Hot answers tagged

61

Congratulations on an amazing rise on salary. Please pat yourself on the back for such an accomplishment. The best thing you can do is to hire a competent tax specialist. Here in the US, it is typically an accountant and they would tell you that there is not much they can do. Maximizing tax favored retirement accounts is about the best one can get away ...


55

Don't bother. It's a stunt, and a wasteful one. The whole point of it is emotional: wanting to believe this is your money, blah blah. But money is fungible: there's no difference of this, vs your RRSP loaning to somebody else's mortgage while you borrow from a bank. The RRSP money is tax sheltered, "restricted" money. It's not your money (yet); it's ...


11

The root of the advice Bob is being given is from the premise that the market is temporarily down. If the market is temporarily down, then the stocks in "Fund #1" are on-sale and likely to go up soon (soon is very subjective). If the market is going to go up soon (again subjective) you are probably better in fictitious Fund #1. This is the valid ...


7

That expense ratio on the bank fund is criminally high. Use the Vanguard one, they have really low expenses.


7

Minimizing taxes at your scale is more an exercise in determining which activities the government decides to tax less rather than an exercise in finding clever loopholes to exploit. You lack the resources (and the tax burden) to make use of the more intensive tax avoidance strategies in a feasible or efficient manner. Sorry, but no tax havens, no accountants,...


6

Your question is based on incorrect assumptions. Generally, there's no "penalty", per se, to make a withdrawal from your RRSP, even if you make a withdrawal earlier than retirement, however you define it. A precise meaning for "retirement" with respect to RRSPs is largely irrelevant.* Our U.S. neighbours have a 10% penalty on non-hardship early withdrawals ...


6

If you withdraw money from an RRSP, you are taxed on that money as ordinary income and will have to pay withholding taxes, and potentially more income tax when you file. Additionally, you lose that contribution amount. If you subsequently deposit the same gross amount into another RRSP at a different bank, that will lower your taxable income for the year ...


6

It looks like the advice the rep is giving is based primarily on the sunk cost fallacy; advice based on a fallacy is poor advice. Bob has recognised this trap and is explicitly avoiding it. It is possible that the advice that the rep is trying to give is that Fund #1 is presently undervalued but, if so, that is a good investment irrespective if Bob has lost ...


5

For any accounts where you have a wish to keep track of dividends, gains and losses, etc., you will have to set up a an account to hold the separately listed securities. It looks like you already know how to do this. Here the trading accounts will help you, especially if you have Finance:Quote set up (to pull security prices from the internet). For the ...


5

No. Income inside an RRSP is sheltered from income tax until you withdraw it. That is, indeed, the major benefit of RRSPs. Note that you will eventually declare this as income. Consider the following case: - in 2015, you make $1000 in income. - in 2015, you contribute $100 to your RRSPs. You store this in an account that pays interest, rather than investing ...


5

There is a tax treaty between Canada and the US that recognizes RRSPs as retirement accounts. You won't be taxed on the gains in your RRSP like you would be if it was in a TFSA. So you don't really have to do anything (except fill out a form for the IRS every year). The problem that usually arises is if you want to buy something else. I don't know of ...


5

IANAL (and nor am I an accountant), so I can't give a definitive answer as to legality, but AFAIK, what you propose is legal. But what's the benefit? Avoiding corporation tax? It's simplistic – and costly – to think in terms like that. You need to run the numbers for different scenarios, and make a plan. You can end up ahead of the game ...


4

not having ever filed anything with IRS Up to $100,000 (one hundred thousand) penalty per account per year that you willfully neglected to report. If there's also tax evasion - it can jump up to much more + jail time. withdrawing $33,000 in one lump sum Not sure how RRSP are taxed. May very well be taxed as PFIC, since they're supposed to be taxed as ...


4

Yes, the extra matching contribution your employer puts into your group RRSP plan is considered employment income and so yes it would be included in the income reported on your T4. However, you should also receive from your RRSP plan administrator a contribution receipt, and the amount on that receipt should include both your contributions and the $500. ...


