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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
coming up on today show, we are having a look at some issues that could have an impact on your personal finances.
Nicole Ewing will take us or what changes to trust reporting rules could mean for your taxes and what new immigrants need to consider before bringing money to Canada.
Canada. Canada. Canada. their grandkids.
As we approach the Black Friday kickoff to holiday shopping season, money talks and they will he will have a look at whether consumers will open their wallets amid the higher cost of living. In today's WebBroker education segment, Bryan Rogers will show us how you can test out a potential trade idea using the watchlist function.
Before he gets all of that, let's get you an update on the markets.
The Americans are often we are still on.
We have some action to report. You're up a modest 40 points, some green on the screen, 1/5 of a percent on the TSX Composite Index. One of the most actively traded names on the TSX today is Danistan, a uranium play, add to bucks and $0.55 comforting almost another 4% on the table today.
Operations in Panama that quantum said it might have to wind down by the end of the week, perhaps temporarily shatter, looks like that starting to happen. There is a port closure, a blockade, a lot of opposition to the Cobre Panama project in Panama from the population leading to a lot of problems for First Quantum.
Those problems have been priced into the stock in recent weeks based off of some of those troubles. Today, you're pretty much flat on the name. At 1383, you are up seven takes. Since of the border, they are closed for the thanks giving holiday.
Let's take a look at the S&P 500. It's been quite a run this year. We had Benjamin Gossack from TD Asset Management on the show yesterday, a lot of people said it's all about the Magnificent Seven, he took us through some of his research showing that, there are more than just seven stocks that have been the benchmark this year but is been a surprise for many people to see the S&P 500 show this kind of strength. At 4556 it closed yesterday, we will see what happens in the short and trading session tomorrow. And that's your market update.
Well, it is US Thanksgiving, it means turkeys, it means football, but it also means Black Friday, the traditional kickoff to the holiday shopping season.
Joining us that with more is MoneyTalk Anthony Okolie. I am being inundated on my phone with Black Friday deals trying to entice me. Obviously, retailers count on the cement.
>> This is the biggest shopping period of the year.
TD Economics does not think it will match the numbers we saw last year. Only look at holiday spending growth, TD Economics is expecting about 4 1/2% year-over-year growth in the fourth quarter of the USN that compares to 6% growth that we saw in 2022 but it does top the pre-pandemic average. This strong growth is being driven by the access pandemic era savings plus a strong US jobs market as well.
However, retailers do face some headwinds this holiday season. Justin Flowerday of TD Asset Management recently talked about some of those headwinds coming up in some of the latest earning results from these retailers. Take a listen.
>> I would say we heard from several management teams that the lower income cohort is weakening, and they have drained down the excess savings, and they are starting to see decisions which are slowing consumption trends across a whole bunch of different sectors. We heard from Walmart and Home Depot, they came out and said, look, purchases of over $1000 are down 6% year-over-year.
>> Yeah.
>> Some difficulty in terms of low and consumers.
>> So we are seeing this divergence between the lower consumers and the middle and upper consumers.
You can see the lower income consumers in the bottom 50%, they are running out of cash, this cash cushion built up during the pandemic.
This has led a lot of the big retailers, as Justin alluded to, to issue warnings ahead of the biggest shopping day of the year.
In addition to that pressure from higher interest rates, we are seeing the resumption of student loan repayments in the US, higher credit card debt as well as reduce savings, which have left lower income consumers with less discretionary income. That will force a trade-off between necessities, paying for things like food and housing, and discretionary holiday spending, spitting on electronics, phones.
That's something that these US retailers are warning about.
>> Our big shopping day used to be Boxing Day, after Christmas, the idea that we had money to go spend.
But we have, like so many American cultural phenomenon, and have imported Black Friday fully into this country. What about the health of the Canadian consumer?
What are we thinking on that front?
>> More so than the US, TD Economics as Canadian consumers are feeling the pinch from higher interest rates and when you look back to the second quarter, Canadian consumer spending was flat in the second quarter as heavily indebted Canadian households struggled with higher borrowing costs.
Now, TD Economics estimates that the increased mortgage payments have/real consumer spending by 1 1/2% in 2023 and they expect it to be slashed in 2024 up until 2027. A key factor behind this is the outlook for consumer spending which legs the US over the medium term.
Now, in contrast to their American counterparts, Canadians still have roughly $140 billion in excess deposits in less liquid term products. That's just Canadians but to put money aside anticipating higher debt payments but overall, I think the reports out of the US and Canada do show that consumers are beginning to struggle with both inflation, higher borrowing costs. Tomorrow, we get the latest Canadian retail sales which will give us a sense of how things are for the Canadian consumer.
>> Thanks for that, Anthony.
>> My pleasure.
>> Money talks Anthony Okolie.
All of your family will to trust or even if you share a joint account with the parent, new federal trust reporting rules could impact you you this coming tax season. Nicole Ewing, Dir., tax and estate planning had TD Wealth join me earlier to discuss.
>> Now the exemptions are not as fulsome as they once were and a lot more trusts are going to be captured by these rules.
They apply to trusts within a year of an effort as 1/30 of this year so that is essentially all trusts that have a December 31 year end and you can't simply wind up now, you are still caught by the rules, it's still the same tax year and reporting under these rules is going to be due in March if you are aware of these impacting you.
>> Some people listening right now might be saying they didn't know the information but now they have a better idea of their obligations.
we been seeing these new trust reporting rules?
>> So the government feels that there are gaps in the information that it has with respect to who is really the beneficial owner of the assets in a trust. What are they, who owns them, who is entitled to them? So they are taking steps and we see other money laundering or tax evasion plays, this is part of that and it requires now that the trustee of the trust report much more information than they have in the past, about more than they needed to in the past.
They have to provide information about anybody who is exerting influence over the trust and I think what stripping a lot of people up is that beneficiaries includes contingent beneficiaries. So people who might not even realize they have an interest in a trust are now going to be asked to provide this information which includes their name, their date of birth, tax residency, tax information number, you are a social insurance number or your business number, but a lot of information is now required for a lot of people.
>> It sounds like a pretty wide net. I was just thinking if someone is watching and saying, I set up a trust, did they apply to me?
This is a wide net.
>> It is a very, very wide net. I'm not sure how well the layperson would know that. There are some exemptions that would apply. If a trust is $50,000 or less but only of publicly traded securities or cash, if it's a short trust and has only been in existence for three months, you might want to get out of those rules, graduated or states don't apply, qualify disability trust, but essentially anything else in your typical family trust is going to be caught here and bear trusts are going to be called as well.
>> Walked me through the bear trusts thing. I was going to ask you about that.
People might not realize that the situation they're in, what are the rules around that?
>> I'll put it this way. Essentially any asset that we own can have both a legal and a beneficial owner. They are not necessarily the same person.
So when you have a bear trusts, one individual is the legal owner and their name is on title but they don't have beneficial interest in that property. They are holding up for somebody else. They are not making any decisions about it and they are essentially the agent who is following the instructions of that individual.
