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[music] >> Hello I'm Greg Bonnell and 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 will only see here. We'll take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, with tax season on the horizon, will go through some things you should be keeping in mind when it comes to your personal financial situation with Nicole Ewing, Director of Tax and Estate Planning at TD Wealth.
MoneyTalk's Anthony Okolie brings us the latest sales report in the US and what it can mean for interest rates going forward and in today's WebBroker education segment, Bryan Rogers will show us the learning tools available right here on WebBroker.
Here's how you can get in touch with us: email moneytalklive@td.com or Phil at that viewer response box under the video player on WebBroker.
Before we get to our guests of the day let's get you an update on the markets.
Interesting times indeed. In terms of inflation out of the states this morning and this week. A retail report which Anthony will tell us about in more detail later, a lot hotter than expected.
Despite all these price pressures. We did see some downward pressure on the market and will start coming off the lows of the session here at home.
The TSX Composite Index is down a pretty modest 32 points right now little more than 1/10 of a percent.
Shopify scheduled to report their latest quarterly earnings after the close markets today, I have that report with 70 bucks and $0.27.
We are seeing more than a 5% rise.
We'll see what they bring after the closing bells today. Barrick Gold, we are noticing gold names across the space under pressure today because on that strong US retail's report saw a real jump in the US about. It seems to be pressuring gold prices down to the tune of almost 4%.
South of the border, hotter than expected retail sales reports on the back of inflation, coming off but still being sort of stubborn, trying to get back down to 2%. It does have the market thinking that perhaps the Fed needs to go a bit higher with their terminal rate. And stay there longer.
So we did open and the red but were coming off the lows of the session on Wall Street. Five points right now the S&P 500 a little more than 1/10 of a percent.
On my screen right now you actually of the NASDAQ in positive territory. Up almost 1/3 of a percent. I want to check on the chipmaker is because yesterday the rictus of gains including Nvidia today giving back a bit of that but off the lows of the session, 225 bucks and change a share down a little less than 2% and that's your market update.
There are no shortage of reminders this year and that tax season is just around the corner. Joining us now with more of what we should be keeping in mind when it comes to your personal finances, Nicole Ewing, Director of Tax and Estate Planning at TD Wealth. Pleasure to have you back on the show.
>> Pleasure to be here.
>> More people are probably noticing "my T4 just landed for my employer" it's coming.
It's not tomorrow but it is coming. So what should we be thinking and how do we get ourselves ready?
>> It is imminent at this point.
We want to collect those slips and make a list of slips that you're expecting to get.
Sharing with you that I forgot one year and I filed early not realizing that I had another slip to come. It did not work out well.
It was not something I recommend.
So try to anticipate what slips are going to be coming through.
We want to, of course, be paying and filing on time as quickly as possible because with, we've seen that the rising rates, it's now 8% overdue taxes owing. So even if there's a question about some of our small business people who have the option of filing your taxes later, the amount becomes due still on March 1. So making sure that you are getting ahead of that, having that money allocated and ready to go. Of course, were also coming up against the deadline for RSP donations.
Contributions [laughing]but also are planning not only for last year but this year as well.
>> Let's talk a bit about that.
It's the end of this calendar month as you hit March 1. Correct me if I'm wrong.
Those RRSP contributions for the last tax year and then you file your taxes later.
Is there a benefit in roughing things out to try to figure out where you are in case you want to make some different moves?
I'm thinking the deadline passes and you finally get your taxes and say "wait a minute I could've made different choices".
>> I think that's important and we don't want perfect to be the enemy of the good when it comes to our planning.
Having a best guess her best idea of what you and relevant of what your spouse is going to be reporting this year is worthwhile. To get a sense so that you can get ahead and make that RRSP contribution and make sure that it's in there and you're not delaying that. So yes. I think there is definitely value in that.
>> You mentioned spouses as well. If you're in a family situation and there can be different strategies to deploy heading into tax season. What are some of the most popular and effective ones if you want to try to figure that out?
>> A couple of immediate ones come to mind.
The RRSP spousal contribution.
A very effective way of doing some future income splitting, well say.
Rather than making the contribution to my own RRSP, if I make it to my spouse, I'm still using my contribution room but I make it to my spouse and they then, in retirement will be able to pull that money out at their marginal rate at the time.
So certainly were we have a big disparity between marginal rates or anticipated income in retirement, it's something to think about. He splitting up that eventual income once were taking the proceeds.
The other one is RTF essay.
We can't simply give our spouse money without any income on that being attributed back to us. It's called the attribution rules.
I don't know how aware most people are of these. But the general role is if I gift or loan for less than prescribed rate to my spouse, they don't get to claim the income at their marginal rate. I still need to claimant at mine. The TF essay allows you to gift the money to your spouse and they can contributed to their TF essay and we don't have those attribution rules applying because there's no tax.
There's no tax being triggered that I would need to report on my returns.
So very effective way of getting money into the hands of the lower income spouse and making sure there were doing that in the most tax effective way.
> You mention a prescribed rate there. I hadn't thought of it.
If you relate with the CRA. It will mean a higher rate. This prescribed rates change to write?
Does not change the map on that other strategy of gifting or loaning with your spouse?
>> Very much so. We talked about this for years. The low 1% rate which is the lowest it can possibly be.
Essentially if you loan amount to your spouse at the prescribed rate, it they pay you interest. You report it. We are good.
We all have these attributions applying.
Not very long ago, that was 1%.
It's now going to be 5%. So the benefit of a strategy like that is it allows you to, your spouse would take that money and invested and have a difference between what they are earning as income and the percentage that they need to pay to US interest.
There was a nice opportunity for some savings. It's a bit more difficult.
We need to be 5% in order to make that strategy effective given all the additional compliance.
So I would recommend, and hopefully everybody who had a prescribed rate loan in place of earlier years, made sure to if you have an interest payment made by the end of January because once that… If you don't do that, you lose the benefit of those rules of the attribution rules.
They will continue to apply. So hopefully we don't have anyone in that situation but it's a bit of a different math equation than it was a few years ago.
>> That's a significant change of landscape that people need to keep in mind. Anything else we think about this tax season being different than previous tax season?
>> Certainly last year we did see a lot of capital loss harvesting. That type of thing.
That I think, will be new for some people this year that they're going to need to file and look at whether or not they're going to be claiming those losses. They may want to carry them forward and back.
So there is some, again some math that my need to be done.
It's a strategy that we don't want to have to employ very often.
We don't want to have to figure it out.
I think that's a little different for people this year.
>> When were thinking about as well, depending on where your investments are, your time horizon and what kind of vehicle you put them in, maybe someone will say "I'm looking into my TFSA and I lost some money on a stop I got there." It's not the same as losing money in a cash account.
>> Now and it's an unfortunate situation because once in the TFSA, you don't… You're not tax on gains. You're not tax on income. You also don't have the benefit of claiming your losses. So unfortunately, those losses are likely trapped in the TFSA but it's a good reminder in what we invest where, what type we are putting into our register and nonregistered accounts. And making sure that we are thinking about the taxation of that particular type of investment rather than kind of filling up our RRSP or our TFSA and what the potential for loss may look like.