4

Generally it's about 18% of your lifetime taxable earnings but there is a maximum for each year so this isn't an absolute. If you do not have a copy of your notice or a T1028, you can find out the amount of your RRSP deduction limit by going to My Account, Quick Access or by calling our automated TIPS RRSP service. For more information, see My Account ...


4

How would the RRSP know where the money came from? You have two separate financial operations going on: You invest some money, within the limits set by the law, in a Tax Free Savings Account. Near the end of the year, you take the money, plus interest, out of the account. As you may guess by the name, you need not report the interest as income. There are ...


4

Considering that the market has grown consistently in the macro sense (the regression curve slopes up) the market is often at an "all-time high". So the only reason you would not want to invest in equities is if you have a short investment horizon and think there is a correction soon, in which case you'd buy when equities are down relative to today. The ...


4

Think about it this way: you are considering giving up a 100% guaranteed return [contribute 5% of your salary, get 5% for free from your employer] to avoid a 1.5% management fee. You would be giving up a net return of 98.8% above your current investing mechanisms. So now consider that 98.8% against the non-financial factors: lack of control, vesting, etc.. ...


4

If you own any works of art or ecologically sensitive lands you can donate those to a city government/museum/conservation trust/accredited charity and receive a tax refund for the appraised value of the donation. This would only net you a tax benefit if the appraised value was greater than what you spent, but it would deprive the government of money if that'...


4

It depends on what you mean by "net worth". If you mean "how much money would I have now if I liquidated everything", then yes you'd take the after-tax (and penalty, if applicable) value of your retirement plans, since that's what you'd get in a liquidation. But, it would also be a mistake use your current tax rate to discount your retirement savings if you ...


3

No, it is not the nefarious government preventing Registered Account traders from making money. They get their taxes eventually. A registered account has legal limits to the amount in a year a person can contribute to their account. How much money they earn within the account has no limit. If you trade naked options, there exists a condition (a bad trade) ...


3

Calculate, NO. You can get your available RRSP Contribution amount from last years notice of assessment or by calling the Canadian Revenue Agency.


3

More complications... When the provisions of FATCA go into effect for financial institutes in Canada (July, 2014?), the institution holding your RRSP and LIRA may, if they know or suspect that you are subject to US taxation, be required to supply the IRS with FBAR-type information on you and your accounts annually.


3

Bob should treat both positions as incomplete, and explore a viewpoint which does a better job of separating value from volatility. So we should start by recognizing that what Bob is really doing is trading pieces of paper (say Stocks from Fund #1 or Bonds from Fund #2, to pick historically volatile and non-volatile instruments.*) for pieces of paper (...


3

You can withdraw the funds, you'll just have to pay tax on them as you would any other RRSP withdrawal, and you would be unable to recontribute the funds at a later date. The only exception is for payments made for a first time home buyer. Without getting into the idea of whether reno costs count for that in general, if you have owned the home for > 30 days,...


3

The plan works regardless of your bracket - it is one of the most tax-effective things you can do if you are planning on buying your first home, and are looking to maximize your down payment. Effectively you take a deduction from your income tax this year, and only need to contribute to your RRSP over the next 10 years [Well, really you contribute today, ...


3

1% of your overcontribution will be paid in penalties per month. It's not just a one-time penalty. That continues until you correct the problem by withdrawing to reduce the overcontribution or until your RRSP contribution room catches up. So, if you never earn money again, you'll keep paying 1% per month in penalties indefinitely. On the other hand, if you ...


2

I had an RRSP account with a managed services account at a major Cdn bank that increased its fees to $125 a year per account. Because I could not trade any of my funds living in the US, it made no sense to throw away $500 a year for nothing (two accounts for me and two accounts for my wife - regular RRSP and locked in RRSP). I was able to move all my ...


2

I believe your question is based on a false premise. First, no broker, that I know of, provides an RRSP account that is a margin account. RRSP accounts follow cash settlement rules. If you don't have the cash available, you can't buy a stock. You can't borrow money from your broker within your RRSP. If you want to borrow money to invest in your RRSP, you ...


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