But these are trusts and these rules explicitly applied to a bear trust.
And so those who may have had a trust account for a minor who can't open an account of themselves, people who have done it for privacy or anonymity in their planning may have put things in the name of a corporation and not an individual so there are a lot of different ways that people may be caught in this and bear trust, again, it was a bit of a surprise and I'm not sure many people know what a bear trust is but definitely seek some guidance on that. We've talked before about joint accounts as well-being potentially caught by these rules and catching people off guard and that as well.
>> That caught me off guard. A joint account could be considered a trust. Walk me through the logic there.
>> For the purpose of these rules, it may qualify as a bear trust because essentially if we think about an individual who's been on the account of their elderly parents and they've done that for convenience purposes, they are in legal title, they are able to transact on that account but they don't have a beneficial interest, they are a trustee of that money.
Similarly, you might have a property that is in joint names, you may have real estate, for example, people trying to avoid probate by adding all their kids onto title or you may have a parent who has taken out of the mortgage a little bit and it's on title until things are paid back. All of those are bear trust circumstances.
They are potentially caught by these rules and the individual, the trustee in the case, the person who is the legal owner who doesn't have any beneficial interest in this asset it all is responsible for reporting these rules and the penalties are quite significant.
So definitely go into that if you have joint accounts.
This is one of many reasons to revisit that structure and see that it works for you.
>> Has we are listening to this, who do people speak to to get a better understanding of this? What is going on with these new rules and what I be affected by them?
>> Firstly, we want to look at how your assets are held.
Definitely reaching out your financial institutions, looking at how your real estate is held, whose name is on title because that is who is potentially going to be caught here but working with your tax advisor, your accountant, your lawyer, asking them what they these rules impact you, I'm sure you're not the only one who is asking that question.
Many, many professionals are fielding questions about this space and it's not intuitive to many people that trust reporting rules would apply to a joint account or an interest account for a minor but they do.
So be on guard.
>> That was Nicole Ewing, Dir., tax and estate planning at TD Wealth.
Now let's get our educational segment of the day.
If you are looking to test out a potential trading idea, WebBroker's watchlist function has tools that can help.
Bryan Rogers, Senior fund education instructor at TD Direct Investing has more.
>> All right, today I want to take a few moments just to review an aspect of the watchlist that many people may not know about.
So the reason you would use this as well is if you want to test a theory or you have a hunch about something with the stock but you don't want to put your money on it quite yet, maybe you were adjusting something on a fundamental analysis concept you learned and you want to see if it will work out or you are following some analysts and they are saying there is a certain price target for a stock, you can use of a tracker tool. Most people have heard of the watchlist. You can add symbols that you're interested in but not quite buying yet.
You can use it multiple ways. You can use the tracker tool. You can have these stocks followed by their price as well.
So I want to jump into WebBroker and I will show you how you can add that on.
First off, just a quick review on the watch lists themselves.
Under the research tab, you can pull up stock quotes.
We talked about that a lot. On the right-hand side, if you click on this watchlist tab on the right-hand side at the top, there are only 10 watchlist's total that you can utilize in WebBroker but you can add in 10 different symbols on 10 different watchlist if you are tracking different sectors or different types of stocks, even as many as you want, up to 10, see the list here. You can see list one, I haven't quite used yet. You can look at quotes in general here.
You can add a number of quotes if you don't want to name of watchlist.
If I want to add a new and I would click on this list here and then I would add in a symbol. Let's I want to add TD for example. I will add on the stock and it is add to my list. That's a quick review on how to create a watchlist.
But if I want to now say if I were to buy this right now and I want to see maybe a month from now or week from our two weeks from now how I'm doing on this particular stock, you can go to this tab: the tracker tab, and you can see how it says market value investments, but because, it's like a mini mock portfolio or maybe you have heard the term paper trading before. So I can add in here if you see the quantity and average costs, if I was thinking of testing the idea of buying 100 shares at a certain price, I could enter that in, enter my hundred shares, and you want to enter a price in similar to what it is at.
Then you press save and go. Why not do much at the moment. It could show some real… To share an example of what I did a while ago on US tech stocks over here I was testing some ideas quite a while ago and if I click on my tracker tab, here's Meta, Google, Shopify, and once I entered and at some point about a month or so ago Just to see how I'd been doing at home I can see the difference, I can see it for the whole portfolio. I am up around $3700 on this paper trading or mock portfolio that I can use on the tractor. Now I have an idea which one I like the most, did my theory work out, did I have a hunch that did not work out or maybe you did and you can realize that you can test those theories and utilize that on the tractor tool.
>> Our thanks to Bryan Rogers, 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.
One of the joys of being a grandparent is spoiling your grandchildren. So as the kids grow, can the size of financial gifts grow as well? Georgia Swan, tax and estate planner at TD Wealth joined MoneyTalk's Kim Parlee did to help ensure your gifts will not come with unintended consequences.
>> When you do it while you're alive, you get to see the benefit of it, so an education free from debt or your grandchildren enjoying their first house so that's always a wonderful thing. The problem with that is you have to make sure you can really spare the money because if you can't honestly say, I'm never going to need this amount, so whether I have medical issues or long-term care issues, I'm never gonna need this money, then that's great.
Do it while you are alive and enjoy what comes of it. But if you can't honestly say that I never gonna need it back, because you probably won't get it, then maybe it's better to wait and do it through your will because then it's going to be a part of whatever's left over, so it's not going to affect your lifestyle while you are alive.
>> Good point.
Now in terms of ways you could do it, one way is giving cash. What do you think about it?
>> So when you are thinking about giving money, let's say for example you want to give $200,000.
The problem is you have to really think about what that is actually costing you.
Said who hundred thousand dollars in cash is usually after tax money so if you're in the highest marginal tax rate for example, that might have cost you 300,000 in order to make 200,000. You also have to think that I in the vein of can you spirit that that's money now that's not going to be working for you. So you have lost the future investment opportunity for that money.
So that's part of the consideration when I say can you really spare it.
What is it actually costing you to get that amount?
>> There is a lot to go through here are so I'm going to be rapidfire on this one.
So if you say okay maybe not cash, maybe it's a security, I stopped, maybe it's property.
What does that mean?
>> So again, tax consequences. Let's say you want to get the cottage to the grandkids. In that case, you can gift it.
Under real estate law, you can transfer the ownership of the problem is that it's going to be a disposition of that property to you.
So if there are accrued capital gains, you will have to pay tax on it.
If you want to get money for example from an investment account, you are going to have to liquidate that account.
There can also be issues. I had a client wants to want to give to rental property and they want to do it to say well the rental properties worth $1 million. I'm going to have them pay me part of that.
They are only gonna have to pay me $500,000.
That can create another tax problem, especially if it's an income producing asset because there's something called attribution rules that when it goes at less than fair market value, the income ultimately that the grandkids would get can attribute back to you.