More coming up with Nicole Ewing now let's get you updated and some of the top stories in the world of business and take a look at how the markets are trading.
Higher borrowing costs are easing pressure this countries even real estate market.
Slowest January for home sales in some 14 years and the average national sale price was down 18% compared to last January.
TD Economics taking a look at these numbers saying the market could find the bottom sometime in the first half of this year.
In the meantime Canadian homebuilding activity also pulled back last month.
Slowing down and homebuilding south of the border appears to be weighing on West Fraser Timber.
Sales down more than 20% compared to a year earlier.
The company is pointing to lower demand for lumber from US homebuilders.
Suncor reporting a 76% jump in quarterly profit on the back of higher crude oil prices. The Calgary-based energy giants is the bottom line was also boosted by higher upstream production.
While Suncor did not announce a new CEO with this release, that news is expected sometime this month.
A quick check in the markets, will start here on Bay Street with the TSX Composite Index.
At the start of the show, slightly negative territory will call it a 50 point deficit from breakeven, about 1/4% the downside.
South of the border, keeping an eye on what's happening in the NASDAQ, in positive territory you still of the S&P 500 on the heels of that much stronger-than-expected that US retail sales reported negative territory. Pretty modest, down about 12 points or one third of a percent.
We are back now with Nicole Ewing taking your questions about personal finance so let's get to them. Here we go: these are always meeting questions we talk about personal finance.
[Reads question}there's a lot they are. We can't give tailored advice to someone you've never met but I think there's an interesting thing in there.
How you use these different kinds of accounts.
>> Absolutely.
My first question is are they all at the same institution? Are they at various institutions?
Are you deploying different strategies and maybe not thinking about your portfolio holistically? We don't necessarily want to think about the individual accounts. It's what makes sense from that overall perspective.
From a planning perspective, we want to be thinking about where is the best place for that next dollar to be?
Is that registered? Nonregistered? What type of investment… It has to be talked about. Again when it comes to taxes, there are different types of income and they are taxed differently as we know.
So we have our capital gains in our interest in our dividends.
Depending on what other income you have, your income rate, that's going to be more or less effective for you.
So, the recommendation generally would be to be looking at all of these issues holistically. Particularly what we think about US dollar accounts as well. We need to be mindful of the currency issues. And if these are accounts that may have been moved from a different institution… I would caution you as well to be mindful of your cost base because often times, when it's transferred from one financial institution to another, the new institution simply uses the fair market value of that day is your cost base.
And that is going to cause some issues down the road.
We need to report their income with these different types of accounts. So being mindful of it, taking that holistic view, stepping back and seeing what makes sense and what type of asset makes sense in the different types of account.
We want the lowest tax rate to apply outside of our registered plans to the extent that we have an abundance of money that is more than RRSPs about as we talked about, you don't want to put stocks that can have a loss into your TFSA where it's going to be trapped.
So it's a lot but making sure that they are all serving you in the best way possible.
> Even being mindful of contribution limits. If you've never put anything in a TFSA, it's big but if you have had these vehicles for some time you have to be mindful of it.
>> Absolutely.
If those are switched around, if you move your TFSA from one institution to another, please be sure you're doing that from account to account. Because if you first take the money out, that's a withdrawal.
Then you put it into the new account, that's a contribution. Depending on what you've done that year, if you've already major contribution, you can actually be over contributing.
so we have to be mindful.
>> Another question now of you were saying "I'm interested in investing.
.
.
(reads question) >> Yes these are fantastic. Again, the name "tax-free savings account" has done a bit of a disservice to Canadians (laughing) but this is an investment account.
One part of your overall strategy. Your overall portfolio and thinking of it that way.
It can hold all sorts of… The typical things would be investing in. So there are some limitations. It has to be a qualified investment but for the most part, you can have Securities, ETF's, mutual funds, all that sort of thing in there. You do want to be, as I mentioned, thinking about whether it makes sense to… We want our interest investments in our TFSA if we have the option, again, an abundance of money we have the opportunity to select.
But TFSAs are incredibly useful. There's not a reason I can think of. Not to use them… It should be one of the first vehicles you're thinking of when you're thinking of investing.
>> Because the other people will think of the other vehicle people will think of is the RRSP. Once the thinking around… Where is that next dollar goal… Where is it best go?
What kind of math are you doing?
>> Depending on your personal circumstances, what your goals are and what you're trying to achieve with that money but we have some general rules of thumb that we can use.
So, if, in your retirement, this is the question when it comes to whether to put the money in the RRSP or the TFSA, if you expect to be in a lower marginal rate than you are currently in your earning years, then an RRSP will be very effective.
Because you received your deduction now off your high income earning years and you're gonna be taking that money out and have a taxable when you have a lower marginal rate.
The challenge for a lot of people though is by default, we throw a bunch of money into RRSPs.
That's just what you've been taught.
You get that nice refund, it feels great.
The challenges though that I have met clients with millions of dollars in their RRSPs not appreciating that it will be taxable one day. If you were in a high tax rate during your retirement, which many people are, you actually might end up paying more in tax than you would have now.
The other thing to be thinking about there as well in terms of estate planning is that these are fully taxable in year of death. The RRSP is fully taxable. So it's essentially collapsed and included in your income.
As with everything else, deemed disposition of all your assets, you're very likely going to be in the highest marginal rate at that time. So some planning needs to be done around there.
TFSAs are incredibly effective useful tools for both short-term goals and used for retirement as well.
We don't think of RRSPs as retirement and TFSAs for anything else. They can also be part of your retirement plan. But they're good for short-term goals, pulling money out.
But I can talk out of both sides of my mouth because if you're thinking about buying a home or going back to school, an RRSP might be a good vehicle to use because you get a deduction and you can take that money out and use it towards those goals and not be taxed at the same time.
We have the new first homes savings account, I think I got that right, coming up.
There's a bunch of the different, those opportunities and you are going to be able to transfer money from your RRSP into that account without having or needing to pay tax immediately as well.
So yeah.
It ultimately depends on what makes sense for you and your family, both now and where you see yourself in retirement.
> As always at home make sure you do your own research before you make any investment decisions or personal finance decisions. We'll get back to your questions for Nicole Ewing on personal finance in just a moment's time.
A reminder of course that you can get in touch with any time by emailing moneytalklive@td.com.
Now let's get to educational segment of the day.
There are a number of education tools available to you on WebBroker which can help expand your knowledge of the investing world.
Bryan Rogers, Senior Client Education Instructor instructor with TD Direct Investing has this.
>> All right. Well I wanted to take our viewers through three easy steps to learn more about investing within WebBroker.
So there are a few easy steps you can take within the platform that help expand your knowledge.
