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[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 show, it's tax season again and will discuss what you should be thinking about when you file with TD Wealth's Nicole Ewing.
Money talks Anthony Okolie will have a look at TD's latest provincial economic forecast.
And in today's WebBroker education segment, Hiren Amin will take us through how you can find company filings using the WebBroker platform. So here's how you can get in touch with us. Just email moneytalklive@td.com are you can follow that your response box right under the video player here on WebBroker.
before he gets all that, let's get you an update on the market. It seems a bit of calm is being restored to North American markets today. We have some green on the screen.
We have been building since the open today, 128 points to the upside, got the TSX up a little more than, we will call that what it is, two thirds of a percent. In the morning, some of the energy names were continuing to be under pressure but that has shifted.
We have crude not making any great gains but sort of settling right now.
West Texas intermediate around 6740 per barrel. A bit of calm returning there.
Suncor back into positive territory, although it's a bit choppy, of the highs of the session. At 4839, got Suncor up almost .3%. Shopify slipped into positive territory. At 60 bucks and $0.82 per share, up 1 1/2%.
So the border, got a bit of a relief rally on her hands after what has been a pretty choppy trading weekbased on all of these concerns about a few banks and what it could mean for the broader financial sector.
The S&P 500 is up 50 points right now, that's good for 1 1/3% of again. The tech heavy NASDAQ very even better last time I checked in on it. Right now, I got the NASDAQ up 1.8%. But First Republic Bank, we are still seeing some shockwaves going through some of those US regional banks. Right now we've got First Republic down to the tune of about 21%.
There are reports that the bank is exploring its strategic options, including perhaps a sale, these are unconfirmed reports, there bonds have been cut to junk bison ratings agencies. That's your market update.
Tax season is upon us once again. There are plenty of considerations before you file your returns. Joining us now with some of the things we need to keep in mind, Nicole Ewing, director of tax and estate planning at TD Wealth.
Nicole, always good to have you with us. This is the season for talking taxes. Let's get into it. What do we need to be mindful of?
>> Oh gosh, everything.
I mean, first, be mindful of the due date.
We want to make sure that we are not filing our taxes late because they see year, the late filing, the interest that you would pay on any balances D was actually going to be going up to 9%.
It's currently eight. It's much higher than it's been in the past. We certainly don't want to be late with our taxes.
We also want to be thinking about what credits and deductions might be available to us and think more broadly as well into our family unit.
So what sorts of credits might be able to be shared between spouses or children or even parents for that matter, some interesting things that we can do there in terms of sharing our charitable expense, charitable donation credits and sharing our medical expenses, our tuition expenses. So there are a lot of opportunities there that if you haven't yet sat down and looked at some of this with your family, you might be leaving some money on the table.
>> Yeah, because obviously when you are doing that kind of planning, you think about charitable donations and medical expenses, it does matter between family members based on their income and who can get the better bang I guess for their tax return by claiming certain things.
> That's exactly it.
So when we are thinking about charitable giving, for example.
.
.
Our contributions and have those used by our by the higher income earning spouse.
To the higher income earning spouse is going to be able to reduce their income more significantly than somebody who's in that lower tax bracket.
Similarly, we think about medical expenses that we need to meet certain threshold. This is the 3% of your income threshold to be able to claim that your medical expenses and that can be done for the family.
So between you and your spouse, if you are combining your medical expenses, might only need to meet that threshold wins. I will caveat that by saying that if you are sharing a medical expense with a family member like a parent for example, then it is actually there 3% limit that needs to be met but there is definitely some math that can be done in figuring out which spouse is going to be able to get the best after-tax result by claiming those expenses or credits or deductions.
>> Here is an interesting one that you brought to my attention. Gifting money to fund it TFS a's as a tax play. Walk me through that one.
> This is a really great strategy because typically speaking, we are not able to gift funds between ourselves and our spouse without having the attribution rules apply. What that means is one I give to those funds over, even though they are now owned by my spouse, they are going to be taxed in my hand because I gave them and I did not pay the prescribed rate, so the income is going to attributed back to me.
What you can do with it TFS a is because there is no income tax being triggered, you are able to gift those funds to your spouse, have them invest them in their TFS a and they are not going to be attributed back to you. This is a great play when we think about maybe we get a refund back, maybe our children are filing for the first time, maybe they are over 18 and are now able to contribute their TFS a.
It's a great vehicle to be using and it's incredibly tax effective because you're not paying any taxes on the income being earned within that vehicle. So certainly if you've got children that are filing for the first time or are for the first time able to contribute to a TFS a, have that conversation between them.
As between spouses, if one of you, you get that money into the hands of your lower income earning spouse, then it's not going to be… It will be taxed in your hands going forward and instead can be in their TFS a contact shoulder.
>> This next makes me think about what they were calling for a while the sandwich generation. I'm at the stage in our my youngest is going to turn 18 in the spring. That makes him an adult in the eyes of the law.
I don't have those dependence like I used to when they were younger but then if you start caring for elderly parents, there are things you need to keep in mind.
>> There are, and even if your children are in firm and require, and are still dependent all new as that is defined under the tax act, then you still may be able to access some of that sharing with your children. But with parents, some things to think about, if I'm caring for my parents and I am funding some of their expenses, I may actually be able to claim those on my taxes. So good example of this might be a medical expense that I am providing for a parent who is depending on me for support.
I would be able to claim their medical expenses that I have paid for on my taxes.
Now, we need to be cautious here because there was actually a recent decision where, say it's an administrative concession by CRA that allows spouses to share the medical expenses even if, regardless of which one of them paid for it. So regardless of whose money was actually used to fund back.
With parents, that concession does not extend to if my spouse paid for their parents medical expenses, I cannot claim that. My spouse might be able to but I'm not able to claim those. So we need to be really careful when we are thinking about the parents expenses but if I am funding those, I can certainly write those off. We also want to be thinking about things like the caregiver credit.
So if I'm providing that support to my family, look into that. Disability tax credit that unfortunately, it used to be very, very difficult to navigate and so some people may have been turned off the idea of applying, to be qualified for the debility tax credit but I would recommend looking into that if that's an option for you and seeing how you can maximize that because to the extent that those amounts aren't used by your dependent family member, you might be able to have that transferred over to you as well.
And then you mentioned your children, they might be adults in the eyes of the law, but if you are still funding them, for example school or tuition, you are having a conversation with them, you can see if they can transfer that unused tuition amount over to you to reduce your taxes as well. So we do need to be thinking about who in our family are we supporting whether or not they meet the definition of a dependent for that particular permit.
So there are different definitions sometimes depending on what particular deduction or credit we are speaking about, so why not see if those can be accessed for your parents or children.
>> I recently said my son, dig up your tuition slip for me. He was like, why do you need it?
I was like, because I paid it, you didn't pay, so guess was going to get the tax credit?
>> That is not an unusual conversation.
>> Before we and our conversation, specifically to provinces, I know that coming out of the pandemic, some provinces, including when we are in here, Ontario, has a very specific tax credits. What we need to be mindful of your?
>> So as much is the news you might be hearing about the tax season coming up, very often we are speaking only about federal taxes and deductions and credits that might be available. But each province does have its own list of credits and deductions that might be available to you.