So there are so many intricacies based on how you want to structure this so-called gift that you really have to investigate.
>> Okay. Yeah.
Education. A lot of grandparents want to help with their grandchildren's education through an RESP.
>> So absolutely. That's almost an indirect gift to your kids as well because if they are not saving for the RESP, they have more disposable income to do other things so it's great. You get the bond and you get the grant. But you have to be careful. If it's an RESP that he was a grandparent created, so you are the subscriber, you have to have special wording in your will that appoint a successor subscriber because if you don't and the RESP hasn't been used, it's going to be collapsed and the contribution amount, so all the grants and bonds go back to the government, the contribution amount will end up going through your will. So it's very important that if you are the subscriber of an RESP to have that wording in your will to appoint successor subscriber. That's a conversation to be having with the parents of the kids. >> What about a down payment for a home?
I like all these lists, by the way. But if you decide that's a wonderful gift, what you have to think about?
>> That's the biggest one. That's when I see most often. often. often. often. top that up. You got other tax efficient ways of buying a new home. But certainly you can also, if they've gone part way to getting that down payment, you can give them a little bit more.
What happens in that case is sometimes people want to structure… My grandchild is married and they get divorced I want the money back, they sell the house, I want the money back, that's a different animal than a gift and so you need to get good advice because that's more in the nature of a loan and that's a different story.
>> Okay. So be clear if there are conditions around it what they need to be.
Trusts. That's a whole show. But give me a thought on trusts, what to think about.
>> Usually, you're going to see trusts when you are gifting, especially the grandchildren are minors. That is what we have to start talking about trusts because you can't necessarily give directly to a minor. Now, trust, what a lot of people don't realize is it's a relationship, it's a situation where you are creating a relationship between the trustee, you, and the beneficiary.
You can do that in two ways. You can do that when you are alive, very complicated things. So you need to get good advice about that.
>> Let's finish with that on the good advice. All of this, I'm assuming, your financial advisor can help you work through these things.
>> As I said, can you spare the money?
That's when your financial advisor or investment advisor comes in and then because these are complicated things, a good estate planning lawyer, somebody that can see that these intersect different areas of law and you need to have an understanding of all of those areas in order to properly advise your client about how this should be structured.
>> That was Georgia Swan, tax and estate planner at TD Wealth.
With an aging population, a growing number of Canadians may find themselves in a position of need to help their parents manage the finances.
Nicole Ewing, Dir. of tax and estate planning at TD Wealth wants to discuss some ways that you may be able to help your parents out without comprising your own financial future.
>> We need to really assess what type of help they need. Did they need something as basic as ensuring that the bills are being paid on time, perhaps they need help with bank accounts or accessing those, maybe they are looking for help filing their taxes or ensuring that their benefits are being cleaned or they might actually need the financial subsidizing and that's where if that's within he truly is, make sure that you are aware of your own financial position before starting to have that conversation.
>> The next step is, what is the problem?
Understand what it is they are asking for.
Ask questions.
>> And how did they get here in the first place?
Are they working with a financial advisor, for example, that maybe has not done the job that they expected them to do or maybe doesn't have the information that they need?
Maybe they need to be introduced to your financial advisor, people you are working with that can help navigate them through that and really figure out what is the issue, what is it that we are selling for?
Is that a lack of money or is it a lack of organization and planning?
And we need to sort of step back and have a look at that. So I would be pulling all of their information together, I would want to see bank statements, credit card statements, what's going out and what's coming in and that will allow you to have some insight into whether these decisions are intentional or whether there are some savings that can be found as well and stepping back and thinking through how are we going to get this information from them?
This is a challenge and people don't, it's very uncomfortable for children to have these conversations with their parents and there is often a little bit of a push and pull to between the family members. So maybe they are more comfortable telling one family member than the other.
Maybe they are seeing different things to different family members so this is where you can work as a team together… >> Find out what's facts.
>> What is fact, what is the situation we are dealing with and can we align ourselves to make sure we are helping.
>> What are some bad ideas? What are some risky things maybe that you've heard about people doing to try to help the parents?
>> You are borrowing for them. Maybe you're cosigning on a loan and expecting that money to come back in some other way, maybe your siblings will pitch in and give you the share, don't expect that. We cannot expect that any additional money is going to shop anywhere down the line. So we need to deal with the situation we are in and adding your name to their property can create a whole host of issues. It can create issues for your own estate and your own credit protection.
>> Co-mingling.
>> If we are having co-mingling, that sort of thing. We want to have that clear idea of what is mom and dad's, what are they working on, what do they own and then what do, how can I actually help them without jeopardizing my own financial security, my own legal security, my own relationships with family members as well. Because you have your own family may be, your spouse might not agree with the decisions about the support you want to provide and how you might have siblings who have different ideas as well.
Again, same page, get everybody together.
>> What about things you could do that would be helpful to their organization but does not involve you, is not financial in your side?
>> So you're not out-of-pocket any money but able to help them benefit. Number one, making sure that they are aware of their taxes and the different benefits that they could potentially be claiming and so often times or people don't have money, they aren't filing their taxes because they don't think, there's no point, they don't have enough income to owe anything.
>> But it could trigger benefits.
>> It could, once you file that you will have the opportunity to qualify for other things.
Another thing, just introducing them to the idea that some of the new ways of helping and getting money, so by nothing sites in the community that your parents may not be online in the same way you are, they might not have access to all the different social media and so if you are aware of those, connecting them with other people in the community, so there's lots of services within our communities to help seniors and ensure they get their support.
So researching those in finding out what they are as well. And again, connecting them with other professionals who will be able to help them is probably the biggest thing you can do.
>> And what about, I know we have talked about this before, but there's helping them understand what benefits might be available to them but there also benefits I believe for people who want to help let's say an older family member live in a house and things like that, right?
>> There are a number of benefits that can be shared.
There are benefits that your folks may be able to claim themselves, others that you may be able to use. If you are doing renovations, there are other credits that are available if you do renovations to accommodate things that happen with age.
Medical expenses, you can also use those against your own, you can claim on behalf of your parents if you are finding those as well.
So there are tax strategies or tax benefits that you want to have coordinator for the whole family. Depending on where those funds are coming from.
And if you are able to demonstrate that they are fully dependent upon you for that support, then we have caregiver credits and other sorts of things. So it's well worth looking into what tax benefits are available and seeing which ones either they can claim or you can claim or somehow split them between the family.
>> And it's always worth working with professionals. In your case, you the kind of person that works with advisors and clients to say, here's the financial picture, they have the knowledge, you have the expertise.
>> Exactly. Beyond that, there are financial therapists, people who can help families talk through some of these issues and really understand what their options are, maybe what some of their trigger points are, where they are more likely to find themselves in trouble. So we want financial advisors, again, family counsellors of that's appropriate and getting everybody at that table so they can do that coordinated planning together.