So if you're exploring a certain topic or taking a specific action and you want to learn more, if we jump into WebBroker, I can show you how we can do that. So step number one is… Let's say for example, if I want to place a trade, we get questions with us all the time about how I would place a trade. What are some of those details I need to know. Some of you might jump in here and click on "trading" and go to stocks. They are stuck right away saying "what I do with this price type what happens when I put a symbol here?" If I type capital and that I select the stock, you're going to get this other information comes up and you may not know what any that means.
What you can do as a first step is you can click on this?. Within every area of WebBroker, there's a? To help you with that section or that page that you're currently on.
So I click on that. I'm gonna scroll down fairly quickly because some of this is more general information about having enough cash in buying power.
But as you scroll down a little further, you start to see information on what is a stock quote?
Regarding the stock quote… You can keep going and there's an "action to buy and sell". There's information of the market order. What's a market order? That price type… The limit order… That is stuff that you fill in those details really quickly by just clicking that?.
So in step number two, if you feel like "I still feel a little uncomfortable and needs more information" you can close this page here and go back to the main page WebBroker. Click on the "search" tab.
It's still within WebBroker. This search is all the available education within the platform.
So if I type in "how to place a trade"… And then just wait for what comes up, there I'm getting some videos and you can type in "how to place an order"… It will look at the keywords you looking for.
It may give you some simple steps or more advanced as you go along.
Here's some more video lessons as you go along… But if you don't find exactly what you're looking for, just refine your search in terms of your keywords and you'll be able to find something within our education Centre that will be available for you.
And then that third step is exactly that.
If we go to the "Learning Center" word of it is the learned tab within WebBroker, you can click on that and there's a number of ways you can explore that as well. You can explore learning passed. If you click on that, that will give you some curated information on how you answer these questions.
Some questions here "are you looking for more intermediate level? Basic? Advanced?" If you go back to the Learning Center again, you can find individual lessons if you're looking for things about order entry or stocks or a number of different topics. Mutual funds etc. And also, if you're looking for industry experts, we do record these on a live basis and they are archived later on. If you click on "view all webinars" that will give you a listing of webinars available that you can watch.
They are normally about 30 minutes long. A bit longer material but it is something you can see what industry experts are saying.
Normally they are interviewed by one of our education specialist.
Nonetheless when there we had master classes.
Those are the last thing to click on.
Those are live events with individuals such as myself, Client Education Instructor's walking you through life events where you can ask questions in the chat and if you still, at that point, have not gotten your answer, fire your questions are way or throw your questions appear on MoneyTalk Live.
>> Our thanks to Bryan Rogers, Senior Client Education Instructor TD Direct Investing.
Make sure to check out the Learning Center on WebBroker for more educational videos, live interactive master classes and upcoming webinars.
Now before we get back to your questions with Nicole Ewing on personal finances, a reminder of how you can get in touch with us.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live.
>> We are back with Nicole Ewing taking your questions about personal finance.
A very popular topic.
Just in the past couple of seconds, a viewer is asking as a spouse and… [reads question] >> I'm not sure I have the facts exactly on this but for professional corporations, once you start practising or stop practising whatever it is, medicine… It's essentially no longer an operating company. It's now holding company. So in a small business, I'm curious about whether it qualifies as a small business corporation.
There are actually definitions in the income tax active at what that means to be a small business corporation.
Usually, if you are a nonvoting shareholder then of course, you need the approval of those who have that voting control.
They do have the opportunity to convert different types of shares.
Often times we see this as a state estate freezes rather. I would see the value, freeze them in exchange them for preferred shares with fixed value to find dividend rights and all that sort of thing. Then I give the new common shares to a family trust or other individuals for example.
So there is an opportunity to convert your shares into different types of share classes.
It would require the approval of the voting shareholder.
> Interesting stuff. Another one hot enough the platform. If you were wants to know [reads question]a tax-free savings account… But that CRA will take notice… > Oh [laughing]the CRA frowns upon registered accounts being used in this way. It's not their intended purpose so daytrading really is regarded as business activity. And it will be taxed income.
So if the, if the CRA is looking at your TFSA and determines its being used that way, it's not really dependent on the values but it's more about how you were engaging with this activity?
Are you engaging with it as somebody would a business?
How frequent are your trades?
How long are you holding funds? So I would suggest that TFSAs are likely not a good place to be doing day trading because you're losing out on the opportunities for having the work the way they should also risk being reassessed, penalties applying… So I say there's really no dollar amount that is safe.
>> What are you doing with this? It's almost like like a judgement call.
It kind of is is in it?
> Oftentimes when we asked the CRA for their opinions on things and it's kind of a running joke in the tax community that it's a question of fact.
You try to get a straight answer and it's always good to be a question of fact.
When it comes to whether or not your activity goes from an investor to a business activity, it is a question of fact.
It is something that the CRA is aware of.
They certainly know the people do this and there's ways.
>>[reads question]I don't know how much of a crystal ball you have but there's a difference when this is coming from a coupon from a bond.
>> There is. 60 years old, I think we depend on the question of what is your time horizon?
Are you going to be, are you still working?
Are you earning other types of income:?
What is your overall strategy?
Where you have the opportunity to put those funds? So, I would not be able to say whether or not somebody should invest in fixed income or dividend paying stocks.
But we want to be aware.
There is growth opportunity. We want to look at the volatility involved, how comfortable you are.
What your relationship with risk is going to be and how, whether or not you can withstand that. There is different levels of vulnerability in those situations.
So I think it's worthwhile to look at your overall circumstances.
Looking at your portfolio as a whole and determining what your other income streams might be.
And one thing that we always want those nearing retirement age to be thinking about, one other income might be received from the government that could be impacted by the types of income that you are taking in?
So we want to, again, just be mindful as to whether this might affect your OAS and if it is good to be a clawback on that sort of thing and where do you put this money?
If you're still putting this… You want the income stream but for what purpose? What are using that for? To find other investments?
Actually have your cash flow coming through? So a lot of considerations and really, again, it's a question of fact.
It makes sense for you and your circumstances.
>> Here is one recently: can I put anything other than stocks and bonds into a TFSA? So if you were going down the right road but realizing… >> We can put real property in there.
We've been through the qualified investments that generally speaking, you're going to be on board if you're putting the same types of investments into your TFSA that you would be putting in an RRSP. There's an opportunity there.
To be using at the same way for your overall portfolio. Things get a little bit questionable.
We start getting into alternative investments and that sort of thing but for the most part, you can really, mutual funds, ETF's, security is… Something to think about certainly if you are a US person.
You really need to be looking at the math and see if it works for you because there's a lot of reporting or hard. When you think it is well of the types of foreign income that you might be earning… Does it make sense to have it in a registered account or otherwise based on the withholding rules that might apply.
Whether or not you can get out of the withholding rules or whether you will be stuck with, again, paying a tax that you don't have any opportunity to offset.
>> While we are on the topic of TFSA, can you not just make an election to treat the gains us? Can you get ahead of it?
>> A really interesting question. I don't know.
I would assume no. Because that's not what the account is designed to do.
We really only report how much we've contributed to our TFSA.
.
I looking through the forms and is there an opportunity to do that?
I think it might be more of a withdraw the money.
