a tax planning perspective, what do people need to be keeping in mind if they are thinking about donating securities and kind?
You said it's a very effective strategy, but what more do you need to think about?
>> When you are donating securities and kind, you want to be looking at your portfolio and seeing those that have significant gains on them. If there are significant gains, then you are able to provide a large donation to a charity, they get the benefit of that amount. You are not paying any tax on it.
And you are getting either the deduction or credit to be able to still offset other taxes that may have otherwise been payable.
Being careful again, those loss rules are going to kick in, they can kick in and a sneaky way. If you're buying or selling those, be mindful there.
Working with the-- there's a few different ways to do it. Most charities are set up to allow for that to be an effective transfer. They like receiving securities and they are set up to be able to do that but there is going to be some time that they need in order for those traits to go through. I really effective way sometimes is if you can combine making the donation, the securities to be able to fund an insurance policy, the company or charity can then fund through that, that's a way of doing it. Lots of really useful ways to effectively give and maximize that gift.
In advance.
Now is a good time to think about your year end donations.
>> There you go. Summer holiday, let's talk at the end of the year.
>> That's where the time crunch really starts to come in so it's a good idea to be thinking about that throughout the year, may be realizing or donating some of those on a regular basis as opposed to waiting for the bank… >> It gets busy near the end of the year, social schedule. It fills up.
>> There are others issues as well. A lot of people think about donating securities through their will and there are additional considerations to make sure you're doing that effectively. There is a tax event that you are able to use those credits to offset gains in the appropriate year and sometimes there is a mismatch between when you are realizing the gain and when you are receiving the credit and so if you are planning on making significant donations through your will, make sure you are getting that in beforehand as well, it might make sense to advance some of those gifts and be doing that before he passed away to make the biggest impact for yourself and for the charity as well.
>> Interesting that you mention wills. At next question from the audience is, my uncle has passed away and donated all his stocks in-kind. Do we have to first pay the income taxes and then ask for a refund after the charity gives him his receipt?
>> Okay, so, if uncle has made this donation, so I'm going to assume that this was in the will that the uncle has established that they want to make a charitable gift.
There are different rules that apply on death for charitable gifting so you are able to donate up to 100% of your net income where his during life it's up to 75%, and it's 100% of your net income both for the year past and the year prior to that as well. When you are completing the forms, and depending on presumably this is going to be made, after 2016, it's not treated as though the donation is made by the estate if it is through a will, the estate itself is on this responsible for making the tax returns and making sure those were filed.
If you are making that donation, that would all be done in the tax return and so that your net amount owing would be zero.
For easy math, let's say it wipes out the debt or the tax completely. You don't need to pre-pay that tax and then apply for the credit.
You fill out the form and it says how much you have for income and you have your credits and your deductions and the net amount owing would be zero. So what the estate ultimately would be then is in a position to be able to distribute the after-tax proceeds to beneficiaries but CRA will always get any amounts that it is owing before anybody else.
>> Interesting stuff. We have another question here about old age security. The viewer says, my OAS has been clawed back completely this year. If my income goes down and I am eligible for OAS, do I have to apply for it or will the CRA automatically pay me?
>> What's interesting about the OAS clawback is that it's actually recovery tax and so it's clawing back what you've already been paid in a previous year and so when you, if you have not, if your income is such that you now do not receive OAS or it was fully clawback this year, next year, January, when you are sent the form, the OAS recovery tax form I think is the name of the form.
>> Aptly named.
>> That you need to complete, and that needs to be filed with April 30 deadline generally with your other taxes. And that will indicate there how much you were paid, how much OAS was paid out to you, how much other income you had and that will determine whether or not that will lead to, whether the government is going to recover some of those taxes. If it does determine that you are essentially overpaid last year, it will recover those taxes by dividing it over the number of months by reducing your next month's payment by the amount of the recovery. If you don't file that form by April 30, we often speak about the importance of filing your income tax returns on time, this is one of the reasons for that because if you file that on time with this form, then there will not be any interruption in your entitlement and your payments and if you no longer have the income that there would be a clawback, then he would be able to receive those funds which I believe would start in July. If you don't complete that form and you don't send it in, then you will not receive your old age security payments, whether or not you received them last year or not. Make sure you complete your form, due in January, have it sent in by April 30 and if you are in a positive position, then you will continue to receive your OAS.
>> Interesting stuff. The lessons we learned when were young, get your homework and on time.
As always, make sure you do your own research before making any investment decisions.
will get back your questions for Nicole Ewing on tax and estate planning in just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get our educational segment of the day.