In Ontario, for example, we had a staycations tax credit that fingers crossed will extend into 2023 but was there for 2022. So if you are in Ontario and you travelled within the region, that might be something you can avail yourself of and reduce your taxes that way.
Each province is going to have these unique sort of programs available to them.
If you look for this online, the government websites are usually very proud to let you know about what sorts of programs they are offering and it shouldn't be too hard to find that information for your local, provincial sorts of credits.
And of course, tax planning software, if you are using that, you can auto populate that as well. So keep in mind that the federal credits that we talk about are not the only ones that might be available to you.
>> Lots of great things to think about there. Great start the program.
We are going to get your questions about personal finance for Nicole Ewing in just a moment.
You can get in touch with us anytime.
Just email moneytalklive@td.com or you can follow the viewer response box under the video player on WebBroker.
Right now, let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading. Credit Suisse has opened a $50 billion US credit line with the Swiss National Bank.
The move comes amid turmoil for the lender that resulted in dramatic swings in a share price in recent days. Concerns about the ongoing health Credit Suisse have also sent shockwaves to the global financial system. We are seeing more common storm today.
Alimentation Couche-Tard is offering to buy almost 2200 Gas Stations in Europe for $3.3 billion US.the Québec-based convenience store operator says it has made a firm nooffer to Total Energies for retail assets across four countries. The deal comes amid an industry shift towards rest and convenience stops for drivers as more electric vehicles hit the road.
Shares of Empire Company are in the spotlight today.
The parent company of Sobeyssays a cyber attack on its operations last November hit quarterly net earnings by at least $15 million or six cents per share.
Empire also says it needs to work through inflationary pressures and supply chain issues.
I do want to pull up a fresh quote for you on WebBroker. Shares of Empire Company are down to a tune of about 2 1/2%.
Let's take a quick look at how the benchmark indices are trading on Bay Street and Wall Street.
The TSX Composite Index, continues to make gains.
We were up 92 points we will call that, almost half a percent.
South of the border, the S&P 500, let's check in on that one. Right now 37 points to the upside, almost a full percent. A bit of calm being restored to the markets after some turbulent days.
We are back now with Nicole Ewing, take your questions about personal finance. Let's get to them. He is the first one for you.
Are there any expected changes coming in this year's budget that we should be watching for? This is the season for speculation heading into the budget. What's making the rounds?
>> It is.
When it comes to this, a lot of the conversations we've had in the past are so concerns. Whether or not there is going to be a change in the inclusion rate for capital gains is always going to be on the radar, but we do have some indication that there might be some relief for those who are really having a challenging time right now because of the inflationary pressures and the cost of living. It can be things like we've seen in the past where there was a doubling of the GST for example or an increase in the OAS. That might be something to keep in mind.
We are also looking for additional details on the alternative minimum tax we've heard about.
There already is one in the interim tax act so it will be interesting to see what the details are there and how that might be distinguished from what we already have.
There is Bill C208 amendments that deal specifically with intergenerational transfers between parent and child for example of a business where there in the past has been some unequal treatment or different treatment for family members that if you want to sell your business to a stranger so there's legislation that has been put in place for that so some of that might change.
So the general anti-avoidance rule in the tax act has been very much of interest to the government. We might see some additional ramping up of the types of behaviours that are going to be prohibited under the act. So we are looking at anti-avoidance measures.
As always.
There is always the discussion of this wealth tax as well on the high earners that we've been sort of hearing about for a little while now.
So we'll have to look and see to see whether or not we are going to have a wealth tax of sorts in Canada.
>> All things to be mindful of when budgeting approaches. All will be known after the budget is released sometime after 4 PM Eastern time on Tuesday, March 20.
Less than two weeks away.
Let's catch another question from the audience. We have of you are asking, Nicole, I will be 70 this year.
My wife is six years younger than me. When she turned 65 in 2024, will there be some opportunities tax -wise for one or both of us at that point in time?
>> So, yes.
Probably even now you should be having those conversations. So we want to be thinking about things particularly we are thinking about our cash flow in retirement and what that looks like.
What sort of income are you expecting?
What sort of income is your wife expecting?
Are we going to have a disparity between the amount of income you each are earning in retirement?
So we look at things like one to take your old age security payments. We take at 65 or deferred to a later date? Are there pension amounts that may be coming in and we can start thinking about a pension income splitting, so allocating a certain amount pension you receive into the hands of your spouse when there are 65?
We want to look at our CPP and whether we are going to delay taking that. Perhaps you've already taken it. But really thinking through what the family unit income is going to be during retirement and whether there is things that you couldn't do to really maximize the tax savings. So I would suggest that we are looking at overall the type of income that you are earning and whether or not you need to minimize that. So for example, we don't want OAS clawback. We might then want to be investing in things like that produce capital gains as opposed to producing income so we might have an opportunity to reduce the amount of income that's flowing into our hands. Or we might need to increase it depending on what your spouse's income needs are as well. So yes, a great time to start thinking about your retirement funding and how to ensure you are in the best possible position going for.
>> That's a good question to ask. Let's take another question.
If you are wants to know, any general tips for what you need to keep in mind when making TFSA contributions?
>> So again, this is a really wonderfulaccount, the tax-free savings account. It savings and an investment account. It's about my first hit, see it as part of your overall portfolio andEnsure that you are investing appropriately in the TFSA and to earn income in that account because it is tax-free and it is tax free on the dollar. thinking about the types of investments that would make most sense to have in this registered account , allocating between maybe your TFSA and your nonregistered accounts. I would also be looking at making sure you're not over contributing. One thing that has people up is if they are switching from one institution to another and they think, I will take the funds out of my Essay and put them into the account to the other institution, that would actually count as a withdrawal and you would need to wait until the following year to make that re-contribution in order to avoid having over contributed to her to FSA and having penalties that would apply to that. So that's not ideal.
So we certainly want to be just mindful of all the rules that apply and make sure that we are not getting tripped up by some of them.
>> Definitely important things to be mindful of. As always at home, make sure you do your own research before making any investment decisions or personal finance decisions.
We are going to get back to your question for Nicole Ewing on personal finance in just a moment.
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.
If you're interested in having a look at the earnings statements put out by companies that you are thinking of perhaps investing in, WebBroker has tools which can help. Hiren Amin, Senior client education instructor with TD Direct Investing has more.
>> In today's education segment, we are going to be looking at how to read and income statement and some ratios that can be extracted from that statement as well.
Now before we get started, let me explain. By law, any publicly traded company is required to prepare financial statements at the end of every quarter and at the end of their fiscal year.
Now, there were three main financial statements that can be found that are issued by these companies as well is found on WebBroker.
So let's go ahead and step into WebBroker and chat through a little bit of these. Now we are going to be looking at Apple as our example for today.
So on the page where Apple is loaded up, we are going to access those statements first of all by clicking on the tab that says fundamentals right there.
Now, within the fundamentals tab, we are going to click on the sub tab that says the financial statements.
Now we mention that there are three financial statements that are issued by these publicly traded companies and those can be found right over here.
Income statement, balance sheet and cash flow. We are going to focus specifically today on the income statement.
But just of the audience knows what are these other two statements that we have.
The balance sheet tells us about the net worth of the company. It's looking at the total assets the company has and their liabilities in terms of things that the company owes. And if you take the assets and subtracting from the liabilities, that gives you the shareholders equity that in other words is the amount invested by the shareholders.