You can preserve your contribution but we will take that money out and maybe do that in a different account going forward.
I don't know that there is much that you could do in terms of past behaviour. If you're really concerned about it.
The numbers are substantial enough.
You might want to avail yourself to the voluntary disclosure program at CRA which does allow you to essentially self-report that you've made an error. Which happens all the time of this might be one of them.
You can self-report and you will then have the opportunity to not pay some of those penalties that otherwise, if they find you first, it's much more expensive than if you say "I did not realize I was doing this." At the end of the day, ignorance is no defence when it comes to tax.
The courts have been very clear about that.
Once the people of made mistakes with their TFSAs and over contributed, there's not a lot of wiggle room there.
So I would suggest if you are doing this sort of activity in your TFSA, I can't think of any other way to report the gain.
Taking that money out and using it in a different way might be the best path forward.
But I'm some research to do.
I'm very curious.
I like creative thinking.
>> All right.
We'll get back to your questions for Nicole Ewing on personal finance in just a moment's time.
As always make sure to 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 is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live.
>> It's no secret to anyone out there that the cost of living has been moving higher throughout the last year. Things are more expensive than they were last year at this time but the US consumer is awfully resilient. Latest retail sales coming in pretty hot. Our Anthony Okolie is been digging into the numbers and what TD Economics has to say about it all.
>> Thanks Greg. Yes US retail sales rebounded in January after two consecutive months of decline.
Proving that economic growth picked up steam to start the year. Last month, month-to-month gain was the biggest since March 2021. It shows it shows that US consumers are still in pretty good shape.
Now, we dig into the numbers, sales of cars and car parts rose nearly 6% accounting for most of the gains.
The gas station sales there, even though we saw a rise in gas prices last month, when we exclude autos and gas, sales were up 2.
6% month over month.
Also going above expectations. Sales of building materials and gardening equipment stores, that's another volatile category.
They also rose in January.
TD Economics says that stores in these categories have the highest buildup in inventories relative to pre-pandemic average.
So they may come under present pressures in the coming months something will be watching very closely. Now the retail sales report also details consumer spending and bars and restaurants with the biggest contribution last month from Food services and drinking places up more than 7% month over month.
More people are dining out as that pandemic faded.
Now, retail sales report, does paint a partial picture of spending because it does include many services like travel, housing and utilities.
The TD Economics notes that the upward trend in retail sales and restaurants, their estimates of leisure trash selectivity for the supports US consumers healthy appetite for service spending going forward. Greg?
>> All these aggressive rate hikes whether from the Fed of the Bank of Canada, the banks are supposed to slow economic activity. They're supposed to make us think twice about wanting to spend.
So given the strength of this report, thinking in terms of interest rates going forward? How the consumer might react?
>> That's what you think after the aggressive rate hikes that they will slow down. But were not really seeing that.
TD Economics expects the Fed will hike rate points by 25 basis points by the next policy to try to cool inflation and of course, over the long term bring inflation down to its target 2%.
Now they expect the recent inflation numbers will reinforce chairman Powell's messaging that we are only in the very early stages of the disinflationary process.
Now, given there are several indicators that sick suggest service sector continues to show strong demand, TD Economics expects consumer spending growth to come in or on how to percent in the first quarter of 2023.
Greg?
>> Interesting stuff.
Thanks Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Let's check in on the markets.
The TSX Composite Index, we did see a big jump in the trade of the US box off the back of the hotter than expected retail sales report.
77 points in the hole for the TSX. Suncor reported up earlier in the session.
The last time I checked, some downward pressure on the price of crude indeed.
American benchmark crew down. Suncor modestly in negative territory. Let's check on the gold miners.
The price of gold, feeling that pressure, we have Kinross down almost 5%. South of the border, the S&P 500 coming off the lows of the session right now down 16 points, less than about half a percent.
The tech heavy NASDAQ. Is it still positive? There seems to be some fluctuation in the market today.
It's hanging in there but pretty modest.
Up about 12 points or 1/10 of a percent.
Let's check in on Taiwan semiconductor Manufacturing.
Holding about 8 million shares according to the latest filings down from 60 million.
So some downward pressure. Usually when you get these, remember back in the old day filings, can't move the markets in some of the big investors route to. We are back now with Nicole Ewing from TD Wealth, let's get a question coming in here. This next one, I will have to go back to the silver screen.
[reads question] >> I love this question because it gives me the opportunity to dispel some misinformation. I have spoken to people before who are under the impression that a parent can give to a child and not trigger a tax event.
That is not the case. So, when the parent gift of those shares to the child, that would've been a taxable event for them.
They should have been claiming their capital gain based on the difference for and what they purchased it for and what the fair market value is when they transferred it to their child.
So when the child then, sells those shares at their own timing, the cost base would be the fair market value on the day that they received it.
This is an area where there is a lot of confusion and one thing that you can do, one of the worst tax planning things to do is for a parent to transfer money to a child for less than fair market value.
"What if I just sell it?" Maybe it's not a security exchange but maybe it's a different type of property and you can sell it for a dollar… That is a nightmare situation.
Because what actually happens is the parent, because they've trends they transferred for less than fair market value will be deemed to have sold it at fair market value and need to pay the gain on that, the difference between what their cost base and what it's worth today.
Regardless of the fact that they only receive the dollar.
But if they are essentially being penalized for doing this because the child then who received this purchased for a dollar, they do not get the benefit of that bumped up cost base. They take over the original cost base of the parent and they then have to ultimately dispose of the property and have to pay tax on it again.
So you're essentially paying tax on the same growth two times.
So there are a lot of… CRA really doesn't, there's not a lot of opportunity to transfer money to not arm's-length people and not have some of these tax rules trip us up for not careful.
In that example, it's the day the parent transfers the Securities to the child that the tax would've been triggered.
>> Fascinating stuff.
We are almost running out of time but will squeeze another one in.
Can RESP's be carried forward if missed in a particular year?
> Very good question.
There is no annual limit to what you can contribute.
There's a lifetime limit on RESP for $50,000 but there is some strategy to how much or contribute in each year to maximize grants.
We need to contribute $2500 in order to get that full grant in a year. And we have the opportunity to carry forward that grant one year. So if I missed a year, I can contribute $5000 that year and get the grant from the previous two years.
So it's not… I wouldn't say it's carry forward… Because there's no limit to how much you can contribute and when.
The lifetime of 50,000 per child. But we want to be thinking of it strategically if we can, the earlier in life to get those funds. The earlier the better. But you might not necessarily want to put the full 50,000 in the first year if you have an available because you not can have the opportunity to maximize those government grants.
>> Always fascinating stuff and I always appreciate come to visit us. The audience loves it to looking forward to the next time.
>> Our thanks to Nicole Ewing Dir.
of estate planning a TD Wealth.
A reminder to always do your own research in financial decisions.
Stay tuned tomorrow, Robert Both, macro strategist at TD Securities take your questions about the economy. Email us anytime at moneytalklive@td.com. That's all the time we have thanks and will see you tomorrow.