>> That was Nicole Ewing, director of tax and estate planning a TD Wealth.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
This, of course, is the heat map function, he gives view of the market movers.
Trading bonds are later today. Our Americans are on the thanks giving holiday.
Volumes are light.
We do have some movement in certain areas.
The financials, you got Manulife up modestly along with some of the banks including Royal and PMO. Take a look at energy space, there has been some concern about OPEC delaying a meeting because there had been some I guess report earlier in the week that they were to consider further production cuts to support the price of crude so you're getting a mixed bag there the energy space as well. And materials, guess what phrase I'm going to use?
Americans will be back at it tomorrow for half a session.
We will see if we get more action then.
You can find more information on TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
If you are a family member is planning to immigrate to Canada, you may wonder how in which asset may be subjected to Canadian taxes.
Nicole Ewing, Dir. of tax and estate planning at TD Wealth joined Kim Parlee to talk about the importance of planning ahead when you bring significant wealth to Canada.
>> On that, we need to be planning as far in advance as we possibly can because many of the tax strategies or opportunities you might have might take some time. So I'm talking well in advance of the year, some strategies take multiple years, so that's one. Let's make sure we are thinking about this as early in the process as possible.
Then, we want to engage advisors, lawyers, accountants and our country of origin, where we currently are, and in Canada and have those two individuals speak to each other, perhaps there is more than two, and then just make sure everybody is on the same page because the tax laws are very, very different across the world, what we tax, who is tax, what sorts of assets are taxed and what sorts of credits and deductions might be available, vastly different throughout the world so we need to have that coordination between our advisors.
I think of it, last week I had someone reach out to me and I was delighted because he was calling from Thailand and his interest was in what's going to happen when I move.
What about joint accounts? What about minor accounts for my children? Are there income attribution rules? And those are the types of calls we like. I was able to connect him with a wealth advisor who is able to start that process for him so when he comes to Canada next year with his family, much better prepared.
>> That's great, and yet there's a lot to go through as we are about to talk about.
So tax rules, obviously, as he said, different in every country, and for different reasons and the history that goes with it. When someone gets their Canadian residency status, what then? Are you only subject to Canadian tax laws at that point or are you still going to be subject to other tax laws?
>> Well, and I want to clarify, what's really important here is that tax residency is distinct from immigration status and so you may be a tax resident before you have immigration status. These rules may apply to you as well.
And yes, you may still be subject to the tax laws of your country of origin. You may be subject to tax laws for assets that are held in other parts of the world where you don't live. You may be subject to tax in Canada as well and was critical is if there is a treaty, we want to know what it says so we can act accordingly and make sure we are not paying tax on the same assets are same income in multiple countries because, for example, if you are a US citizen, resident in Canada, you are subject to tax both in Canada and the US and we want to coordinate on that. In other parts of the world, there may be assets that are not taxed there. For example, capital dividends in some countries and jurisdictions, those aren't taxable. So you want to know that before you bring those assets to Canada potentially then disposing of them here and becoming subject to tax on something you could have brought over had you disposed of it in advance of calming and simply bought cash with you.
>> Got it. That's really good point. Let's talk about that.
If you are moving foreign assets, I'm assuming not cash, it could be a currency or securities and kind to Canada, what you need to be thinking about?
>> We need to be thinking about if they are already a tax resident, what is a source of these funds?
Do we have deemed dispositions that we need to be thinking about?
And we want to be reporting in advance of calming what our assets are, what are we bringing with us? I think of an example here where we might have somebody who doesn't want to necessarily tell what they have, the entirety of their assets, when they come to Canada and they need to dispose of it but because you've not planned ahead and told Canada that you are bringing this asset and this is its value on the day that you brought it, you might not get credit for that, the cost base, so now you may be subject to tax on the entire value because the cost base might be assumed to be zero because it wasn't reported when you brought it with you.
So making sure that you are upfront and disclosing all of your assets and your advisors know what you actually hold is going to be critical.
>> Got it. What about buying real estate in Canada?
If I assume once you become a resident, either tax resident or a Canadian resident, would you need to think about once you actually buy real estate?
>> We want to firstly understand the rules because, each jurisdiction, the way that real estate is treated might be different so we have a principal assumption in Canada which is fantastic, we want to familiarity with that. But we also want to think about that source of funds. So as I mentioned when you are purchasing property in Canada, you may be asked to, we have money laundering rules, you may be asked to declare what the source of those funds were so make sure that you are in a position to do that and really making sure that you understand what those rules are in terms of ownership, in terms of disposition, which family member should be on title, all sorts of those questions should be considered in advance.
>> Yeah, and you mentioned earlier that if you are moving to Canada and still have real estate where you were, you have to be thoughtful about where you are going to be tax the most in terms of capital gains and those types of things. But is there anything else you have to think about in terms of not disposing of foreign real estate?
>> It can really catch people off guard the way you may think, I left that country, I own property there, why would I still be subject to tax on that and in Canada? You very well may be and what we want to think about here is how is that asset going to be treated in your estate?
And so having wills dealing with the real property in that other country is probably going to help and from a tax perspective, you might want to be giving you are trustees or your executors of the will of the authority and power that they are going to need in order to perhaps do some postmortem tax planning around the area.
So making sure that your documents reflect what you want them to say and that they are coordinated with each other, that they are Canadian will documents, contemplate the existence of the property you might own in other parts of the world and we are availing ourselves of some of those rules that will avoid the double taxation or that big tax hit that you weren't expecting.
>> What about pensions, retirement plans, those things? Again, if they exist in another country, how does that work?
>> This is a very complex area. It really depends on the nature of the pension, on which country it's being brought from. The Canadian income tax act does not have a provision that allows for the direct transfer of a foreign pension into a Canadian register plan, for example. But we do have legislation that allows for that to happen in directly, so we want to familiarize ourselves with those rules as well as the rules from the country that you are bringing that pension from. There might be limitations on that, your ability to withdraw from those funds or for example if you are bringing 401(k) funds up to Canada, there may be a couple of different ways to do that really depending on what your objectives are and in some circumstances it makes sense just to keep things as they are and have your foreign pension foreign but incorporated into her financial planning and your cash flow planning a Canadian perspective.
>> If ever there was a time you need to speak somebody, I'm gonna say this is it.
>> Yeah, we want all of your advisors to be supporting you as a team within Canada and within your country of origin to make sure that we are putting together that best plan for you so you are coming here and you are able to participate fully without tax being a major difficulty.
>> That was Nicole Ewing, director of tax and estate planning at TD Wealth.
As always, make sure you do your own research before making any investment decisions.
we will be back tomorrow with an update on the markets, reactions to the latest Canadian retail sales report. On Monday, Jason Hnatyk, senior client education sector with TD Direct Investing will be our guest, he wants to take your questions on how to get more out of the WebBroker platform. A reminder that you get a head start with those questions. Just a moneytalklive@td.com. That's all the time we have the show today. Thanks for watching. We will see you tomorrow.