The other statement that's there is a cash flow statement which tells you about how the company manages the cash that's coming in and how would they manage the cash that's going out in terms of managing ongoing debt obligations as well as how it funds its operating expenses, in other words, how it keeps the lights on.
But we are going to look at income statement here today and that's going to be found right here. The income statement is also known as a profit and loss statement.
This is perhaps the one investors are most interested in. When earnings come out, these numbers are ecstatic from this statement in terms of the revenue and the earnings themselves.
It tells us a little bit about the profitability. Let's click on the income earning statement here. It is going to load.
We have a trimmed down version for our investors to read.
So what are we looking at on the income statement?
First of all, tells us the topline number, this is what we say and a lot of the finance world, you here, with the top line? Definitely means what is their revenue.
In other words, revenue means sales and total billable is that they have done.
We can see looking at Apple in the previous fiscal year of 2022, Apple amassed $394.328 billion.
It just to put that into perspective for everyone, we have 190 countries in the world and only 28 of those countries have a higher annual GDP then Apple.
So that gives you a sense of the scale that Apple's revenue comes in at at the previous year.
In the second segment of that income statement, we have's operating income, so things to me or are telling us that to generate this much in revenue or sales, how much did it cost Apple to do that? And so we can see in this number here it says Apple the cost of Apple $223.5 billion to generate this much in sales.
And so this number, the topline number, is subtracted from the cost and that gives us that gross profit so far that we have. And from there you will subtracted a few more numbers, research, development, admin expenses, and then you have the net operating income that we are left with.
The final part of this income statement is going to show those things that are taken off of this in terms of costs.
So this is like taxes for example are accounted for here, any investment income or expenses that they have to pay, so there's interest income, this is how much income they generated from their investments, and then you have the taxes that Apple paid, 19.3 billion as of last year and this number now, the net income is also known simply as the profit and this is 99.8 billion and this is what Apple had.
We can appreciate sometimes that it can take the law to decide on these numbers. He doesn't have much meaning to it until we can really compare where does this stand in the scale, in the grand scale against its peers in the industry average? And so from this income statement, there is actually one valuable metric it take it and that's the earnings-per-share number.
The earnings-per-share number is taking this profit, which we are also calling earnings, 99.38 billion, and dividing it by the total shares that are outstanding that Apple has issued.
If we go back to the overview tab appear, we can see that there is 15.8 billion shares that Apple has issued out and you would take that number, divided by this and you would have essentially this number right here, earnings-per-share.
So basically tells us that for every share that Apple holds, every one share, it is generating currently $5.89 in profit.
Now this again doesn't mean a whole lot to us because we do not get this actual profit in our hands.
So how is this meaningful? Well, there is 1 More Way to show that's very used in the finance world and that is known as the price to earnings ratio. What this ratio does is it scales to us, based on the current price of the stock, which is 151.87 for Apple, and it divides it by this number, the EPS, to come up with this ratio.
What does this ratio mean? 25.8. It says that for every $25.8 that I invest, Apple is generating one dollar in profit. So tells us a little bit about the efficiency of the company, how much investment dollars do I have to put down to generate one dollar and profit.
And you can see that this is where we would like to compare it against its peers on a one-to-one basis, standardizing a process for us.
So this is for investors, one of the two primary ratios that are looked at, the EPS numbers, P/E ratio and earnings numbers. Especially when earnings come out, they benchmarked these against analyst expectations and you can see at the bottom here you can see their previous analyst expectations, what they have for the EPS, the earnings-per-share on the border, and what Apple actually came in at and this is… Sometimes if they meet expectations it's good, the stock may go up a bit.
They don't meet expectations, we can see the stock maybe have some downward pressure on it.
And that is it for those ratios.
Now keep in mind, this is just a small snapshot of the ratios. We have many other ratios out there to help you along with your research.
>> Our thanks to Hiren Amin, senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
now before you back to your questions about personal finance for Nicole Ewing, a reminder of how you can get in touch with us.
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.
we are back now with Nicole Ewing, we are taking your questions about personal finance, so let's get to them.
Here's the next one, Nicole. They say you need $1 million to retire.
is that still true?
>> Oh, they.
[laughing] You know, we… So I will say this, that the number that you need is really dependent on your personal circumstances and is based on how long you're going to be in retirement and how much you need to be comfortable in retirement and how much is available to you. So we think about what does $1 million mean, where did that number come up?
It was at a time as well when we didn't have as long of a lifespan, where we didn't spend as long in retirement as we do now and some things did not cost as much as they might now and you might not have the same idea about how to spend your retirement as those in the past have.
So I would suggest, $1 million, that's going to be well out of the hands of many people who will never have that amount and for others, they wouldn't be able to live the lifestyle that they want and they have other needs. So really when we are looking at what you need in retirement, we need to do that analysis of what is your budget, what do you want to spend, what is your cash flow and your sources of income and as we project out over time, we do an analysis. Not just enough to assume that everything will be perfect and stay the same. At TD Wealth, we do is we run a Monte Carlo analysis.
We see all of the different variations and scenarios that could happen if the market goes up or down early or late into your retirement, it is going to give you an idea of whether or not you are likely to reach your retirement goals based on what you have.
So if $1 million is the right number for you, it very well might be, that's great.
For other people, we might need to be doing a different analysis for them. Some would say there is no magic number that is going to be appropriate for everybody.
> As a follow-up, personal question, Nicole, can I borrow $1 million?
[laughing] We will talk after the show.
Here's another one from the audience, a serious question. Does your guest think there will be any change to the capital gains inclusion rate?
We touched a bit on that but it always comes up for every budget.
>> You know, it does come up and it comes up for good reason because the rate has not always been what it currently is, so it's a current 50% inclusion rate that means whatever your capital gain is, the difference between the fair market value now and the amount of your cost base, you only need to include 50% of that income on your taxes.
That rate used to be higher, so we have not… It's not out of the realm of possibility. And frankly, it's one of the ways, one of the levers that the government can pull to increase the amount of taxes it's going to receive. This is why it's always been there. It's been on there for a number of years. If some people do think that it's more likely to happen this year, I might not be hearing those same murmurs as I've heard in the past.
I don't have a crystal ball, it's very difficult to know.
I think it's gonna be one of those questions that if he doesn't change this year, we are going to sit back again on the table next year. It's always going to be an option that the government has available to it to raise taxes and it generally thinks of raising taxes on those who have higher net worth.
It might be more politically palatable for some and it will have very significant impact on a number of strategies that we have in place, the way that we invest our money, the way that we plan our retirement and for our estate planning.
Absolutely something that we want to stay very much focused on and if it is in the budget, then we need to react to it and make some plans.
If you are in a situation where that would make a significant difference to your son, your lifestyle, you might want to be stepping back and thinking about the types of investments you are in and whether or not you want to have a strategy for to realizing some capital gains over a period of time as opposed to being hit with a 75% inclusion rate for example at some point in the future. It something to be mindful of for those who are heavily invested in capital properties. Something to stay aware of.
It'll be a big story of the changes.
It will be a big story for personal finance.
>> March 28 is the day of the federal budget.
You're keeping a careful eye on that.