[music]
Every day I'll be joined by guests from across TD many of whom you will only see here. We'll take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, with tax season on the horizon, will go through some things you should be keeping in mind when it comes to your personal financial situation with Nicole Ewing, Director of Tax and Estate Planning at TD Wealth.
MoneyTalk's Anthony Okolie brings us the latest sales report in the US and what it can mean for interest rates going forward and in today's WebBroker education segment, Bryan Rogers will show us the learning tools available right here on WebBroker.
Here's how you can get in touch with us: email moneytalklive@td.com or Phil at that viewer response box under the video player on WebBroker.
Before we get to our guests of the day let's get you an update on the markets.
Interesting times indeed. In terms of inflation out of the states this morning and this week. A retail report which Anthony will tell us about in more detail later, a lot hotter than expected.
Despite all these price pressures. We did see some downward pressure on the market and will start coming off the lows of the session here at home.
The TSX Composite Index is down a pretty modest 32 points right now little more than 1/10 of a percent.
Shopify scheduled to report their latest quarterly earnings after the close markets today, I have that report with 70 bucks and $0.27.
We are seeing more than a 5% rise.
We'll see what they bring after the closing bells today. Barrick Gold, we are noticing gold names across the space under pressure today because on that strong US retail's report saw a real jump in the US about. It seems to be pressuring gold prices down to the tune of almost 4%.
South of the border, hotter than expected retail sales reports on the back of inflation, coming off but still being sort of stubborn, trying to get back down to 2%. It does have the market thinking that perhaps the Fed needs to go a bit higher with their terminal rate. And stay there longer.
So we did open and the red but were coming off the lows of the session on Wall Street. Five points right now the S&P 500 a little more than 1/10 of a percent.
On my screen right now you actually of the NASDAQ in positive territory. Up almost 1/3 of a percent. I want to check on the chipmaker is because yesterday the rictus of gains including Nvidia today giving back a bit of that but off the lows of the session, 225 bucks and change a share down a little less than 2% and that's your market update.
There are no shortage of reminders this year and that tax season is just around the corner. Joining us now with more of what we should be keeping in mind when it comes to your personal finances, Nicole Ewing, Director of Tax and Estate Planning at TD Wealth. Pleasure to have you back on the show.
>> Pleasure to be here.
>> More people are probably noticing "my T4 just landed for my employer" it's coming.
It's not tomorrow but it is coming. So what should we be thinking and how do we get ourselves ready?
>> It is imminent at this point.
We want to collect those slips and make a list of slips that you're expecting to get.
Sharing with you that I forgot one year and I filed early not realizing that I had another slip to come. It did not work out well.
It was not something I recommend.
So try to anticipate what slips are going to be coming through.
We want to, of course, be paying and filing on time as quickly as possible because with, we've seen that the rising rates, it's now 8% overdue taxes owing. So even if there's a question about some of our small business people who have the option of filing your taxes later, the amount becomes due still on March 1. So making sure that you are getting ahead of that, having that money allocated and ready to go. Of course, were also coming up against the deadline for RSP donations.
Contributions [laughing]but also are planning not only for last year but this year as well.
>> Let's talk a bit about that.
It's the end of this calendar month as you hit March 1. Correct me if I'm wrong.
Those RRSP contributions for the last tax year and then you file your taxes later.
Is there a benefit in roughing things out to try to figure out where you are in case you want to make some different moves?
I'm thinking the deadline passes and you finally get your taxes and say "wait a minute I could've made different choices".
>> I think that's important and we don't want perfect to be the enemy of the good when it comes to our planning.
Having a best guess her best idea of what you and relevant of what your spouse is going to be reporting this year is worthwhile. To get a sense so that you can get ahead and make that RRSP contribution and make sure that it's in there and you're not delaying that. So yes. I think there is definitely value in that.
>> You mentioned spouses as well. If you're in a family situation and there can be different strategies to deploy heading into tax season. What are some of the most popular and effective ones if you want to try to figure that out?
>> A couple of immediate ones come to mind.
The RRSP spousal contribution.
A very effective way of doing some future income splitting, well say.
Rather than making the contribution to my own RRSP, if I make it to my spouse, I'm still using my contribution room but I make it to my spouse and they then, in retirement will be able to pull that money out at their marginal rate at the time.
So certainly were we have a big disparity between marginal rates or anticipated income in retirement, it's something to think about. He splitting up that eventual income once were taking the proceeds.
The other one is RTF essay.
We can't simply give our spouse money without any income on that being attributed back to us. It's called the attribution rules.
I don't know how aware most people are of these. But the general role is if I gift or loan for less than prescribed rate to my spouse, they don't get to claim the income at their marginal rate. I still need to claimant at mine. The TF essay allows you to gift the money to your spouse and they can contributed to their TF essay and we don't have those attribution rules applying because there's no tax.
There's no tax being triggered that I would need to report on my returns.
So very effective way of getting money into the hands of the lower income spouse and making sure there were doing that in the most tax effective way.
> You mention a prescribed rate there. I hadn't thought of it.
If you relate with the CRA. It will mean a higher rate. This prescribed rates change to write?
Does not change the map on that other strategy of gifting or loaning with your spouse?
>> Very much so. We talked about this for years. The low 1% rate which is the lowest it can possibly be.
Essentially if you loan amount to your spouse at the prescribed rate, it they pay you interest. You report it. We are good.
We all have these attributions applying.
Not very long ago, that was 1%.
It's now going to be 5%. So the benefit of a strategy like that is it allows you to, your spouse would take that money and invested and have a difference between what they are earning as income and the percentage that they need to pay to US interest.
There was a nice opportunity for some savings. It's a bit more difficult.
We need to be 5% in order to make that strategy effective given all the additional compliance.
So I would recommend, and hopefully everybody who had a prescribed rate loan in place of earlier years, made sure to if you have an interest payment made by the end of January because once that… If you don't do that, you lose the benefit of those rules of the attribution rules.
They will continue to apply. So hopefully we don't have anyone in that situation but it's a bit of a different math equation than it was a few years ago.
>> That's a significant change of landscape that people need to keep in mind. Anything else we think about this tax season being different than previous tax season?
>> Certainly last year we did see a lot of capital loss harvesting. That type of thing.
That I think, will be new for some people this year that they're going to need to file and look at whether or not they're going to be claiming those losses. They may want to carry them forward and back.
So there is some, again some math that my need to be done.
It's a strategy that we don't want to have to employ very often.
We don't want to have to figure it out.
I think that's a little different for people this year.
>> When were thinking about as well, depending on where your investments are, your time horizon and what kind of vehicle you put them in, maybe someone will say "I'm looking into my TFSA and I lost some money on a stop I got there." It's not the same as losing money in a cash account.
>> Now and it's an unfortunate situation because once in the TFSA, you don't… You're not tax on gains. You're not tax on income. You also don't have the benefit of claiming your losses. So unfortunately, those losses are likely trapped in the TFSA but it's a good reminder in what we invest where, what type we are putting into our register and nonregistered accounts. And making sure that we are thinking about the taxation of that particular type of investment rather than kind of filling up our RRSP or our TFSA and what the potential for loss may look like.
