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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I sold these earlier these in a panic , to avoid losing what was left of a fantastic profit : I am OK on the 30 day rule . Technicals seem to be hooking upward and this appears to be an opportunity . I suppose repurchasing is considered bottom fishing but they pass the "would you BUY this stock today?" question .... so would you ?

Read Answer Asked by Thomas on June 27, 2022

Q: What do you think about tax-loss selling each of the above companies at this point? If in favour, do you think I should buy 30 day proxies for each, and if so, what companies? Thanks.

Read Answer Asked by Ben on June 23, 2022

Q: 30 DAYS BUY BACK TAX RULE, DOES IT APPLY ONLY WHEN TAKING A TAX LOSS AND NOT A CAPITAL GAIN?
THE FIRST IN, FIRST OUT RULE, IN OTHER WORDS, YOU BROUGHT 100 SHARES IN 2021, BROUGHT ANOTHER 100 SHARES IN THE SAME STOCK RECENTLY, THEN TURN AROUND AND SOLD 100 SHARES FROM 2021, THUS, DOES THE 30 DAYS APPLY SINCE YOU BROUGHT THEM SIX MONTHS AGO?

Read Answer Asked by Herbert on June 23, 2022

Q: Is QST a decent Canadian proxy for XBC?

Read Answer Asked by Blake on June 23, 2022

Q: My question is about tax efficiencies on yields and distributions.
Has anyone created a table to demonstrate the tax implications for stocks? Can this be easily determined? Should REITs always be in TFSAs? What are the tax savings regular acct vs TFSA? How or what would the dividend tax calculation be for the stocks I mentioned?

Thanks for your support
Mark

Read Answer Asked by Mark on June 22, 2022

Q: More fuel for the tax loss selling debate is the prospect of a higher future capital gains tax rate where (hopefully) losses would be worth more also. With federal govt. spending showing no sign of abating and increasing interest payments on its debt, it's possible this issue will be revisited in the next budget.

In Paul's scenario it's possible more tax will be paid by taking the loss now and paying much more later with the greater cap gain on the stock price.

Also, tax rates tend to rise evidenced by tax freedom day getting pushed further along in June, and there's the phenomenon of bracket creep to consider.

Read Answer Asked by Jeff on June 20, 2022

Q: I hoped I could shed some light for Paul regarding his question on tax loss selling.

Most people on this site are buy-and hold investors rather than traders. Their thinking is that they can sell, harvest a tax break from the loss, and then buy it back to hold for a long period.

In short, they are aiming to continue holding it for the long term, but getting a tax benefit in the short term by quickly selling and buying it back.

5i - please publish or not as you see fit.

Read Answer Asked by Kevin on June 20, 2022

Q: We plan to begin annually to withdraw funds from our RSP investment accounts and transfer the amount minus the withheld taxes in a cash investment account. The funds are not needed at this time but the purpose is to reduce future taxes,although we are aware that we will be paying taxes on 50% of the Capital Gains in the cash investment account as well as taxes on dividends. With the stock market being at a low at this time is it a good strategy to do the withdrawing and reinvesting at this time ?

Read Answer Asked by Elizabeth on June 20, 2022

Q: I have seen in several answers you say you are encouraging tax loss selling in this market. Why? I don't see the reason to do that.

Let's use a hypothetical example. Last year I bought $10,000 of stock XYZ. It's fallen 50% so my paper loss is $5000. I sell the stock for a capital loss of $5000. I buy the stock back in 30 days (at the same price I sold it at), or I buy a proxy stock using the $5000 from the sale. Lucky me, one year from now stock XYZ has doubled and I now have a paper capital gain of $5000 (or the proxy stock I bought has doubled, and I have a $5000 gain). I sell the stock XYZ (or the proxy) and have a capital gain of $5000. The loss I generated from tax loss selling offsets the gain I made one year later. Net effect is 0, other than trading commissions.

If I had simply kept the stock XYZ, one year later I would be back at breakeven, no gain or loss.

If you believe in the stock as evidenced that you buy it back 30 days after selling it, or you buy a proxy and keep that, I don't see the point of tax loss selling for the sake of it. If you buy something completely different, that's a different story. But reading through the Q&A must people intend to buy the stock back in 30 days.

For this example keep in mind that the financial situation doesn't suddenly change; my tax bracket remains the same during this example.

Please explain why you are encouraging tax loss selling at this time. I don't see the point of doing this if you intend to buy back the same stock, and you remain within the same tax bracket. If you are relying on the stock being lower 30 days later when you buy it back that is market timing.

Paul

Read Answer Asked by Paul on June 16, 2022

Q: Hi there.

Just a follow up to an earlier question.

1/ Do any of the HHL ETF distributions qualify for the dividend tax credit?

2/ Are any of the HHL ETF distributions subject to a withholding tax?

Thanks very much.

Read Answer Asked by Dave on June 07, 2022

Q: Hello 5i
A question about investing on margin. I have heard a few people extolling the praises of investing with borrowed money. Some even prefer it to making extra money through selling options. It is easier, less time consuming, has the benefit of lower taxes because of favourable dividend and cap gains rates. But, one thing i can’t understand is that some people advocate investing on margin at the same time as they seem to hold a fairly large cash reserve. It seems to me to be more reasonable to use your cash reserves before borrowing. Am i missing something here. Or, does this practice not really make sense?
Thanks

Read Answer Asked by joseph on June 07, 2022

Q: Seeking clarity on corporate class etfs. Does this structure exist using US dollars and does it exist in the US? Is there any other provider other than Horizons? Does the structure result in dividends being reinvested in the etf thus becoming taxable as a capital gain when the etf is sold and therefore not taxable as dividend income while the etf is held? So does this structure assist an investor who wishes to reduce income for tax purposes during the period the etf is held? THANKS

Read Answer Asked by Ken on June 06, 2022

Q: Concerning a canadian ETF,or a covered call ETF ,that pays dividends,but includes mostly US stocks or foreign stocks in a non-registered account : are the dividends fully taxable ? or has the fund already paid the foreign taxes on dividends and is then eligible ( automatically or one has to fill a specific form ?) for a canadien tax crédit ? Thanks

Read Answer Asked by Jean-Yves on June 06, 2022