A viewer wants to know, how often can we do transactions in a TFSA and not be counted as daily trading? The CRAis keeping an eye on this.
>> Is a tax-free savings account and so to the extent that you are using it as intended, an investment vehicle where you are expected to make profit but you are investing is a typical layperson would, but if you engage in businesslike behaviour, so daytrading is counted as businesslike behaviour, then it will actually be tax. You are not allowed to traded your TFS A. But it will be taxable income to you.
There is no magic number.
It's always a question of facts about how often you are trading, but the issues that the CRA is going to look at is how frequently are you making these traits? There is no point be a magic number, whether it's one or 10, it will depend on the totality of the circumstances.
But how often are you making trades? How long are you holding your investments for? Are you engaging with this as you would a business?
So either holding yourself out as an expert trader or sort of conducting spending a disproportionate amount of time focused on your investments with your TFSA in a way that a, again, a regular person would not be doing.
to the fact they were asking the question probably means that you are on a line there and we don't want to get too close to it.
So do your investing, your trading outside of your TFSA, it's highly recommend it.
>> Will get back your questions for Nicole Ewing on personal finance in a moment.
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 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.
the Canadian economy started the year on a solid footing despite near record inflation and elevated interest rates.
So are we poised for more economic momentum or will growth slow as rate hikes continue to wind to the economy?
Our Anthony Okolie has been taking a look through TD Economics latest quarterly provincial forecasts.
What are they saying?
>> TD Economics is saying that there will be a standstill. However there are a few standards. I'm going to talk a little bit about them right now. TD Economics is forecasting that the Prairie provinces will be one of the performers specifically, Alberta, Saskatchewan and Manitoba, rather.
These provinces will see a performance of real GDP.
With Alberta, there's is pegged at… The China economy picks up, that will certainly benefit their GDP growth this year.
However, spending and job growth are some headwinds because they expect it will slow in Alberta, amid higher interest rates, and Alberta has a third most indebted households behind BC and Ontario. The biggest growth the laggards will be Ontario, BC and Québec.
specifically Ontario and Québec. TD Economics expects that the manufacturing sector in these provinces will face a tough year as the US economy slows significantly.
Within Québec, Québec also faces a tight job market amid a low population growth as well as an aging workforce.
Looking at BC, the province is set to enter a period of sluggish below trend growth.
Now this comes after a decade of chart topping growth for the province. TD Economics these modest growth for the Atlantic provinces going forward with Newfoundland and Labrador and PEI or Prince Edward Island as key standards. I will start with Newfoundland and Labrador first.
TD Economics expects that Newfoundland will see stronger growth thanks to rebound in oil production in the near term after the completion of repairs at their key Terranova oil field which will bring back oil production, bring production back online in 2023.
Longer-term, Newfoundland will see a boost from West white rose expansion on oil production, which is expected to come online in 2026.
Within PEI, consumption could be stronger-than-expected thanks to number one in a very tight job market.
They got the tightest job market in Canada.
Secondly, they got a big minimum boost, minimum-wage boost this year, and third, a freeze is expected in 2023. So that should help boost job growth in Prince Edward Island.
Now when it comes to housing, a BC and Ontario stand out as the most highly indebted provinces in Canada.
They are likely to struggle from higher rates in 2023.
That will have a subdued effect on real estate activity this year.
For the Atlantic provinces, they boast the best housing affordability conditions in the country and not too blunt to the impact of higher borrowing costs going forward.
Now while the average home prices have dropped among Atlantic province is, the market still remains pretty tight due to lack of new listings.
However, there are some headwinds for the Atlantic provinces, specifically with regards to migration flows.
TD Economics expects that migration flows from other provinces will ease in 2023 after pretty robust 2022.
That poses further risks to prices in the Atlantic provinces, specifically they single out Nova Scotia.
> The housing market obviously over the last several years in Canada has been a pretty key driver of economic growth, since we've gotten these aggressive rate hikes in the past year so, the picture has changed. What they think about the housing market going forward regarding challenges?
>> What it shown, according to TD Economics, is that we are not yet done with interest rate volatility.
However, they do expect the Bank of Canada to continue to pause in terms of interest rate hikes. But they also see uncertainty on the policy front, specifically Canada's banking regulator has signalled new rules that will come into place for the management of household leverage at risk. As a result, there is always a risk, according to TD Economics, that the Bank of Canada may be forced to resume raising rates later this year.
>> Interesting stuff.
Thank for that.
>> My pleasure.
> MoneyTalk's Anthony Okolie.
llet's check in all the markets. After a very choppy week and trading, we do have some green on the screen today with the TSX Composite Index up 91 points, we will call that about half a percent, taking a look at the energy it names because we do have West Texas intermediate just holding steady.
it's around $67 a barrel.
It's getting a bit of a bid in some of the energy names.
Canadian Natural Resources is up to 1 1/4% at 6975. A lot of these big names are contributing points to the top line number.
We will check in on Barrick Gold.
Goltz made some aggressive moves in the last couple of days. But it will pull back though today, at 2358, Barrick Gold down almost 2%.
Let's check in all that broader read of the American market, the S&P 500. Right now you are up more than a full percent, 43 points to the upside. A bit of risk appetite returning to the market with some risk elements in the global banking sector.
Tech heavy NASDAQ hearing even better.
It's up almost 1.8%.
Some of that has to do with some of the chipmakers.
You got Advanced Micro Devices up 6 1/2%, noticing some of the other chipmaking names also pretty healthily in positive territory.
I don't know if that's a real phrase.
We are back with Nicole Ewing with TD Wealth. Much more eloquent than I. Let's get some questions for you. What are the penalties for filing taxes late? Here's a place you don't want to be.
> It's going to depend on what your circumstances are, but generally speaking, I believe it will be 9% as well for late filing. Now if you don'toh any tax, you are actually not required to file. There's a number of other reasons you might… But if you don't have any tax owing, then the late penalty will not apply to you. But to the extent that you do, you will have a late filing penalty of I believe it's 9% and then 1% per month after that as well as the income, the tax on the outstanding amount owing.
So you are penalized for not filing. You are penalized for not paying. Those are not mutually exclusive.
If you are, for example, waiting on something and you don't have that full information, sometimes it is better, get a tax professional's advice on this, but some things it's better to go ahead and file or at least go ahead and pay what you think you might owe.
You can do amendments at a later date. You can make sure things are reported properly. You do want to avoid underreporting and come.
If you underreport your income, you are going to get hit by this penalty and if you have done it more than once, so if you underreported a couple of years in a row, those penalties get quite large.
Avoid late filing, avoid late paying and try to stay ahead of these rates.
They are very high now.
9% is a hefty number.
>> Indeed. Nicole, always fantastic to get your insights. Always when having on the program. Look forward to next time.
>> Me too.
>> Our thanks to Nicole Ewing, director of tax and estate planning at TD Wealth. Stay tuned. We'll be back tomorrow with an update on the markets and highlights from our best interviews of the week. On Monday, Michael Craig, head of asset allocation at TD Asset Management will be our guest take your questions about asset allocation. A great topic in times like these. A reminder that you can get a head start with this question. Just email moneytalklive@td.com.
That's all the time we have for the show today.
from Anthony and I here at the desk, we will be back tomorrow to do it all again.