More coming up with Nicole Ewing now let's get you updated and some of the top stories in the world of business and take a look at how the markets are trading.
Higher borrowing costs are easing pressure this countries even real estate market.
Slowest January for home sales in some 14 years and the average national sale price was down 18% compared to last January.
TD Economics taking a look at these numbers saying the market could find the bottom sometime in the first half of this year.
In the meantime Canadian homebuilding activity also pulled back last month.
Slowing down and homebuilding south of the border appears to be weighing on West Fraser Timber.
Sales down more than 20% compared to a year earlier.
The company is pointing to lower demand for lumber from US homebuilders.
Suncor reporting a 76% jump in quarterly profit on the back of higher crude oil prices. The Calgary-based energy giants is the bottom line was also boosted by higher upstream production.
While Suncor did not announce a new CEO with this release, that news is expected sometime this month.
A quick check in the markets, will start here on Bay Street with the TSX Composite Index.
At the start of the show, slightly negative territory will call it a 50 point deficit from breakeven, about 1/4% the downside.
South of the border, keeping an eye on what's happening in the NASDAQ, in positive territory you still of the S&P 500 on the heels of that much stronger-than-expected that US retail sales reported negative territory. Pretty modest, down about 12 points or one third of a percent.
We are back now with Nicole Ewing taking your questions about personal finance so let's get to them. Here we go: these are always meeting questions we talk about personal finance.
[Reads question}there's a lot they are. We can't give tailored advice to someone you've never met but I think there's an interesting thing in there.
How you use these different kinds of accounts.
>> Absolutely.
My first question is are they all at the same institution? Are they at various institutions?
Are you deploying different strategies and maybe not thinking about your portfolio holistically? We don't necessarily want to think about the individual accounts. It's what makes sense from that overall perspective.
From a planning perspective, we want to be thinking about where is the best place for that next dollar to be?
Is that registered? Nonregistered? What type of investment… It has to be talked about. Again when it comes to taxes, there are different types of income and they are taxed differently as we know.
So we have our capital gains in our interest in our dividends.
Depending on what other income you have, your income rate, that's going to be more or less effective for you.
So, the recommendation generally would be to be looking at all of these issues holistically. Particularly what we think about US dollar accounts as well. We need to be mindful of the currency issues. And if these are accounts that may have been moved from a different institution… I would caution you as well to be mindful of your cost base because often times, when it's transferred from one financial institution to another, the new institution simply uses the fair market value of that day is your cost base.
And that is going to cause some issues down the road.
We need to report their income with these different types of accounts. So being mindful of it, taking that holistic view, stepping back and seeing what makes sense and what type of asset makes sense in the different types of account.
We want the lowest tax rate to apply outside of our registered plans to the extent that we have an abundance of money that is more than RRSPs about as we talked about, you don't want to put stocks that can have a loss into your TFSA where it's going to be trapped.
So it's a lot but making sure that they are all serving you in the best way possible.
> Even being mindful of contribution limits. If you've never put anything in a TFSA, it's big but if you have had these vehicles for some time you have to be mindful of it.
>> Absolutely.
If those are switched around, if you move your TFSA from one institution to another, please be sure you're doing that from account to account. Because if you first take the money out, that's a withdrawal.
Then you put it into the new account, that's a contribution. Depending on what you've done that year, if you've already major contribution, you can actually be over contributing.
so we have to be mindful.
>> Another question now of you were saying "I'm interested in investing.
.
.
(reads question) >> Yes these are fantastic. Again, the name "tax-free savings account" has done a bit of a disservice to Canadians (laughing) but this is an investment account.
One part of your overall strategy. Your overall portfolio and thinking of it that way.
It can hold all sorts of… The typical things would be investing in. So there are some limitations. It has to be a qualified investment but for the most part, you can have Securities, ETF's, mutual funds, all that sort of thing in there. You do want to be, as I mentioned, thinking about whether it makes sense to… We want our interest investments in our TFSA if we have the option, again, an abundance of money we have the opportunity to select.
But TFSAs are incredibly useful. There's not a reason I can think of. Not to use them… It should be one of the first vehicles you're thinking of when you're thinking of investing.
>> Because the other people will think of the other vehicle people will think of is the RRSP. Once the thinking around… Where is that next dollar goal… Where is it best go?
What kind of math are you doing?
>> Depending on your personal circumstances, what your goals are and what you're trying to achieve with that money but we have some general rules of thumb that we can use.
So, if, in your retirement, this is the question when it comes to whether to put the money in the RRSP or the TFSA, if you expect to be in a lower marginal rate than you are currently in your earning years, then an RRSP will be very effective.
Because you received your deduction now off your high income earning years and you're gonna be taking that money out and have a taxable when you have a lower marginal rate.
The challenge for a lot of people though is by default, we throw a bunch of money into RRSPs.
That's just what you've been taught.
You get that nice refund, it feels great.
The challenges though that I have met clients with millions of dollars in their RRSPs not appreciating that it will be taxable one day. If you were in a high tax rate during your retirement, which many people are, you actually might end up paying more in tax than you would have now.
The other thing to be thinking about there as well in terms of estate planning is that these are fully taxable in year of death. The RRSP is fully taxable. So it's essentially collapsed and included in your income.
As with everything else, deemed disposition of all your assets, you're very likely going to be in the highest marginal rate at that time. So some planning needs to be done around there.
TFSAs are incredibly effective useful tools for both short-term goals and used for retirement as well.
We don't think of RRSPs as retirement and TFSAs for anything else. They can also be part of your retirement plan. But they're good for short-term goals, pulling money out.
But I can talk out of both sides of my mouth because if you're thinking about buying a home or going back to school, an RRSP might be a good vehicle to use because you get a deduction and you can take that money out and use it towards those goals and not be taxed at the same time.
We have the new first homes savings account, I think I got that right, coming up.
There's a bunch of the different, those opportunities and you are going to be able to transfer money from your RRSP into that account without having or needing to pay tax immediately as well.
So yeah.
It ultimately depends on what makes sense for you and your family, both now and where you see yourself in retirement.
> As always at home make sure you do your own research before you make any investment decisions or personal finance decisions. We'll get back to your questions for Nicole Ewing on personal finance in just a moment's time.
A reminder of course that you can get in touch with any time by emailing moneytalklive@td.com.
Now let's get to educational segment of the day.
There are a number of education tools available to you on WebBroker which can help expand your knowledge of the investing world.
Bryan Rogers, Senior Client Education Instructor instructor with TD Direct Investing has this.
>> All right. Well I wanted to take our viewers through three easy steps to learn more about investing within WebBroker.
So there are a few easy steps you can take within the platform that help expand your knowledge.
