Investment Q&A

Q: Hello all,
This is further to the question regarding BIP.UN and tax reporting. I have had this equity for several years and it is always, without exception, the last tax form I receive. As of yet, this year's (2016) has still not arrived.
Having said that, it is a very small problem. Annoying, yes, but nothing more.
So, some final points:
1. It is probably not tax-advantageous to keep in a taxable account in the first place. (That was the only room I had available when I chose to purchase it - my bad.)
2. Kept in a TFSA, RRSP or other tax-efficient entity I don't believe the tax issues apply so if you have, or can make room, put BIP.UN (this would apply to BEP.UN as well, I imagine) in one of those vehicles.
3. We are in the process of moving our BIP.UN into our TFSA's each year until it is all in TFSA's, thus our tax issues become smaller each year until they will finally go away.
4. BIP.UN has been a stellar performer in our portfolios both in terms of dividend cash flow and capital appreciation - it would take something really dramatic for us to part with it. I guess it would be one of our "core" holdings.
All the best!
Cheers,
Mike

Q: I am considering investing in BIP.UN & BEP.UN but have been advised not to on account of complex tax accounting & sometimes late reporting of the required tax info. If you or customers that have held these investments can offer enlightenment I will be grateful.
Thanks, Ian

Q: This is in response to your answer to Stan(1) in regards to dividend income and DRIP plans.
I agree that taxable Canadian dividend income does not reduce the A.C.B. of the stock shares held, but then neither does the market value of the shares received under a DRIP. In fact the value of the shares at the time of the dividend payment is added to the A.C.B of your share holdings at the same time that you are credited with the additional shares. For reduce of A.C.B., are you not referring to "Return of Capital" which would be noted on the Corporate website under dividends/distributions and can be found in the appropriate box on your T5/T3 supplementary slips received each year.
R.

Q: I often see posts about members saying they are down on ALA-tsx or some other dividend paying company and wonder if they should sell (nearsightedness).

I offer my approach for consideration.

I own ALA and every months when I receive a dividend payment my ACB is lowered. It is like getting some of my original $$ back.

The present dividend yield is 6.7% annually, paid monthly at $0.175/month.

So every month my cost basis is lowering. This is great in a non-taxable account such as a TFSA or RSP (also good in a taxable account).

Eventually I will have 100% of my original, out-of-pocket $$$ returned to me.

At that point in time, lets say we got to a $0.00 ACB for example purposes, then no matter the price of the stock and any dividend I receive the return is incalculable. This is because a dividend of say, $1.00 is an infinite return on a ACB of $0.00.

What % return is Warren Buffet getting on his long held KO, Coke shares? I suspect he is near the infinite, incalculable figure = pure 100% profit. Or is it 100,000,000%... percent profit?
--------------------------------------------

Example (with made up #'s):

ALA bought at $30.00/share.
Get 6 dividends totalling $1.05 ($01.175*6 = $1.05).
New ACB: $30.00 - $1.05 = $28.95.

** So if ALA is at $29.00 now the investor is still up $ 0.05/share ($29.00 - $28.95).
But in a taxable account the investor on paper is down $1.00 ($30.00 - $29.00) so they could sell @ $29.00 and declare a capital loss even though they have a gain in reality.

This is 1 way the long term investor get richer and richer without getting out of bed.

Hope this is clear and helpful to some one.

It is like with real estate income property in that once you have your original down payment returned all future incomes are 100% profit (minus normal expenses like hydro, insurance..).

Have a great and prosperous day/year.

PS. The other 2 great things I have learned over the years:
1. To not listen to the media, financial tv shows....
2. Once a person knows how basic Options & Shorting works they can make $$$ in any market (up/down/sideways) easily.

Q: I often see or hear questions relative to with holding tax on US companies held within an RRSP or RIF.
The reply confirms that they are not taxed however, with no reference to exceptions.
Unfortunately experience tells me to be careful of ADR's and Limited Partnerships as they ARE subject to tax with no way to recover as foreign tax paid. Both of these are not considered US companies in the tax agreement between Revenue Canada and the US Department of Revenue.
Please comment on whether I am wrong and if there are other types of holdings that I am not aware.
Thanks

Q: Saw George's question regarding US dividend withholding tax rate, just a reminder, don't forget to complete the W8BEN form and submit to your financial institution, once completed, the form is good for 3 years and need to be renewed before expiry. With the form on file, the US withholding tax is 15%, otherwise, it will be 30%.

Q: What happens to US dividends received in a RRSP? Is the 30% withdrawal tax applied?

Q: Hi Peter, I bought some VOD stock recently, primarily for dividends. Are dividends paid to Canadians in Registered accounts taxed in UK? Also, what about non-registered accounts and capital gains. Thank you.

Q: Please name which stocks out of Balanced Equity Portfolio deserve a place in taxable Investment account. Thanks for your service.

Q: Good morning Peter.
Regarding the gold miners ETFs GDX and GDXJ trading on the NYSE, do I have to declare these as "foreign property" on my Cdn tax return (for cost base greater than $100,000)???

Q: Hello,
I have a tax question.I have capital gains after selling several stocks on Mar20/17 in my trading account.Since I have capital losses carried forward from other years,there should be no tax owing on my 2017 return.My question is,can I repurchase thse stocks in my TFSA,without waiting 30 days?
Most of your recommendations have worked well for me.Thanks to you,I spend less time doing my own research and more time outside.

Q: Should/if the Capital Gains Tax change with the new Budget on Wednesday, does this mean if one were to sell a equity/stock either today or tomorrow that the sale would be taxed at the NEW rate (I.E. does not settle until after the Budget has been announced).

Thanks for any insight you can provide!

Scot

Q: I have this ETF in my TFSA and I have a question about the dividend payment. Fund is hedged but the dividend is it subject to the US withholding tax or because its hedged does it not apply. Thank you.

Q: There is a rumor that capital gains taxes are going up ib the next budget. Should I be selling some of my big winners before the budget? Thanks, Mark

Q: If the government increases the capital gains tax, like it did in the past, does it affect the gains executed prior to March 22? If it doesn't apply to them, is there a reason NOT to sell my portfolio now and buy it back the same day? In my corporate account, I always will pay a 25% tax, whether I'm retired or not.

Q: Hi Peter&Ryan
Is this trust unit a Canadian domiciled company and would ther be a US withholding tax on the Div?
Kind Regards
Stan

Q: Hi 5i,
I have ORACLE stock in a Basic Securities Account with Morgan Stanley (I used to work for Oracle Corp. in Canada), and now I want to move the stocks and/or funds from the US to Canada, and I have some questions:

Are there any tax implications for me to move the investments from the US to Canada, either on the US side, the Canadian side, or both?

Are there different tax implications if I move the investments as stock-in-kind, vs cashing them out in the US and moving cash?

Thanks

Q: Hi:
I have heard that the Federal Liberals are going to increase the tax on capital gains to 75% of the gain vs the present 50% of the gain in their upcoming budget. This was tried years ago but it was shown that no additional tax revenue resulted. Have you heard any of these rumours?
Thanks: Jerry

Q: I am in the process of transferring our investments from the financial advisor we have been dealing with to a discount brokerage so that we can manage the funds ourselves. Do you suggest that the investments be transferred "in kind" or as cash - or does it really matter? Thanks.

Q: Do you think there will be a major sell off March 21 in light of the capital gains inclusion rate increase rumours? I believe there were simliar rumours prior to last years budget - was there market reaction?