[music]
coming up on today show, we are having a look at some issues that could have an impact on your personal finances.
Nicole Ewing will take us or what changes to trust reporting rules could mean for your taxes and what new immigrants need to consider before bringing money to Canada.
Canada. Canada. Canada. their grandkids.
As we approach the Black Friday kickoff to holiday shopping season, money talks and they will he will have a look at whether consumers will open their wallets amid the higher cost of living. In today's WebBroker education segment, Bryan Rogers will show us how you can test out a potential trade idea using the watchlist function.
Before he gets all of that, let's get you an update on the markets.
The Americans are often we are still on.
We have some action to report. You're up a modest 40 points, some green on the screen, 1/5 of a percent on the TSX Composite Index. One of the most actively traded names on the TSX today is Danistan, a uranium play, add to bucks and $0.55 comforting almost another 4% on the table today.
Operations in Panama that quantum said it might have to wind down by the end of the week, perhaps temporarily shatter, looks like that starting to happen. There is a port closure, a blockade, a lot of opposition to the Cobre Panama project in Panama from the population leading to a lot of problems for First Quantum.
Those problems have been priced into the stock in recent weeks based off of some of those troubles. Today, you're pretty much flat on the name. At 1383, you are up seven takes. Since of the border, they are closed for the thanks giving holiday.
Let's take a look at the S&P 500. It's been quite a run this year. We had Benjamin Gossack from TD Asset Management on the show yesterday, a lot of people said it's all about the Magnificent Seven, he took us through some of his research showing that, there are more than just seven stocks that have been the benchmark this year but is been a surprise for many people to see the S&P 500 show this kind of strength. At 4556 it closed yesterday, we will see what happens in the short and trading session tomorrow. And that's your market update.
Well, it is US Thanksgiving, it means turkeys, it means football, but it also means Black Friday, the traditional kickoff to the holiday shopping season.
Joining us that with more is MoneyTalk Anthony Okolie. I am being inundated on my phone with Black Friday deals trying to entice me. Obviously, retailers count on the cement.
>> This is the biggest shopping period of the year.
TD Economics does not think it will match the numbers we saw last year. Only look at holiday spending growth, TD Economics is expecting about 4 1/2% year-over-year growth in the fourth quarter of the USN that compares to 6% growth that we saw in 2022 but it does top the pre-pandemic average. This strong growth is being driven by the access pandemic era savings plus a strong US jobs market as well.
However, retailers do face some headwinds this holiday season. Justin Flowerday of TD Asset Management recently talked about some of those headwinds coming up in some of the latest earning results from these retailers. Take a listen.
>> I would say we heard from several management teams that the lower income cohort is weakening, and they have drained down the excess savings, and they are starting to see decisions which are slowing consumption trends across a whole bunch of different sectors. We heard from Walmart and Home Depot, they came out and said, look, purchases of over $1000 are down 6% year-over-year.
>> Yeah.
>> Some difficulty in terms of low and consumers.
>> So we are seeing this divergence between the lower consumers and the middle and upper consumers.
You can see the lower income consumers in the bottom 50%, they are running out of cash, this cash cushion built up during the pandemic.
This has led a lot of the big retailers, as Justin alluded to, to issue warnings ahead of the biggest shopping day of the year.
In addition to that pressure from higher interest rates, we are seeing the resumption of student loan repayments in the US, higher credit card debt as well as reduce savings, which have left lower income consumers with less discretionary income. That will force a trade-off between necessities, paying for things like food and housing, and discretionary holiday spending, spitting on electronics, phones.
That's something that these US retailers are warning about.
>> Our big shopping day used to be Boxing Day, after Christmas, the idea that we had money to go spend.
But we have, like so many American cultural phenomenon, and have imported Black Friday fully into this country. What about the health of the Canadian consumer?
What are we thinking on that front?
>> More so than the US, TD Economics as Canadian consumers are feeling the pinch from higher interest rates and when you look back to the second quarter, Canadian consumer spending was flat in the second quarter as heavily indebted Canadian households struggled with higher borrowing costs.
Now, TD Economics estimates that the increased mortgage payments have/real consumer spending by 1 1/2% in 2023 and they expect it to be slashed in 2024 up until 2027. A key factor behind this is the outlook for consumer spending which legs the US over the medium term.
Now, in contrast to their American counterparts, Canadians still have roughly $140 billion in excess deposits in less liquid term products. That's just Canadians but to put money aside anticipating higher debt payments but overall, I think the reports out of the US and Canada do show that consumers are beginning to struggle with both inflation, higher borrowing costs. Tomorrow, we get the latest Canadian retail sales which will give us a sense of how things are for the Canadian consumer.
>> Thanks for that, Anthony.
>> My pleasure.
>> Money talks Anthony Okolie.
All of your family will to trust or even if you share a joint account with the parent, new federal trust reporting rules could impact you you this coming tax season. Nicole Ewing, Dir., tax and estate planning had TD Wealth join me earlier to discuss.
>> Now the exemptions are not as fulsome as they once were and a lot more trusts are going to be captured by these rules.
They apply to trusts within a year of an effort as 1/30 of this year so that is essentially all trusts that have a December 31 year end and you can't simply wind up now, you are still caught by the rules, it's still the same tax year and reporting under these rules is going to be due in March if you are aware of these impacting you.
>> Some people listening right now might be saying they didn't know the information but now they have a better idea of their obligations.
we been seeing these new trust reporting rules?
>> So the government feels that there are gaps in the information that it has with respect to who is really the beneficial owner of the assets in a trust. What are they, who owns them, who is entitled to them? So they are taking steps and we see other money laundering or tax evasion plays, this is part of that and it requires now that the trustee of the trust report much more information than they have in the past, about more than they needed to in the past.
They have to provide information about anybody who is exerting influence over the trust and I think what stripping a lot of people up is that beneficiaries includes contingent beneficiaries. So people who might not even realize they have an interest in a trust are now going to be asked to provide this information which includes their name, their date of birth, tax residency, tax information number, you are a social insurance number or your business number, but a lot of information is now required for a lot of people.
>> It sounds like a pretty wide net. I was just thinking if someone is watching and saying, I set up a trust, did they apply to me?
This is a wide net.
>> It is a very, very wide net. I'm not sure how well the layperson would know that. There are some exemptions that would apply. If a trust is $50,000 or less but only of publicly traded securities or cash, if it's a short trust and has only been in existence for three months, you might want to get out of those rules, graduated or states don't apply, qualify disability trust, but essentially anything else in your typical family trust is going to be caught here and bear trusts are going to be called as well.
>> Walked me through the bear trusts thing. I was going to ask you about that.
People might not realize that the situation they're in, what are the rules around that?
>> I'll put it this way. Essentially any asset that we own can have both a legal and a beneficial owner. They are not necessarily the same person.
So when you have a bear trusts, one individual is the legal owner and their name is on title but they don't have beneficial interest in that property. They are holding up for somebody else. They are not making any decisions about it and they are essentially the agent who is following the instructions of that individual.