In today's education segment, we are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
Hiren Amin, Senior client education instructor with TD Direct Investing has this look at how to use conditional orders on the platform.
>> Hello and welcome to today's education hit. We are going to be talking about our platform advanced dashboard here today.
Specifically, we are going to look at how to place conditional orders on our trading platform. Now, those are ones we are going to be looking at how to do profit taking orders and ones on how you can limit losses.
Now, conditional orders in general at a certain level of automation to traders for their trade and it helps them execute on those trading plans and stay disciplined but it also helps us take out the emotions of trading and we all know that you can get caught up with those, especially when it comes to money.
So let's hop into our platform today, Advanced Dashboard. We will bring up the tool and show you how you can go about doing this. I've got Advanced Dashboard pulled up and you could be on any screen, really. We are going to get to the order entry but for me to do that first, I'm going to pick a security.
So I'm on the markets tab over here, you can see all of the major indices we have, so I'm going to focus on one of the Dow 30 companies. You can see the Dow Jones here, I'm going to expand that list to populate the companies. The one I'm going to pick today as we are going to go with Nike. So let's open up the bubble here and enter our by order. Now, with this order set up, I'm going to minimize the indices as well so we can just focus on the order entry box, so what we are going to do here is we want to add both a profit taking order as well as a loss minimizing order. We can do either or and I will show you how to do that. First of all, we are looking to buy Nike, maybe we will queue this down to 10 shares and put in the limit price of $100, if it does get to that price. Then, you will notice is little function here that says attach profit loss exits. Let's click on that. Once you do that, it's going to open up additional sets of orders you can input. Now, it is up to you whether you want to choose to do a profit taking order, see you can click the top half or you can click the bottom half to do a stoploss which is going to minimize losses.
Or both.
So let's show you how you can do just the one first and we call this simply a one triggers another order. Let's do a profit loss order. Let's assume that we get to buy our Nike had 100 bucks and we just want to put in an order now to sell that at a profit. Maybe I will say if I can get it at 100, let's see if we can run up to about hundred and 10, we want to take our profits and take that $10s off the table and booked that.
By the same token as well, we are also going to do what we call a first triggers another order in which we are going to attach a stoploss. So what we are seeing now is we are going to get this order first bought and then it's either going to get us our profit taking order or stoploss. The way stoploss works is we are going to set a trigger limit price. Let's say this is on the downside so in case the stock falls, if it falls to $90, alert me or get this order activated and at the very least, I want a minimum price of will go just about a dollar below and call that $89. At the very least, get my $89 as my limit price once this order gets activated at the $90 threshold. So what this is basically saying is we are going to by the order and then set both of these up together and which of the price goes to first, whichever direction Nike heads to first, if it goes to the limit price on the profit, if it goes south on us, we are going to get out of the stock and lock in our losses at that $10 threshold that we have or $11 in this case.
And that is a look at how you can place these profit and minimizing loss taking orders using the Advanced Dashboard platform.
It's especially useful and I would highly recommend or have traders consider this, especially during heightened market volatility or to give you peace of mind if you happen to be away, relaxing on a sunny beach, you know those orders are going to be taking care for you when you are taking some time off the market appeared that's it for a hit today.
>> Thanks to Hiren Amin, Senior client education instructor with TD Direct Investing. And a reminder that June is Options Education Month at TD Direct Investing.
[upbeat music] And if you want more information about Options Education Month, you can scan this QR code.
Okay, we are back with Nicole Ewing, taking your questions about tax and estate planning. Lots coming in. Do you have any advice for someone who has owned a hobby farm for 40 years and intends to sell it in the near future?
We can give advice here on the platform but we can definitely talk about the situation and its applications.
>> Work with an expert in this because when it comes to farming and when it comes to hobby farming, the rules around what can be deducted and claimed and how it's been treated in the past and what sorts of benefits or credits or deductions you may have already claimed with respect to the property is going to be very relevant. So this is one of those areas where… >> There's not a simple rule.
>> There is no rule of thumb, it really, truly is best to work with somebody who works with this sort of question all the time, so not just a tax accountant but one who specializes in hobby farming.
>> Thanks for sending in that question.
Another one here. If you are saying, as I approach the age of 71, I am drawing down my registered accounts to reduce the minimum withdrawal amounts.
What considerations should I keep in mind?
>> Well, the primary one is, what are your goals? So yes, you want to reduce the taxes perhaps by having the income being not having to pull out as much RIF income.
As long as you don't need more in order to fund your lifestyle.