[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 show, it's tax season again and will discuss what you should be thinking about when you file with TD Wealth's Nicole Ewing.
Money talks Anthony Okolie will have a look at TD's latest provincial economic forecast.
And in today's WebBroker education segment, Hiren Amin will take us through how you can find company filings using the WebBroker platform. So here's how you can get in touch with us. Just email moneytalklive@td.com are you can follow that your response box right under the video player here on WebBroker.
before he gets all that, let's get you an update on the market. It seems a bit of calm is being restored to North American markets today. We have some green on the screen.
We have been building since the open today, 128 points to the upside, got the TSX up a little more than, we will call that what it is, two thirds of a percent. In the morning, some of the energy names were continuing to be under pressure but that has shifted.
We have crude not making any great gains but sort of settling right now.
West Texas intermediate around 6740 per barrel. A bit of calm returning there.
Suncor back into positive territory, although it's a bit choppy, of the highs of the session. At 4839, got Suncor up almost .3%. Shopify slipped into positive territory. At 60 bucks and $0.82 per share, up 1 1/2%.
So the border, got a bit of a relief rally on her hands after what has been a pretty choppy trading weekbased on all of these concerns about a few banks and what it could mean for the broader financial sector.
The S&P 500 is up 50 points right now, that's good for 1 1/3% of again. The tech heavy NASDAQ very even better last time I checked in on it. Right now, I got the NASDAQ up 1.8%. But First Republic Bank, we are still seeing some shockwaves going through some of those US regional banks. Right now we've got First Republic down to the tune of about 21%.
There are reports that the bank is exploring its strategic options, including perhaps a sale, these are unconfirmed reports, there bonds have been cut to junk bison ratings agencies. That's your market update.
Tax season is upon us once again. There are plenty of considerations before you file your returns. Joining us now with some of the things we need to keep in mind, Nicole Ewing, director of tax and estate planning at TD Wealth.
Nicole, always good to have you with us. This is the season for talking taxes. Let's get into it. What do we need to be mindful of?
>> Oh gosh, everything.
I mean, first, be mindful of the due date.
We want to make sure that we are not filing our taxes late because they see year, the late filing, the interest that you would pay on any balances D was actually going to be going up to 9%.
It's currently eight. It's much higher than it's been in the past. We certainly don't want to be late with our taxes.
We also want to be thinking about what credits and deductions might be available to us and think more broadly as well into our family unit.
So what sorts of credits might be able to be shared between spouses or children or even parents for that matter, some interesting things that we can do there in terms of sharing our charitable expense, charitable donation credits and sharing our medical expenses, our tuition expenses. So there are a lot of opportunities there that if you haven't yet sat down and looked at some of this with your family, you might be leaving some money on the table.
>> Yeah, because obviously when you are doing that kind of planning, you think about charitable donations and medical expenses, it does matter between family members based on their income and who can get the better bang I guess for their tax return by claiming certain things.
> That's exactly it.
So when we are thinking about charitable giving, for example.
.
.
Our contributions and have those used by our by the higher income earning spouse.
To the higher income earning spouse is going to be able to reduce their income more significantly than somebody who's in that lower tax bracket.
Similarly, we think about medical expenses that we need to meet certain threshold. This is the 3% of your income threshold to be able to claim that your medical expenses and that can be done for the family.
So between you and your spouse, if you are combining your medical expenses, might only need to meet that threshold wins. I will caveat that by saying that if you are sharing a medical expense with a family member like a parent for example, then it is actually there 3% limit that needs to be met but there is definitely some math that can be done in figuring out which spouse is going to be able to get the best after-tax result by claiming those expenses or credits or deductions.
>> Here is an interesting one that you brought to my attention. Gifting money to fund it TFS a's as a tax play. Walk me through that one.
> This is a really great strategy because typically speaking, we are not able to gift funds between ourselves and our spouse without having the attribution rules apply. What that means is one I give to those funds over, even though they are now owned by my spouse, they are going to be taxed in my hand because I gave them and I did not pay the prescribed rate, so the income is going to attributed back to me.
What you can do with it TFS a is because there is no income tax being triggered, you are able to gift those funds to your spouse, have them invest them in their TFS a and they are not going to be attributed back to you. This is a great play when we think about maybe we get a refund back, maybe our children are filing for the first time, maybe they are over 18 and are now able to contribute their TFS a.
It's a great vehicle to be using and it's incredibly tax effective because you're not paying any taxes on the income being earned within that vehicle. So certainly if you've got children that are filing for the first time or are for the first time able to contribute to a TFS a, have that conversation between them.
As between spouses, if one of you, you get that money into the hands of your lower income earning spouse, then it's not going to be… It will be taxed in your hands going forward and instead can be in their TFS a contact shoulder.
>> This next makes me think about what they were calling for a while the sandwich generation. I'm at the stage in our my youngest is going to turn 18 in the spring. That makes him an adult in the eyes of the law.
I don't have those dependence like I used to when they were younger but then if you start caring for elderly parents, there are things you need to keep in mind.
>> There are, and even if your children are in firm and require, and are still dependent all new as that is defined under the tax act, then you still may be able to access some of that sharing with your children. But with parents, some things to think about, if I'm caring for my parents and I am funding some of their expenses, I may actually be able to claim those on my taxes. So good example of this might be a medical expense that I am providing for a parent who is depending on me for support.
I would be able to claim their medical expenses that I have paid for on my taxes.
Now, we need to be cautious here because there was actually a recent decision where, say it's an administrative concession by CRA that allows spouses to share the medical expenses even if, regardless of which one of them paid for it. So regardless of whose money was actually used to fund back.
With parents, that concession does not extend to if my spouse paid for their parents medical expenses, I cannot claim that. My spouse might be able to but I'm not able to claim those. So we need to be really careful when we are thinking about the parents expenses but if I am funding those, I can certainly write those off. We also want to be thinking about things like the caregiver credit.
So if I'm providing that support to my family, look into that. Disability tax credit that unfortunately, it used to be very, very difficult to navigate and so some people may have been turned off the idea of applying, to be qualified for the debility tax credit but I would recommend looking into that if that's an option for you and seeing how you can maximize that because to the extent that those amounts aren't used by your dependent family member, you might be able to have that transferred over to you as well.
And then you mentioned your children, they might be adults in the eyes of the law, but if you are still funding them, for example school or tuition, you are having a conversation with them, you can see if they can transfer that unused tuition amount over to you to reduce your taxes as well. So we do need to be thinking about who in our family are we supporting whether or not they meet the definition of a dependent for that particular permit.
So there are different definitions sometimes depending on what particular deduction or credit we are speaking about, so why not see if those can be accessed for your parents or children.
>> I recently said my son, dig up your tuition slip for me. He was like, why do you need it?
I was like, because I paid it, you didn't pay, so guess was going to get the tax credit?
>> That is not an unusual conversation.
>> Before we and our conversation, specifically to provinces, I know that coming out of the pandemic, some provinces, including when we are in here, Ontario, has a very specific tax credits. What we need to be mindful of your?
>> So as much is the news you might be hearing about the tax season coming up, very often we are speaking only about federal taxes and deductions and credits that might be available. But each province does have its own list of credits and deductions that might be available to you.