But these are trusts and these rules explicitly applied to a bear trust.
And so those who may have had a trust account for a minor who can't open an account of themselves, people who have done it for privacy or anonymity in their planning may have put things in the name of a corporation and not an individual so there are a lot of different ways that people may be caught in this and bear trust, again, it was a bit of a surprise and I'm not sure many people know what a bear trust is but definitely seek some guidance on that. We've talked before about joint accounts as well-being potentially caught by these rules and catching people off guard and that as well.
>> That caught me off guard. A joint account could be considered a trust. Walk me through the logic there.
>> For the purpose of these rules, it may qualify as a bear trust because essentially if we think about an individual who's been on the account of their elderly parents and they've done that for convenience purposes, they are in legal title, they are able to transact on that account but they don't have a beneficial interest, they are a trustee of that money.
Similarly, you might have a property that is in joint names, you may have real estate, for example, people trying to avoid probate by adding all their kids onto title or you may have a parent who has taken out of the mortgage a little bit and it's on title until things are paid back. All of those are bear trust circumstances.
They are potentially caught by these rules and the individual, the trustee in the case, the person who is the legal owner who doesn't have any beneficial interest in this asset it all is responsible for reporting these rules and the penalties are quite significant.
So definitely go into that if you have joint accounts.
This is one of many reasons to revisit that structure and see that it works for you.
>> Has we are listening to this, who do people speak to to get a better understanding of this? What is going on with these new rules and what I be affected by them?
>> Firstly, we want to look at how your assets are held.
Definitely reaching out your financial institutions, looking at how your real estate is held, whose name is on title because that is who is potentially going to be caught here but working with your tax advisor, your accountant, your lawyer, asking them what they these rules impact you, I'm sure you're not the only one who is asking that question.
Many, many professionals are fielding questions about this space and it's not intuitive to many people that trust reporting rules would apply to a joint account or an interest account for a minor but they do.
So be on guard.
>> That was Nicole Ewing, Dir., tax and estate planning at TD Wealth.
Now let's get our educational segment of the day.
If you are looking to test out a potential trading idea, WebBroker's watchlist function has tools that can help.
Bryan Rogers, Senior fund education instructor at TD Direct Investing has more.
>> All right, today I want to take a few moments just to review an aspect of the watchlist that many people may not know about.
So the reason you would use this as well is if you want to test a theory or you have a hunch about something with the stock but you don't want to put your money on it quite yet, maybe you were adjusting something on a fundamental analysis concept you learned and you want to see if it will work out or you are following some analysts and they are saying there is a certain price target for a stock, you can use of a tracker tool. Most people have heard of the watchlist. You can add symbols that you're interested in but not quite buying yet.
You can use it multiple ways. You can use the tracker tool. You can have these stocks followed by their price as well.
So I want to jump into WebBroker and I will show you how you can add that on.
First off, just a quick review on the watch lists themselves.
Under the research tab, you can pull up stock quotes.
We talked about that a lot. On the right-hand side, if you click on this watchlist tab on the right-hand side at the top, there are only 10 watchlist's total that you can utilize in WebBroker but you can add in 10 different symbols on 10 different watchlist if you are tracking different sectors or different types of stocks, even as many as you want, up to 10, see the list here. You can see list one, I haven't quite used yet. You can look at quotes in general here.
You can add a number of quotes if you don't want to name of watchlist.
If I want to add a new and I would click on this list here and then I would add in a symbol. Let's I want to add TD for example. I will add on the stock and it is add to my list. That's a quick review on how to create a watchlist.
But if I want to now say if I were to buy this right now and I want to see maybe a month from now or week from our two weeks from now how I'm doing on this particular stock, you can go to this tab: the tracker tab, and you can see how it says market value investments, but because, it's like a mini mock portfolio or maybe you have heard the term paper trading before. So I can add in here if you see the quantity and average costs, if I was thinking of testing the idea of buying 100 shares at a certain price, I could enter that in, enter my hundred shares, and you want to enter a price in similar to what it is at.
Then you press save and go. Why not do much at the moment. It could show some real… To share an example of what I did a while ago on US tech stocks over here I was testing some ideas quite a while ago and if I click on my tracker tab, here's Meta, Google, Shopify, and once I entered and at some point about a month or so ago Just to see how I'd been doing at home I can see the difference, I can see it for the whole portfolio. I am up around $3700 on this paper trading or mock portfolio that I can use on the tractor. Now I have an idea which one I like the most, did my theory work out, did I have a hunch that did not work out or maybe you did and you can realize that you can test those theories and utilize that on the tractor tool.
>> Our thanks to Bryan Rogers, 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.
One of the joys of being a grandparent is spoiling your grandchildren. So as the kids grow, can the size of financial gifts grow as well? Georgia Swan, tax and estate planner at TD Wealth joined MoneyTalk's Kim Parlee did to help ensure your gifts will not come with unintended consequences.
>> When you do it while you're alive, you get to see the benefit of it, so an education free from debt or your grandchildren enjoying their first house so that's always a wonderful thing. The problem with that is you have to make sure you can really spare the money because if you can't honestly say, I'm never going to need this amount, so whether I have medical issues or long-term care issues, I'm never gonna need this money, then that's great.
Do it while you are alive and enjoy what comes of it. But if you can't honestly say that I never gonna need it back, because you probably won't get it, then maybe it's better to wait and do it through your will because then it's going to be a part of whatever's left over, so it's not going to affect your lifestyle while you are alive.
>> Good point.
Now in terms of ways you could do it, one way is giving cash. What do you think about it?
>> So when you are thinking about giving money, let's say for example you want to give $200,000.
The problem is you have to really think about what that is actually costing you.
Said who hundred thousand dollars in cash is usually after tax money so if you're in the highest marginal tax rate for example, that might have cost you 300,000 in order to make 200,000. You also have to think that I in the vein of can you spirit that that's money now that's not going to be working for you. So you have lost the future investment opportunity for that money.
So that's part of the consideration when I say can you really spare it.
What is it actually costing you to get that amount?
>> There is a lot to go through here are so I'm going to be rapidfire on this one.
So if you say okay maybe not cash, maybe it's a security, I stopped, maybe it's property.
What does that mean?
>> So again, tax consequences. Let's say you want to get the cottage to the grandkids. In that case, you can gift it.
Under real estate law, you can transfer the ownership of the problem is that it's going to be a disposition of that property to you.
So if there are accrued capital gains, you will have to pay tax on it.
If you want to get money for example from an investment account, you are going to have to liquidate that account.
There can also be issues. I had a client wants to want to give to rental property and they want to do it to say well the rental properties worth $1 million. I'm going to have them pay me part of that.
They are only gonna have to pay me $500,000.
That can create another tax problem, especially if it's an income producing asset because there's something called attribution rules that when it goes at less than fair market value, the income ultimately that the grandkids would get can attribute back to you.