So if you're exploring a certain topic or taking a specific action and you want to learn more, if we jump into WebBroker, I can show you how we can do that. So step number one is… Let's say for example, if I want to place a trade, we get questions with us all the time about how I would place a trade. What are some of those details I need to know. Some of you might jump in here and click on "trading" and go to stocks. They are stuck right away saying "what I do with this price type what happens when I put a symbol here?" If I type capital and that I select the stock, you're going to get this other information comes up and you may not know what any that means.
What you can do as a first step is you can click on this?. Within every area of WebBroker, there's a? To help you with that section or that page that you're currently on.
So I click on that. I'm gonna scroll down fairly quickly because some of this is more general information about having enough cash in buying power.
But as you scroll down a little further, you start to see information on what is a stock quote?
Regarding the stock quote… You can keep going and there's an "action to buy and sell". There's information of the market order. What's a market order? That price type… The limit order… That is stuff that you fill in those details really quickly by just clicking that?.
So in step number two, if you feel like "I still feel a little uncomfortable and needs more information" you can close this page here and go back to the main page WebBroker. Click on the "search" tab.
It's still within WebBroker. This search is all the available education within the platform.
So if I type in "how to place a trade"… And then just wait for what comes up, there I'm getting some videos and you can type in "how to place an order"… It will look at the keywords you looking for.
It may give you some simple steps or more advanced as you go along.
Here's some more video lessons as you go along… But if you don't find exactly what you're looking for, just refine your search in terms of your keywords and you'll be able to find something within our education Centre that will be available for you.
And then that third step is exactly that.
If we go to the "Learning Center" word of it is the learned tab within WebBroker, you can click on that and there's a number of ways you can explore that as well. You can explore learning passed. If you click on that, that will give you some curated information on how you answer these questions.
Some questions here "are you looking for more intermediate level? Basic? Advanced?" If you go back to the Learning Center again, you can find individual lessons if you're looking for things about order entry or stocks or a number of different topics. Mutual funds etc. And also, if you're looking for industry experts, we do record these on a live basis and they are archived later on. If you click on "view all webinars" that will give you a listing of webinars available that you can watch.
They are normally about 30 minutes long. A bit longer material but it is something you can see what industry experts are saying.
Normally they are interviewed by one of our education specialist.
Nonetheless when there we had master classes.
Those are the last thing to click on.
Those are live events with individuals such as myself, Client Education Instructor's walking you through life events where you can ask questions in the chat and if you still, at that point, have not gotten your answer, fire your questions are way or throw your questions appear on MoneyTalk Live.
>> Our thanks to Bryan Rogers, Senior Client Education Instructor TD Direct Investing.
Make sure to check out the Learning Center on WebBroker for more educational videos, live interactive master classes and upcoming webinars.
Now before we get back to your questions with Nicole Ewing on personal finances, a reminder of how you can get in touch with us.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live.
>> We are back with Nicole Ewing taking your questions about personal finance.
A very popular topic.
Just in the past couple of seconds, a viewer is asking as a spouse and… [reads question] >> I'm not sure I have the facts exactly on this but for professional corporations, once you start practising or stop practising whatever it is, medicine… It's essentially no longer an operating company. It's now holding company. So in a small business, I'm curious about whether it qualifies as a small business corporation.
There are actually definitions in the income tax active at what that means to be a small business corporation.
Usually, if you are a nonvoting shareholder then of course, you need the approval of those who have that voting control.
They do have the opportunity to convert different types of shares.
Often times we see this as a state estate freezes rather. I would see the value, freeze them in exchange them for preferred shares with fixed value to find dividend rights and all that sort of thing. Then I give the new common shares to a family trust or other individuals for example.
So there is an opportunity to convert your shares into different types of share classes.
It would require the approval of the voting shareholder.
> Interesting stuff. Another one hot enough the platform. If you were wants to know [reads question]a tax-free savings account… But that CRA will take notice… > Oh [laughing]the CRA frowns upon registered accounts being used in this way. It's not their intended purpose so daytrading really is regarded as business activity. And it will be taxed income.
So if the, if the CRA is looking at your TFSA and determines its being used that way, it's not really dependent on the values but it's more about how you were engaging with this activity?
Are you engaging with it as somebody would a business?
How frequent are your trades?
How long are you holding funds? So I would suggest that TFSAs are likely not a good place to be doing day trading because you're losing out on the opportunities for having the work the way they should also risk being reassessed, penalties applying… So I say there's really no dollar amount that is safe.
>> What are you doing with this? It's almost like like a judgement call.
It kind of is is in it?
> Oftentimes when we asked the CRA for their opinions on things and it's kind of a running joke in the tax community that it's a question of fact.
You try to get a straight answer and it's always good to be a question of fact.
When it comes to whether or not your activity goes from an investor to a business activity, it is a question of fact.
It is something that the CRA is aware of.
They certainly know the people do this and there's ways.
>>[reads question]I don't know how much of a crystal ball you have but there's a difference when this is coming from a coupon from a bond.
>> There is. 60 years old, I think we depend on the question of what is your time horizon?
Are you going to be, are you still working?
Are you earning other types of income:?
What is your overall strategy?
Where you have the opportunity to put those funds? So, I would not be able to say whether or not somebody should invest in fixed income or dividend paying stocks.
But we want to be aware.
There is growth opportunity. We want to look at the volatility involved, how comfortable you are.
What your relationship with risk is going to be and how, whether or not you can withstand that. There is different levels of vulnerability in those situations.
So I think it's worthwhile to look at your overall circumstances.
Looking at your portfolio as a whole and determining what your other income streams might be.
And one thing that we always want those nearing retirement age to be thinking about, one other income might be received from the government that could be impacted by the types of income that you are taking in?
So we want to, again, just be mindful as to whether this might affect your OAS and if it is good to be a clawback on that sort of thing and where do you put this money?
If you're still putting this… You want the income stream but for what purpose? What are using that for? To find other investments?
Actually have your cash flow coming through? So a lot of considerations and really, again, it's a question of fact.
It makes sense for you and your circumstances.
>> Here is one recently: can I put anything other than stocks and bonds into a TFSA? So if you were going down the right road but realizing… >> We can put real property in there.
We've been through the qualified investments that generally speaking, you're going to be on board if you're putting the same types of investments into your TFSA that you would be putting in an RRSP. There's an opportunity there.
To be using at the same way for your overall portfolio. Things get a little bit questionable.
We start getting into alternative investments and that sort of thing but for the most part, you can really, mutual funds, ETF's, security is… Something to think about certainly if you are a US person.
You really need to be looking at the math and see if it works for you because there's a lot of reporting or hard. When you think it is well of the types of foreign income that you might be earning… Does it make sense to have it in a registered account or otherwise based on the withholding rules that might apply.
Whether or not you can get out of the withholding rules or whether you will be stuck with, again, paying a tax that you don't have any opportunity to offset.
>> While we are on the topic of TFSA, can you not just make an election to treat the gains us? Can you get ahead of it?
>> A really interesting question. I don't know.
I would assume no. Because that's not what the account is designed to do.
We really only report how much we've contributed to our TFSA.
.
I looking through the forms and is there an opportunity to do that?
I think it might be more of a withdraw the money.
