12 Responses to “October 11, 2019”

1. Nestor says:

   October 12, 2019 at 10:04 am

   Jane Philpott just knocked on my door. By herself, asking for our support. I informed her that I will be going after lunch to cast my ballot for her. Nice lady. let’s see what happens. she’s cautiously hopeful.

2. prefman says:

   October 12, 2019 at 8:52 pm

   What are everyone’s thoughts on how a possible minority government – particularly one where the Liberals are supported by the NDP/Greens could impact taxation of dividends and capital gains? Could this result in more losses for the preferred share market?

3. baffled says:

   October 13, 2019 at 6:36 am

   prefman , with a lib majority or a minority you have to expect they will increase the div tax rate as well as increase the cap gain inclusion rate from 50% up to 75% . this absolutely will drop the price of stocks and preferred stocks . other than sell now i dont know how you can protect your self .i also think you can expect a contribution cap to be put on the tfsa

4. mbarbon says:

   October 13, 2019 at 4:53 pm

   A contribution cap on TFSA would be a game changer… If set at something like $150K could mean that rich investors have a limited benifit….
   Maybe it shouldn’t be $150K of contributions, but no more contributions if over $150K… but that would be tough to manage….

5. baffled says:

   October 13, 2019 at 6:31 pm

   $ 150,000 would be nice , but my bet is the contribution cap is set at $ 100,000

6. jiHymas says:

   October 15, 2019 at 1:00 am

   taxation of dividends and capital gains? Could this result in more losses for the preferred share market?

   No impact at all, would be my guess.

   Two reasons: first, it would be bad policy. The dividend tax credit has created a huge cult of dividend investors, small investors without huge ambitions, but who want to get an income stream for retirement. I don’t think it’s entirely coincidental that you can get $52,000 in dividends tax-free, that being a good solid basis for a comfortable retirement for the vaunted middle class.

   This is a desirable public good. But, of course, the public good is not much of a consideration in this Monty Hall election campaign, so we need to consider …

   Secondly, moving against the DTC would be a very risky political move, since all those dividend investors would be outraged and many others would be as well. Remember all that fuss about the Small Business tax rate and passive income? It wasn’t just the extremely well paid beneficiaries of this maneuver who were outraged – every hamburger-flipper in Canada was weeping copiously over the plight of those poor doctors who would find it completely impossible to save any money at all towards a year-long sabbatical every five years without a special tax break.

   The kerfuffle over an adverse change to the DTC would be much, much worse. And in a minority situation, no party is going to want to outrage so many potential voters, not when another election will probably happen sooner rather than later. No, I believe that a minority government will be too busy writing cheques for showpiece talking points to take any unpopular action.

7. baffled says:

   October 15, 2019 at 6:50 am

   as one of those ” who want to get an income stream for retirement.” i hope you are right

8. mbarbon says:

   October 17, 2019 at 12:25 pm

   Recall the outrage over Income Trusts…
   The amount invested in those shares is minor compared to the amount in high-dividend shares (preferred, utilities, etc)..’

9. skeptical says:

   October 17, 2019 at 7:45 pm

   Guys, don’t forget the regular dividends i.e. dividends coming from common stock. They are also going to get hosed. And that’s no income trust or preferred shares. That’s about 2.2 trillion dollar market. With TSX yield of about 2.5% (perhaps someone has a better number here), the dividends paid out are about $60 billion, perhaps more.
   So for once, despite the niche product we own here, we are riding the coat tails of the big guys.
   And in the process the fundamental concept of tax integration would also get destroyed.
   IMHO, unless we go full Venezulea or Cuba, it’s not happening anytime soon. They’d much rather tweak the capital tax rates and screw with GST rates before screwing up corporate tax system. But that’s just me thinking rationally. 🙂

10. baffled says:

    October 18, 2019 at 7:11 am

    skeptical says , good point about safety in numbers , but this comment “And in the process the fundamental concept of tax integration would also get destroyed.” i dont see how the gov increasing the tax on the end recipient of the divs , would change anything else about the tax system

11. skeptical says:

    October 18, 2019 at 11:33 am

    i dont see how the gov increasing the tax on the end recipient of the divs , would change anything else about the tax system

    That’s because dividends are paid from after tax earnings. Should the government choose to tax dividends as regular income, it would lead to double taxation. It’s a primary pillar on which our taxation system rests. Not saying it can’t happen, but it would violate so many core principles of tax policy and law. Here’s a primer:

    http://people.ucalgary.ca/~law/tutorials/L541/lesson5_Part1_intro.html

12. stusclues says:

    October 19, 2019 at 4:25 am

    “Should the government choose to tax dividends as regular income, it would lead to double taxation.”

    Yes it would, unless it didn’t. The way through this is to reduce corporate tax to a de minimus level (not zero because we want the data) and focus on individuals. This seems unlikely in the near term because we seem to have forgotten that corporations are simply social constructs that enable individuals to organize capital into limited liability structures. Neither good nor evil in theory but sometimes one or the other in practice.

    The global movement afoot is to pin taxes directly on the 1%, and more specifically the 0.1%, facilitated by new initiatives such as beneficial ownership rules. This is still some ways off, but ultimately could result in big changes to tax codes in OECD countries.

    I will note that James’ concept of capping dividend and capital gains for individuals is highly compatible with this new world.

    Lastly, consider who benefits most from focusing social anger and resentment on evil corporations. It is individual wealth in the background that enjoys the benefits of the deflection. This is why events like the Panama Papers are so much more threatening to the ultra high net worth crowd than movements like Occupy Wall Street.