In Ontario, for example, we had a staycations tax credit that fingers crossed will extend into 2023 but was there for 2022. So if you are in Ontario and you travelled within the region, that might be something you can avail yourself of and reduce your taxes that way.
Each province is going to have these unique sort of programs available to them.
If you look for this online, the government websites are usually very proud to let you know about what sorts of programs they are offering and it shouldn't be too hard to find that information for your local, provincial sorts of credits.
And of course, tax planning software, if you are using that, you can auto populate that as well. So keep in mind that the federal credits that we talk about are not the only ones that might be available to you.
>> Lots of great things to think about there. Great start the program.
We are going to get your questions about personal finance for Nicole Ewing in just a moment.
You can get in touch with us anytime.
Just email moneytalklive@td.com or you can follow the viewer response box under the video player on WebBroker.
Right now, let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading. Credit Suisse has opened a $50 billion US credit line with the Swiss National Bank.
The move comes amid turmoil for the lender that resulted in dramatic swings in a share price in recent days. Concerns about the ongoing health Credit Suisse have also sent shockwaves to the global financial system. We are seeing more common storm today.
Alimentation Couche-Tard is offering to buy almost 2200 Gas Stations in Europe for $3.3 billion US.the Québec-based convenience store operator says it has made a firm nooffer to Total Energies for retail assets across four countries. The deal comes amid an industry shift towards rest and convenience stops for drivers as more electric vehicles hit the road.
Shares of Empire Company are in the spotlight today.
The parent company of Sobeyssays a cyber attack on its operations last November hit quarterly net earnings by at least $15 million or six cents per share.
Empire also says it needs to work through inflationary pressures and supply chain issues.
I do want to pull up a fresh quote for you on WebBroker. Shares of Empire Company are down to a tune of about 2 1/2%.
Let's take a quick look at how the benchmark indices are trading on Bay Street and Wall Street.
The TSX Composite Index, continues to make gains.
We were up 92 points we will call that, almost half a percent.
South of the border, the S&P 500, let's check in on that one. Right now 37 points to the upside, almost a full percent. A bit of calm being restored to the markets after some turbulent days.
We are back now with Nicole Ewing, take your questions about personal finance. Let's get to them. He is the first one for you.
Are there any expected changes coming in this year's budget that we should be watching for? This is the season for speculation heading into the budget. What's making the rounds?
>> It is.
When it comes to this, a lot of the conversations we've had in the past are so concerns. Whether or not there is going to be a change in the inclusion rate for capital gains is always going to be on the radar, but we do have some indication that there might be some relief for those who are really having a challenging time right now because of the inflationary pressures and the cost of living. It can be things like we've seen in the past where there was a doubling of the GST for example or an increase in the OAS. That might be something to keep in mind.
We are also looking for additional details on the alternative minimum tax we've heard about.
There already is one in the interim tax act so it will be interesting to see what the details are there and how that might be distinguished from what we already have.
There is Bill C208 amendments that deal specifically with intergenerational transfers between parent and child for example of a business where there in the past has been some unequal treatment or different treatment for family members that if you want to sell your business to a stranger so there's legislation that has been put in place for that so some of that might change.
So the general anti-avoidance rule in the tax act has been very much of interest to the government. We might see some additional ramping up of the types of behaviours that are going to be prohibited under the act. So we are looking at anti-avoidance measures.
As always.
There is always the discussion of this wealth tax as well on the high earners that we've been sort of hearing about for a little while now.
So we'll have to look and see to see whether or not we are going to have a wealth tax of sorts in Canada.
>> All things to be mindful of when budgeting approaches. All will be known after the budget is released sometime after 4 PM Eastern time on Tuesday, March 20.
Less than two weeks away.
Let's catch another question from the audience. We have of you are asking, Nicole, I will be 70 this year.
My wife is six years younger than me. When she turned 65 in 2024, will there be some opportunities tax -wise for one or both of us at that point in time?
>> So, yes.
Probably even now you should be having those conversations. So we want to be thinking about things particularly we are thinking about our cash flow in retirement and what that looks like.
What sort of income are you expecting?
What sort of income is your wife expecting?
Are we going to have a disparity between the amount of income you each are earning in retirement?
So we look at things like one to take your old age security payments. We take at 65 or deferred to a later date? Are there pension amounts that may be coming in and we can start thinking about a pension income splitting, so allocating a certain amount pension you receive into the hands of your spouse when there are 65?
We want to look at our CPP and whether we are going to delay taking that. Perhaps you've already taken it. But really thinking through what the family unit income is going to be during retirement and whether there is things that you couldn't do to really maximize the tax savings. So I would suggest that we are looking at overall the type of income that you are earning and whether or not you need to minimize that. So for example, we don't want OAS clawback. We might then want to be investing in things like that produce capital gains as opposed to producing income so we might have an opportunity to reduce the amount of income that's flowing into our hands. Or we might need to increase it depending on what your spouse's income needs are as well. So yes, a great time to start thinking about your retirement funding and how to ensure you are in the best possible position going for.
>> That's a good question to ask. Let's take another question.
If you are wants to know, any general tips for what you need to keep in mind when making TFSA contributions?
>> So again, this is a really wonderfulaccount, the tax-free savings account. It savings and an investment account. It's about my first hit, see it as part of your overall portfolio andEnsure that you are investing appropriately in the TFSA and to earn income in that account because it is tax-free and it is tax free on the dollar. thinking about the types of investments that would make most sense to have in this registered account , allocating between maybe your TFSA and your nonregistered accounts. I would also be looking at making sure you're not over contributing. One thing that has people up is if they are switching from one institution to another and they think, I will take the funds out of my Essay and put them into the account to the other institution, that would actually count as a withdrawal and you would need to wait until the following year to make that re-contribution in order to avoid having over contributed to her to FSA and having penalties that would apply to that. So that's not ideal.
So we certainly want to be just mindful of all the rules that apply and make sure that we are not getting tripped up by some of them.
>> Definitely important things to be mindful of. As always at home, make sure you do your own research before making any investment decisions or personal finance decisions.
We are going to get back to your question for Nicole Ewing on personal finance in just a moment.
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.
If you're interested in having a look at the earnings statements put out by companies that you are thinking of perhaps investing in, WebBroker has tools which can help. Hiren Amin, Senior client education instructor with TD Direct Investing has more.
>> In today's education segment, we are going to be looking at how to read and income statement and some ratios that can be extracted from that statement as well.
Now before we get started, let me explain. By law, any publicly traded company is required to prepare financial statements at the end of every quarter and at the end of their fiscal year.
Now, there were three main financial statements that can be found that are issued by these companies as well is found on WebBroker.
So let's go ahead and step into WebBroker and chat through a little bit of these. Now we are going to be looking at Apple as our example for today.
So on the page where Apple is loaded up, we are going to access those statements first of all by clicking on the tab that says fundamentals right there.
Now, within the fundamentals tab, we are going to click on the sub tab that says the financial statements.
Now we mention that there are three financial statements that are issued by these publicly traded companies and those can be found right over here.
Income statement, balance sheet and cash flow. We are going to focus specifically today on the income statement.
But just of the audience knows what are these other two statements that we have.
The balance sheet tells us about the net worth of the company. It's looking at the total assets the company has and their liabilities in terms of things that the company owes. And if you take the assets and subtracting from the liabilities, that gives you the shareholders equity that in other words is the amount invested by the shareholders.