So there are so many intricacies based on how you want to structure this so-called gift that you really have to investigate.
>> Okay. Yeah.
Education. A lot of grandparents want to help with their grandchildren's education through an RESP.
>> So absolutely. That's almost an indirect gift to your kids as well because if they are not saving for the RESP, they have more disposable income to do other things so it's great. You get the bond and you get the grant. But you have to be careful. If it's an RESP that he was a grandparent created, so you are the subscriber, you have to have special wording in your will that appoint a successor subscriber because if you don't and the RESP hasn't been used, it's going to be collapsed and the contribution amount, so all the grants and bonds go back to the government, the contribution amount will end up going through your will. So it's very important that if you are the subscriber of an RESP to have that wording in your will to appoint successor subscriber. That's a conversation to be having with the parents of the kids. >> What about a down payment for a home?
I like all these lists, by the way. But if you decide that's a wonderful gift, what you have to think about?
>> That's the biggest one. That's when I see most often. often. often. often. top that up. You got other tax efficient ways of buying a new home. But certainly you can also, if they've gone part way to getting that down payment, you can give them a little bit more.
What happens in that case is sometimes people want to structure… My grandchild is married and they get divorced I want the money back, they sell the house, I want the money back, that's a different animal than a gift and so you need to get good advice because that's more in the nature of a loan and that's a different story.
>> Okay. So be clear if there are conditions around it what they need to be.
Trusts. That's a whole show. But give me a thought on trusts, what to think about.
>> Usually, you're going to see trusts when you are gifting, especially the grandchildren are minors. That is what we have to start talking about trusts because you can't necessarily give directly to a minor. Now, trust, what a lot of people don't realize is it's a relationship, it's a situation where you are creating a relationship between the trustee, you, and the beneficiary.
You can do that in two ways. You can do that when you are alive, very complicated things. So you need to get good advice about that.
>> Let's finish with that on the good advice. All of this, I'm assuming, your financial advisor can help you work through these things.
>> As I said, can you spare the money?
That's when your financial advisor or investment advisor comes in and then because these are complicated things, a good estate planning lawyer, somebody that can see that these intersect different areas of law and you need to have an understanding of all of those areas in order to properly advise your client about how this should be structured.
>> That was Georgia Swan, tax and estate planner at TD Wealth.
With an aging population, a growing number of Canadians may find themselves in a position of need to help their parents manage the finances.
Nicole Ewing, Dir. of tax and estate planning at TD Wealth wants to discuss some ways that you may be able to help your parents out without comprising your own financial future.
>> We need to really assess what type of help they need. Did they need something as basic as ensuring that the bills are being paid on time, perhaps they need help with bank accounts or accessing those, maybe they are looking for help filing their taxes or ensuring that their benefits are being cleaned or they might actually need the financial subsidizing and that's where if that's within he truly is, make sure that you are aware of your own financial position before starting to have that conversation.
>> The next step is, what is the problem?
Understand what it is they are asking for.
Ask questions.
>> And how did they get here in the first place?
Are they working with a financial advisor, for example, that maybe has not done the job that they expected them to do or maybe doesn't have the information that they need?
Maybe they need to be introduced to your financial advisor, people you are working with that can help navigate them through that and really figure out what is the issue, what is it that we are selling for?
Is that a lack of money or is it a lack of organization and planning?
And we need to sort of step back and have a look at that. So I would be pulling all of their information together, I would want to see bank statements, credit card statements, what's going out and what's coming in and that will allow you to have some insight into whether these decisions are intentional or whether there are some savings that can be found as well and stepping back and thinking through how are we going to get this information from them?
This is a challenge and people don't, it's very uncomfortable for children to have these conversations with their parents and there is often a little bit of a push and pull to between the family members. So maybe they are more comfortable telling one family member than the other.
Maybe they are seeing different things to different family members so this is where you can work as a team together… >> Find out what's facts.
>> What is fact, what is the situation we are dealing with and can we align ourselves to make sure we are helping.
>> What are some bad ideas? What are some risky things maybe that you've heard about people doing to try to help the parents?
>> You are borrowing for them. Maybe you're cosigning on a loan and expecting that money to come back in some other way, maybe your siblings will pitch in and give you the share, don't expect that. We cannot expect that any additional money is going to shop anywhere down the line. So we need to deal with the situation we are in and adding your name to their property can create a whole host of issues. It can create issues for your own estate and your own credit protection.
>> Co-mingling.
>> If we are having co-mingling, that sort of thing. We want to have that clear idea of what is mom and dad's, what are they working on, what do they own and then what do, how can I actually help them without jeopardizing my own financial security, my own legal security, my own relationships with family members as well. Because you have your own family may be, your spouse might not agree with the decisions about the support you want to provide and how you might have siblings who have different ideas as well.
Again, same page, get everybody together.
>> What about things you could do that would be helpful to their organization but does not involve you, is not financial in your side?
>> So you're not out-of-pocket any money but able to help them benefit. Number one, making sure that they are aware of their taxes and the different benefits that they could potentially be claiming and so often times or people don't have money, they aren't filing their taxes because they don't think, there's no point, they don't have enough income to owe anything.
>> But it could trigger benefits.
>> It could, once you file that you will have the opportunity to qualify for other things.
Another thing, just introducing them to the idea that some of the new ways of helping and getting money, so by nothing sites in the community that your parents may not be online in the same way you are, they might not have access to all the different social media and so if you are aware of those, connecting them with other people in the community, so there's lots of services within our communities to help seniors and ensure they get their support.
So researching those in finding out what they are as well. And again, connecting them with other professionals who will be able to help them is probably the biggest thing you can do.
>> And what about, I know we have talked about this before, but there's helping them understand what benefits might be available to them but there also benefits I believe for people who want to help let's say an older family member live in a house and things like that, right?
>> There are a number of benefits that can be shared.
There are benefits that your folks may be able to claim themselves, others that you may be able to use. If you are doing renovations, there are other credits that are available if you do renovations to accommodate things that happen with age.
Medical expenses, you can also use those against your own, you can claim on behalf of your parents if you are finding those as well.
So there are tax strategies or tax benefits that you want to have coordinator for the whole family. Depending on where those funds are coming from.
And if you are able to demonstrate that they are fully dependent upon you for that support, then we have caregiver credits and other sorts of things. So it's well worth looking into what tax benefits are available and seeing which ones either they can claim or you can claim or somehow split them between the family.
>> And it's always worth working with professionals. In your case, you the kind of person that works with advisors and clients to say, here's the financial picture, they have the knowledge, you have the expertise.
>> Exactly. Beyond that, there are financial therapists, people who can help families talk through some of these issues and really understand what their options are, maybe what some of their trigger points are, where they are more likely to find themselves in trouble. So we want financial advisors, again, family counsellors of that's appropriate and getting everybody at that table so they can do that coordinated planning together.