So generally, we would want to be making those decisions with the entire retirement plan in mind, what are your goals, what is your tax rate currently, what is your tax rate in retirement, what are other sources of income that you have, will there be a change in the retirement years? Will you be spending earlier, will you be having significant upfront costs and then having a reduced need for cash flow later on? So by and large, just be careful that, yes, pulling that extra, that money out early will reduce the amount of RIF income that you need to bring into income and your retirement potentially reducing an OAS withdrawal or clawback, but don't miss the forest for the trees here. Make sure that you are making that decision knowing what the rest of your income sources are, what your expenses are and how you're going to be taking CPP and OAS and when, they need to be factored in together.
>> All part of the bigger plan. I have another audience question for you.
Does power of attorney mean different things in different provinces, for instance Québec?
>> Interesting.
There's different terminology. Generally speaking, the term that the industry folk would use is substitute decision-maker.
You have one both with respect to property and personal care. This may be the same person or different people.
In different provinces, that term can change. We can have a representation agreement, a mandate, a power of attorney, there are different terms that are used.
But what it does, most provinces, I believe all of them but I'm just cautious to say anything with certainty, but we accept the documents that have been paired in another province, provided they met the laws and requirements for signing within the province they were created in. They should allow you to use them in the other provinces but if you have the opportunity to you, if you have moved to a new province and you still have the capacity, I would highly recommend having documents prepared in that province and the jurisdiction in which you will need somebody to be using these because they are more familiar with seeing things the way they are used to seeing them. You may want to have different power of attorney documents prepared to deal with property in different jurisdictions, you may have more than one. Just making sure that you don't inadvertently avoid an earlier one because there are some rules, again, depending on the province about a later power of attorney perhaps avoiding one that was established earlier.
You will want to ensure they are all coordinated but each province has its own legislation, it is provincial, its own legislation to deal with substitute decision-makers and the terminology is a little bit different, some of the rules are a little bit different in terms of how many witnesses they need to have on the document, but it allows, generally speaking, the person you appoint to act on your behalf.
>> Interesting considerations there.
You're going to get back your questions for Nicole Ewing on tax and estate planning and just moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Homebuilders broke ground on a surprisingly healthy number of units last month, boosting housing starts will about pre-pandemic levels. The question is, are we building enough to meet our ambitious targets? Anthony Okolie has a new TD Economics report on all this and to take on the numbers. Louis Cinq-Mars >> It was a hot start in May. We saw housing starts up 10% month over month and when we look at the six month average, more than 4% from the April levels and this puts starts about 5% above the first quarter levels and above the pre-pandemic run rate.
Meanwhile, this will also add to the economic growth in the second quarter.
When we look at, regionally, where the strength was, it was really the Atlantic provinces as well as Québec and Ontario.
Within Québec and Ontario, these are the big cities that drew growth, in Montréal and here in Toronto, and the areas that saw growth were multifamily sector units.
Now, despite the strong start, we have started to see starts slowly falling from multi-decade highs that we saw in 2021 and 2022.
That was dragged down by Ontario and Québec across all housing types, with the exception of multifamily units. But even there, we are starting to see some weak presale activity, again, due to high borrowing costs and high construction costs. The big question is, can the government achieve its lofty goals following new policies in the provincial and federal budgets? We have seen some provincial governments introduce a number of new housing policies, we have seen them up being a amortization from 25 to 30 years for first-time homebuyers. TD Economics believes that these measures will only add marginally to the housing supply. That's because, number one, the federal government's targets vastly exceed historical completions. Hitting the targets for you homes means we are looking at building 550,000 new units per year, that's two times the historical max, as the chart shows.
Another reason is worker shortages. We are seeing a rapidly aging workforce for tradespeople. In addition to that, newcomers to Canada are entering the construction industry at a lesser rate than other sectors, according to a Bank of Canada analysis.
Finally, productivity in Canada's industry has lagged all other industries since the early 2000's. Capacity constraints in the construction sector will make it harder for the government of Canada to achieve those lofty targets.
>> Those are some of the challenges in the new home market. We also had numbers today about existing home sales. They were from May. I think they were little soft.
Of course, in the month of June, the Bank of Canada delivered a rate cut, the first of the cycle. Any thoughts on what that could mean going forward?
>> I want to touch on those numbers. We saw sales were down .6% month over month.
Now, they are running about 12% below pre-pandemic levels. As you mentioned, the Bank of Canada delivered a rate cut and TD Economics expect stronger performance as bond yields come down. Looking ahead, there are expectations that the Bank of Canada will continue to cut and that should boost housing activity and they believe you will see a much stronger performance in the second half of this year.
>> Interesting stuff. Thanks, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, let's get you updated on the markets.