The other statement that's there is a cash flow statement which tells you about how the company manages the cash that's coming in and how would they manage the cash that's going out in terms of managing ongoing debt obligations as well as how it funds its operating expenses, in other words, how it keeps the lights on.
But we are going to look at income statement here today and that's going to be found right here. The income statement is also known as a profit and loss statement.
This is perhaps the one investors are most interested in. When earnings come out, these numbers are ecstatic from this statement in terms of the revenue and the earnings themselves.
It tells us a little bit about the profitability. Let's click on the income earning statement here. It is going to load.
We have a trimmed down version for our investors to read.
So what are we looking at on the income statement?
First of all, tells us the topline number, this is what we say and a lot of the finance world, you here, with the top line? Definitely means what is their revenue.
In other words, revenue means sales and total billable is that they have done.
We can see looking at Apple in the previous fiscal year of 2022, Apple amassed $394.328 billion.
It just to put that into perspective for everyone, we have 190 countries in the world and only 28 of those countries have a higher annual GDP then Apple.
So that gives you a sense of the scale that Apple's revenue comes in at at the previous year.
In the second segment of that income statement, we have's operating income, so things to me or are telling us that to generate this much in revenue or sales, how much did it cost Apple to do that? And so we can see in this number here it says Apple the cost of Apple $223.5 billion to generate this much in sales.
And so this number, the topline number, is subtracted from the cost and that gives us that gross profit so far that we have. And from there you will subtracted a few more numbers, research, development, admin expenses, and then you have the net operating income that we are left with.
The final part of this income statement is going to show those things that are taken off of this in terms of costs.
So this is like taxes for example are accounted for here, any investment income or expenses that they have to pay, so there's interest income, this is how much income they generated from their investments, and then you have the taxes that Apple paid, 19.3 billion as of last year and this number now, the net income is also known simply as the profit and this is 99.8 billion and this is what Apple had.
We can appreciate sometimes that it can take the law to decide on these numbers. He doesn't have much meaning to it until we can really compare where does this stand in the scale, in the grand scale against its peers in the industry average? And so from this income statement, there is actually one valuable metric it take it and that's the earnings-per-share number.
The earnings-per-share number is taking this profit, which we are also calling earnings, 99.38 billion, and dividing it by the total shares that are outstanding that Apple has issued.
If we go back to the overview tab appear, we can see that there is 15.8 billion shares that Apple has issued out and you would take that number, divided by this and you would have essentially this number right here, earnings-per-share.
So basically tells us that for every share that Apple holds, every one share, it is generating currently $5.89 in profit.
Now this again doesn't mean a whole lot to us because we do not get this actual profit in our hands.
So how is this meaningful? Well, there is 1 More Way to show that's very used in the finance world and that is known as the price to earnings ratio. What this ratio does is it scales to us, based on the current price of the stock, which is 151.87 for Apple, and it divides it by this number, the EPS, to come up with this ratio.
What does this ratio mean? 25.8. It says that for every $25.8 that I invest, Apple is generating one dollar in profit. So tells us a little bit about the efficiency of the company, how much investment dollars do I have to put down to generate one dollar and profit.
And you can see that this is where we would like to compare it against its peers on a one-to-one basis, standardizing a process for us.
So this is for investors, one of the two primary ratios that are looked at, the EPS numbers, P/E ratio and earnings numbers. Especially when earnings come out, they benchmarked these against analyst expectations and you can see at the bottom here you can see their previous analyst expectations, what they have for the EPS, the earnings-per-share on the border, and what Apple actually came in at and this is… Sometimes if they meet expectations it's good, the stock may go up a bit.
They don't meet expectations, we can see the stock maybe have some downward pressure on it.
And that is it for those ratios.
Now keep in mind, this is just a small snapshot of the ratios. We have many other ratios out there to help you along with your research.
>> Our thanks to Hiren Amin, senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
now before you back to your questions about personal finance for Nicole Ewing, a reminder of how you can get in touch with us.
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.
we are back now with Nicole Ewing, we are taking your questions about personal finance, so let's get to them.
Here's the next one, Nicole. They say you need $1 million to retire.
is that still true?
>> Oh, they.
[laughing] You know, we… So I will say this, that the number that you need is really dependent on your personal circumstances and is based on how long you're going to be in retirement and how much you need to be comfortable in retirement and how much is available to you. So we think about what does $1 million mean, where did that number come up?
It was at a time as well when we didn't have as long of a lifespan, where we didn't spend as long in retirement as we do now and some things did not cost as much as they might now and you might not have the same idea about how to spend your retirement as those in the past have.
So I would suggest, $1 million, that's going to be well out of the hands of many people who will never have that amount and for others, they wouldn't be able to live the lifestyle that they want and they have other needs. So really when we are looking at what you need in retirement, we need to do that analysis of what is your budget, what do you want to spend, what is your cash flow and your sources of income and as we project out over time, we do an analysis. Not just enough to assume that everything will be perfect and stay the same. At TD Wealth, we do is we run a Monte Carlo analysis.
We see all of the different variations and scenarios that could happen if the market goes up or down early or late into your retirement, it is going to give you an idea of whether or not you are likely to reach your retirement goals based on what you have.
So if $1 million is the right number for you, it very well might be, that's great.
For other people, we might need to be doing a different analysis for them. Some would say there is no magic number that is going to be appropriate for everybody.
> As a follow-up, personal question, Nicole, can I borrow $1 million?
[laughing] We will talk after the show.
Here's another one from the audience, a serious question. Does your guest think there will be any change to the capital gains inclusion rate?
We touched a bit on that but it always comes up for every budget.
>> You know, it does come up and it comes up for good reason because the rate has not always been what it currently is, so it's a current 50% inclusion rate that means whatever your capital gain is, the difference between the fair market value now and the amount of your cost base, you only need to include 50% of that income on your taxes.
That rate used to be higher, so we have not… It's not out of the realm of possibility. And frankly, it's one of the ways, one of the levers that the government can pull to increase the amount of taxes it's going to receive. This is why it's always been there. It's been on there for a number of years. If some people do think that it's more likely to happen this year, I might not be hearing those same murmurs as I've heard in the past.
I don't have a crystal ball, it's very difficult to know.
I think it's gonna be one of those questions that if he doesn't change this year, we are going to sit back again on the table next year. It's always going to be an option that the government has available to it to raise taxes and it generally thinks of raising taxes on those who have higher net worth.
It might be more politically palatable for some and it will have very significant impact on a number of strategies that we have in place, the way that we invest our money, the way that we plan our retirement and for our estate planning.
Absolutely something that we want to stay very much focused on and if it is in the budget, then we need to react to it and make some plans.
If you are in a situation where that would make a significant difference to your son, your lifestyle, you might want to be stepping back and thinking about the types of investments you are in and whether or not you want to have a strategy for to realizing some capital gains over a period of time as opposed to being hit with a 75% inclusion rate for example at some point in the future. It something to be mindful of for those who are heavily invested in capital properties. Something to stay aware of.
It'll be a big story of the changes.
It will be a big story for personal finance.
>> March 28 is the day of the federal budget.
You're keeping a careful eye on that.