>> That was Nicole Ewing, director of tax and estate planning a TD Wealth.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
This, of course, is the heat map function, he gives view of the market movers.
Trading bonds are later today. Our Americans are on the thanks giving holiday.
Volumes are light.
We do have some movement in certain areas.
The financials, you got Manulife up modestly along with some of the banks including Royal and PMO. Take a look at energy space, there has been some concern about OPEC delaying a meeting because there had been some I guess report earlier in the week that they were to consider further production cuts to support the price of crude so you're getting a mixed bag there the energy space as well. And materials, guess what phrase I'm going to use?
Americans will be back at it tomorrow for half a session.
We will see if we get more action then.
You can find more information on TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
If you are a family member is planning to immigrate to Canada, you may wonder how in which asset may be subjected to Canadian taxes.
Nicole Ewing, Dir. of tax and estate planning at TD Wealth joined Kim Parlee to talk about the importance of planning ahead when you bring significant wealth to Canada.
>> On that, we need to be planning as far in advance as we possibly can because many of the tax strategies or opportunities you might have might take some time. So I'm talking well in advance of the year, some strategies take multiple years, so that's one. Let's make sure we are thinking about this as early in the process as possible.
Then, we want to engage advisors, lawyers, accountants and our country of origin, where we currently are, and in Canada and have those two individuals speak to each other, perhaps there is more than two, and then just make sure everybody is on the same page because the tax laws are very, very different across the world, what we tax, who is tax, what sorts of assets are taxed and what sorts of credits and deductions might be available, vastly different throughout the world so we need to have that coordination between our advisors.
I think of it, last week I had someone reach out to me and I was delighted because he was calling from Thailand and his interest was in what's going to happen when I move.
What about joint accounts? What about minor accounts for my children? Are there income attribution rules? And those are the types of calls we like. I was able to connect him with a wealth advisor who is able to start that process for him so when he comes to Canada next year with his family, much better prepared.
>> That's great, and yet there's a lot to go through as we are about to talk about.
So tax rules, obviously, as he said, different in every country, and for different reasons and the history that goes with it. When someone gets their Canadian residency status, what then? Are you only subject to Canadian tax laws at that point or are you still going to be subject to other tax laws?
>> Well, and I want to clarify, what's really important here is that tax residency is distinct from immigration status and so you may be a tax resident before you have immigration status. These rules may apply to you as well.
And yes, you may still be subject to the tax laws of your country of origin. You may be subject to tax laws for assets that are held in other parts of the world where you don't live. You may be subject to tax in Canada as well and was critical is if there is a treaty, we want to know what it says so we can act accordingly and make sure we are not paying tax on the same assets are same income in multiple countries because, for example, if you are a US citizen, resident in Canada, you are subject to tax both in Canada and the US and we want to coordinate on that. In other parts of the world, there may be assets that are not taxed there. For example, capital dividends in some countries and jurisdictions, those aren't taxable. So you want to know that before you bring those assets to Canada potentially then disposing of them here and becoming subject to tax on something you could have brought over had you disposed of it in advance of calming and simply bought cash with you.
>> Got it. That's really good point. Let's talk about that.
If you are moving foreign assets, I'm assuming not cash, it could be a currency or securities and kind to Canada, what you need to be thinking about?
>> We need to be thinking about if they are already a tax resident, what is a source of these funds?
Do we have deemed dispositions that we need to be thinking about?
And we want to be reporting in advance of calming what our assets are, what are we bringing with us? I think of an example here where we might have somebody who doesn't want to necessarily tell what they have, the entirety of their assets, when they come to Canada and they need to dispose of it but because you've not planned ahead and told Canada that you are bringing this asset and this is its value on the day that you brought it, you might not get credit for that, the cost base, so now you may be subject to tax on the entire value because the cost base might be assumed to be zero because it wasn't reported when you brought it with you.
So making sure that you are upfront and disclosing all of your assets and your advisors know what you actually hold is going to be critical.
>> Got it. What about buying real estate in Canada?
If I assume once you become a resident, either tax resident or a Canadian resident, would you need to think about once you actually buy real estate?
>> We want to firstly understand the rules because, each jurisdiction, the way that real estate is treated might be different so we have a principal assumption in Canada which is fantastic, we want to familiarity with that. But we also want to think about that source of funds. So as I mentioned when you are purchasing property in Canada, you may be asked to, we have money laundering rules, you may be asked to declare what the source of those funds were so make sure that you are in a position to do that and really making sure that you understand what those rules are in terms of ownership, in terms of disposition, which family member should be on title, all sorts of those questions should be considered in advance.
>> Yeah, and you mentioned earlier that if you are moving to Canada and still have real estate where you were, you have to be thoughtful about where you are going to be tax the most in terms of capital gains and those types of things. But is there anything else you have to think about in terms of not disposing of foreign real estate?
>> It can really catch people off guard the way you may think, I left that country, I own property there, why would I still be subject to tax on that and in Canada? You very well may be and what we want to think about here is how is that asset going to be treated in your estate?
And so having wills dealing with the real property in that other country is probably going to help and from a tax perspective, you might want to be giving you are trustees or your executors of the will of the authority and power that they are going to need in order to perhaps do some postmortem tax planning around the area.
So making sure that your documents reflect what you want them to say and that they are coordinated with each other, that they are Canadian will documents, contemplate the existence of the property you might own in other parts of the world and we are availing ourselves of some of those rules that will avoid the double taxation or that big tax hit that you weren't expecting.
>> What about pensions, retirement plans, those things? Again, if they exist in another country, how does that work?
>> This is a very complex area. It really depends on the nature of the pension, on which country it's being brought from. The Canadian income tax act does not have a provision that allows for the direct transfer of a foreign pension into a Canadian register plan, for example. But we do have legislation that allows for that to happen in directly, so we want to familiarize ourselves with those rules as well as the rules from the country that you are bringing that pension from. There might be limitations on that, your ability to withdraw from those funds or for example if you are bringing 401(k) funds up to Canada, there may be a couple of different ways to do that really depending on what your objectives are and in some circumstances it makes sense just to keep things as they are and have your foreign pension foreign but incorporated into her financial planning and your cash flow planning a Canadian perspective.
>> If ever there was a time you need to speak somebody, I'm gonna say this is it.
>> Yeah, we want all of your advisors to be supporting you as a team within Canada and within your country of origin to make sure that we are putting together that best plan for you so you are coming here and you are able to participate fully without tax being a major difficulty.
>> That was Nicole Ewing, director of tax and estate planning at TD Wealth.
As always, make sure you do your own research before making any investment decisions.
we will be back tomorrow with an update on the markets, reactions to the latest Canadian retail sales report. On Monday, Jason Hnatyk, senior client education sector with TD Direct Investing will be our guest, he wants to take your questions on how to get more out of the WebBroker platform. A reminder that you get a head start with those questions. Just a moneytalklive@td.com. That's all the time we have the show today. Thanks for watching. We will see you tomorrow.
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