We are going to jump into Advanced Dashboard, take a look at the heat map function, a view of the market movers.
This is the TSX 60, we are screening by price and volume.
What do we have on her hands today? We know the topline numbers in negative territory. Shopify showing some weakness, down about 3% at this hour.
Not a lot of impressive green on the screen, is there? Manulife up a little less than 1%, the financial bucket. The industrials, their CP rail up to the tune of about 2%.
Taking a look at the S&P 100 as well, want to see what's happening there. It's a bit of a slow start to the trading week. The last time I checked on the headline number for the S&P 500, we were positive. We are up about half of a percent now as I refresh my screen, it's lifting. We have has left a little more than 4%, Apple of about 2%.
So we got some interesting names there.
The chipmakers are not really participating today, Nvidia is flat and Nvidia is pulling back about 1 1/2%.
We are back with Nicole Ewing from TD Wealth, talking tax and estate planning.
Another question for you.
In preparing my taxes this year, I realized I made a minor mistake on a tax return from three years ago. I think it would result in me owing another $110 in tax.
Am I obligated to refile with the correct information?
>> So you are obligated to fully disclose all of your income. If you have noticed mistake, it is incumbent on you to update the CRA that you have, that you need to correct that area. You don't need to refile, this would be an amended return.
If you are doing things digitally online, it's a relatively straightforward process.
You are essentially changing a number on your return.
Assuming things have already been assessed, it's three years out, you would need to simply put new information in and you will be reassessed. Now, when you, if it was very significant numbers, we might be thinking about doing a voluntary disclosure, maybe where you are asking for penalties and interest to be waived, you are not going to get interest waived, but penalties, if there has been an error, but if you don't point this out and the CRA does have the opportunity to still reassess Seo, if they discovered the error on their own, then you will have those penalties that apply to you.
If you underreported your income, you will have a penalty plus interest and then if you do it again, that doubles and you will have an even more significant amount to pay. So even if this time it's $110 difference, if you were to do a similar mistake in a much more significant number, the penalties and interest that would apply to that could be much more significant.
So it should be a fairly straightforward process to amend your previously filed return and pay a small amount of tax with the not so small amount of interest.
>> Honesty is the best policy.
>> Better to be, better to do it than to be found out because there certainly are, again, those penalties that can really balloon and otherwise insignificant amount into something that's much more unwieldy to deal with. $110? Those are the type of mistakes I'd like to make.
[laughing] >> If my biggest mistake cost me hundred and 10 bucks, I be all right. Another question for you now. How to protect tax on registered money at joint death point, is it only insurance or other ways?
>> Here we are talking about on the death of an individual, they are deemed to have disposed of all of their assets and all of their registered money is, the funds are collapsed and included in their income.
If you have a spouse and you were able to leave those registered assets to your spouse, then we defer the tax liability until the death of the second spouse.
You could have 1/3 spouse enter the equation and so if before the second spouse were to pass, they were to remarry, they would have the opportunity, again, to name a beneficiary or successor holder on their accounts and have their spouse and that would actually continue to defer the taxes owing but otherwise, on the death of that second spouse, you are going to have the full amount included in income and, yes, it requires liquidity in order to be able to pay for that an insurance has been traditionally a very effective way that people plan for that, they know that they are going to have a tax bill and so they funded through usually a permanent insurance policy that would allow them to fund it at a more cost-effective way than if they were to be receiving it separately. There is really not an opportunity, this is about registered money.
An RSP is a registered savings plan. The RIF is the income fund. The intent is that it will eventually be paid out and taxed in your hands and if it's at death, that means you have had many years if not many decades of that tax deferral so the government does eventually want their share, there are some effective ways of funding that tax liability.
Be sure that your estate documents are updated accordingly. If, for example, you leave your RRSP or RIF to one child and a different account to another child and there is different tax liabilities owing there, it's ultimately the estate that's going to have to pay for the tax bill and that could impact what your children receive.
>> Always interesting to get your answers to these questions. I find it fascinating.
I think the audience finds a fascinating and we all look forward to the next time you're on.
>> Thank you for having me.
>> Our thanks to Nicole Ewing, director of tax and estate planning at TD Wealth. As always, make sure you do your own research before making any investment decisions. if we can get your question today, we will aim to get into future shows. Stay tuned for tomorrow show. Sam Damiani, director of equity research at TD Cowen will be our guest, he wants to take your questions about real estate investment trusts. You can get a head start with those questions.
Just email moneytalklive@td.com. That's all the time we have for the show today.
Thanks for watching.
We will see you tomorrow.
[theme music]