A viewer wants to know, how often can we do transactions in a TFSA and not be counted as daily trading? The CRAis keeping an eye on this.
>> Is a tax-free savings account and so to the extent that you are using it as intended, an investment vehicle where you are expected to make profit but you are investing is a typical layperson would, but if you engage in businesslike behaviour, so daytrading is counted as businesslike behaviour, then it will actually be tax. You are not allowed to traded your TFS A. But it will be taxable income to you.
There is no magic number.
It's always a question of facts about how often you are trading, but the issues that the CRA is going to look at is how frequently are you making these traits? There is no point be a magic number, whether it's one or 10, it will depend on the totality of the circumstances.
But how often are you making trades? How long are you holding your investments for? Are you engaging with this as you would a business?
So either holding yourself out as an expert trader or sort of conducting spending a disproportionate amount of time focused on your investments with your TFSA in a way that a, again, a regular person would not be doing.
to the fact they were asking the question probably means that you are on a line there and we don't want to get too close to it.
So do your investing, your trading outside of your TFSA, it's highly recommend it.
>> Will get back your questions for Nicole Ewing on personal finance in a moment.
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 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.
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We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
the Canadian economy started the year on a solid footing despite near record inflation and elevated interest rates.
So are we poised for more economic momentum or will growth slow as rate hikes continue to wind to the economy?
Our Anthony Okolie has been taking a look through TD Economics latest quarterly provincial forecasts.
What are they saying?
>> TD Economics is saying that there will be a standstill. However there are a few standards. I'm going to talk a little bit about them right now. TD Economics is forecasting that the Prairie provinces will be one of the performers specifically, Alberta, Saskatchewan and Manitoba, rather.
These provinces will see a performance of real GDP.
With Alberta, there's is pegged at… The China economy picks up, that will certainly benefit their GDP growth this year.
However, spending and job growth are some headwinds because they expect it will slow in Alberta, amid higher interest rates, and Alberta has a third most indebted households behind BC and Ontario. The biggest growth the laggards will be Ontario, BC and Québec.
specifically Ontario and Québec. TD Economics expects that the manufacturing sector in these provinces will face a tough year as the US economy slows significantly.
Within Québec, Québec also faces a tight job market amid a low population growth as well as an aging workforce.
Looking at BC, the province is set to enter a period of sluggish below trend growth.
Now this comes after a decade of chart topping growth for the province. TD Economics these modest growth for the Atlantic provinces going forward with Newfoundland and Labrador and PEI or Prince Edward Island as key standards. I will start with Newfoundland and Labrador first.
TD Economics expects that Newfoundland will see stronger growth thanks to rebound in oil production in the near term after the completion of repairs at their key Terranova oil field which will bring back oil production, bring production back online in 2023.
Longer-term, Newfoundland will see a boost from West white rose expansion on oil production, which is expected to come online in 2026.
Within PEI, consumption could be stronger-than-expected thanks to number one in a very tight job market.
They got the tightest job market in Canada.
Secondly, they got a big minimum boost, minimum-wage boost this year, and third, a freeze is expected in 2023. So that should help boost job growth in Prince Edward Island.
Now when it comes to housing, a BC and Ontario stand out as the most highly indebted provinces in Canada.
They are likely to struggle from higher rates in 2023.
That will have a subdued effect on real estate activity this year.
For the Atlantic provinces, they boast the best housing affordability conditions in the country and not too blunt to the impact of higher borrowing costs going forward.
Now while the average home prices have dropped among Atlantic province is, the market still remains pretty tight due to lack of new listings.
However, there are some headwinds for the Atlantic provinces, specifically with regards to migration flows.
TD Economics expects that migration flows from other provinces will ease in 2023 after pretty robust 2022.
That poses further risks to prices in the Atlantic provinces, specifically they single out Nova Scotia.
> The housing market obviously over the last several years in Canada has been a pretty key driver of economic growth, since we've gotten these aggressive rate hikes in the past year so, the picture has changed. What they think about the housing market going forward regarding challenges?
>> What it shown, according to TD Economics, is that we are not yet done with interest rate volatility.
However, they do expect the Bank of Canada to continue to pause in terms of interest rate hikes. But they also see uncertainty on the policy front, specifically Canada's banking regulator has signalled new rules that will come into place for the management of household leverage at risk. As a result, there is always a risk, according to TD Economics, that the Bank of Canada may be forced to resume raising rates later this year.
>> Interesting stuff.
Thank for that.
>> My pleasure.
> MoneyTalk's Anthony Okolie.
llet's check in all the markets. After a very choppy week and trading, we do have some green on the screen today with the TSX Composite Index up 91 points, we will call that about half a percent, taking a look at the energy it names because we do have West Texas intermediate just holding steady.
it's around $67 a barrel.
It's getting a bit of a bid in some of the energy names.
Canadian Natural Resources is up to 1 1/4% at 6975. A lot of these big names are contributing points to the top line number.
We will check in on Barrick Gold.
Goltz made some aggressive moves in the last couple of days. But it will pull back though today, at 2358, Barrick Gold down almost 2%.
Let's check in all that broader read of the American market, the S&P 500. Right now you are up more than a full percent, 43 points to the upside. A bit of risk appetite returning to the market with some risk elements in the global banking sector.
Tech heavy NASDAQ hearing even better.
It's up almost 1.8%.
Some of that has to do with some of the chipmakers.
You got Advanced Micro Devices up 6 1/2%, noticing some of the other chipmaking names also pretty healthily in positive territory.
I don't know if that's a real phrase.
We are back with Nicole Ewing with TD Wealth. Much more eloquent than I. Let's get some questions for you. What are the penalties for filing taxes late? Here's a place you don't want to be.
> It's going to depend on what your circumstances are, but generally speaking, I believe it will be 9% as well for late filing. Now if you don'toh any tax, you are actually not required to file. There's a number of other reasons you might… But if you don't have any tax owing, then the late penalty will not apply to you. But to the extent that you do, you will have a late filing penalty of I believe it's 9% and then 1% per month after that as well as the income, the tax on the outstanding amount owing.
So you are penalized for not filing. You are penalized for not paying. Those are not mutually exclusive.
If you are, for example, waiting on something and you don't have that full information, sometimes it is better, get a tax professional's advice on this, but some things it's better to go ahead and file or at least go ahead and pay what you think you might owe.
You can do amendments at a later date. You can make sure things are reported properly. You do want to avoid underreporting and come.
If you underreport your income, you are going to get hit by this penalty and if you have done it more than once, so if you underreported a couple of years in a row, those penalties get quite large.
Avoid late filing, avoid late paying and try to stay ahead of these rates.
They are very high now.
9% is a hefty number.
>> Indeed. Nicole, always fantastic to get your insights. Always when having on the program. Look forward to next time.
>> Me too.
>> Our thanks to Nicole Ewing, director of tax and estate planning at TD Wealth. Stay tuned. We'll be back tomorrow with an update on the markets and highlights from our best interviews of the week. On Monday, Michael Craig, head of asset allocation at TD Asset Management will be our guest take your questions about asset allocation. A great topic in times like these. A reminder that you can get a head start with this question. Just email moneytalklive@td.com.
That's all the time we have for the show today.
from Anthony and I here at the desk, we will be back tomorrow to do it all again.
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