You can preserve your contribution but we will take that money out and maybe do that in a different account going forward.
I don't know that there is much that you could do in terms of past behaviour. If you're really concerned about it.
The numbers are substantial enough.
You might want to avail yourself to the voluntary disclosure program at CRA which does allow you to essentially self-report that you've made an error. Which happens all the time of this might be one of them.
You can self-report and you will then have the opportunity to not pay some of those penalties that otherwise, if they find you first, it's much more expensive than if you say "I did not realize I was doing this." At the end of the day, ignorance is no defence when it comes to tax.
The courts have been very clear about that.
Once the people of made mistakes with their TFSAs and over contributed, there's not a lot of wiggle room there.
So I would suggest if you are doing this sort of activity in your TFSA, I can't think of any other way to report the gain.
Taking that money out and using it in a different way might be the best path forward.
But I'm some research to do.
I'm very curious.
I like creative thinking.
>> All right.
We'll get back to your questions for Nicole Ewing on personal finance in just a moment's time.
As always make sure to 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 is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live.
>> It's no secret to anyone out there that the cost of living has been moving higher throughout the last year. Things are more expensive than they were last year at this time but the US consumer is awfully resilient. Latest retail sales coming in pretty hot. Our Anthony Okolie is been digging into the numbers and what TD Economics has to say about it all.
>> Thanks Greg. Yes US retail sales rebounded in January after two consecutive months of decline.
Proving that economic growth picked up steam to start the year. Last month, month-to-month gain was the biggest since March 2021. It shows it shows that US consumers are still in pretty good shape.
Now, we dig into the numbers, sales of cars and car parts rose nearly 6% accounting for most of the gains.
The gas station sales there, even though we saw a rise in gas prices last month, when we exclude autos and gas, sales were up 2.
6% month over month.
Also going above expectations. Sales of building materials and gardening equipment stores, that's another volatile category.
They also rose in January.
TD Economics says that stores in these categories have the highest buildup in inventories relative to pre-pandemic average.
So they may come under present pressures in the coming months something will be watching very closely. Now the retail sales report also details consumer spending and bars and restaurants with the biggest contribution last month from Food services and drinking places up more than 7% month over month.
More people are dining out as that pandemic faded.
Now, retail sales report, does paint a partial picture of spending because it does include many services like travel, housing and utilities.
The TD Economics notes that the upward trend in retail sales and restaurants, their estimates of leisure trash selectivity for the supports US consumers healthy appetite for service spending going forward. Greg?
>> All these aggressive rate hikes whether from the Fed of the Bank of Canada, the banks are supposed to slow economic activity. They're supposed to make us think twice about wanting to spend.
So given the strength of this report, thinking in terms of interest rates going forward? How the consumer might react?
>> That's what you think after the aggressive rate hikes that they will slow down. But were not really seeing that.
TD Economics expects the Fed will hike rate points by 25 basis points by the next policy to try to cool inflation and of course, over the long term bring inflation down to its target 2%.
Now they expect the recent inflation numbers will reinforce chairman Powell's messaging that we are only in the very early stages of the disinflationary process.
Now, given there are several indicators that sick suggest service sector continues to show strong demand, TD Economics expects consumer spending growth to come in or on how to percent in the first quarter of 2023.
Greg?
>> Interesting stuff.
Thanks Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Let's check in on the markets.
The TSX Composite Index, we did see a big jump in the trade of the US box off the back of the hotter than expected retail sales report.
77 points in the hole for the TSX. Suncor reported up earlier in the session.
The last time I checked, some downward pressure on the price of crude indeed.
American benchmark crew down. Suncor modestly in negative territory. Let's check on the gold miners.
The price of gold, feeling that pressure, we have Kinross down almost 5%. South of the border, the S&P 500 coming off the lows of the session right now down 16 points, less than about half a percent.
The tech heavy NASDAQ. Is it still positive? There seems to be some fluctuation in the market today.
It's hanging in there but pretty modest.
Up about 12 points or 1/10 of a percent.
Let's check in on Taiwan semiconductor Manufacturing.
Holding about 8 million shares according to the latest filings down from 60 million.
So some downward pressure. Usually when you get these, remember back in the old day filings, can't move the markets in some of the big investors route to. We are back now with Nicole Ewing from TD Wealth, let's get a question coming in here. This next one, I will have to go back to the silver screen.
[reads question] >> I love this question because it gives me the opportunity to dispel some misinformation. I have spoken to people before who are under the impression that a parent can give to a child and not trigger a tax event.
That is not the case. So, when the parent gift of those shares to the child, that would've been a taxable event for them.
They should have been claiming their capital gain based on the difference for and what they purchased it for and what the fair market value is when they transferred it to their child.
So when the child then, sells those shares at their own timing, the cost base would be the fair market value on the day that they received it.
This is an area where there is a lot of confusion and one thing that you can do, one of the worst tax planning things to do is for a parent to transfer money to a child for less than fair market value.
"What if I just sell it?" Maybe it's not a security exchange but maybe it's a different type of property and you can sell it for a dollar… That is a nightmare situation.
Because what actually happens is the parent, because they've trends they transferred for less than fair market value will be deemed to have sold it at fair market value and need to pay the gain on that, the difference between what their cost base and what it's worth today.
Regardless of the fact that they only receive the dollar.
But if they are essentially being penalized for doing this because the child then who received this purchased for a dollar, they do not get the benefit of that bumped up cost base. They take over the original cost base of the parent and they then have to ultimately dispose of the property and have to pay tax on it again.
So you're essentially paying tax on the same growth two times.
So there are a lot of… CRA really doesn't, there's not a lot of opportunity to transfer money to not arm's-length people and not have some of these tax rules trip us up for not careful.
In that example, it's the day the parent transfers the Securities to the child that the tax would've been triggered.
>> Fascinating stuff.
We are almost running out of time but will squeeze another one in.
Can RESP's be carried forward if missed in a particular year?
> Very good question.
There is no annual limit to what you can contribute.
There's a lifetime limit on RESP for $50,000 but there is some strategy to how much or contribute in each year to maximize grants.
We need to contribute $2500 in order to get that full grant in a year. And we have the opportunity to carry forward that grant one year. So if I missed a year, I can contribute $5000 that year and get the grant from the previous two years.
So it's not… I wouldn't say it's carry forward… Because there's no limit to how much you can contribute and when.
The lifetime of 50,000 per child. But we want to be thinking of it strategically if we can, the earlier in life to get those funds. The earlier the better. But you might not necessarily want to put the full 50,000 in the first year if you have an available because you not can have the opportunity to maximize those government grants.
>> Always fascinating stuff and I always appreciate come to visit us. The audience loves it to looking forward to the next time.
>> Our thanks to Nicole Ewing Dir.
of estate planning a TD Wealth.
A reminder to always do your own research in financial decisions.
Stay tuned tomorrow, Robert Both, macro strategist at TD Securities take your questions about the economy. Email us anytime at moneytalklive@td.com. That's all the time we have thanks and will see you tomorrow.
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