[Canada] Canadian Politics Redux

[HVC]

He no doubt knows more then I don't. But I dont see how this effects individual foreign investment. We have tax treaties, and foreigners only pay a certain percentage here (and the rest of their tax at the rate of their home countries rate). Wont effect their taxes. And citizens are still going to invest since CG is still a better return then most other incomes.

Great - so the $19 billion is coming from Canadian small and medium businesses then?

As I understand it, yes. Tax treaties aren't being changed as far as I see. Withholdings aren't changing. Again, this is at the individual level. No idea how it works at the foreign corporate level.

[crazy canuck]

He no doubt knows more then I don't. But I dont see how this effects individual foreign investment. We have tax treaties, and foreigners only pay a certain percentage here (and the rest of their tax at the rate of their home countries rate). Wont effect their taxes. And citizens are still going to invest since CG is still a better return then most other incomes.

Great - so the $19 billion is coming from Canadian small and medium businesses then?

As I understand it, yes. Tax treaties aren't being changed as far as I see. Withholdings aren't changing. Again, this is at the individual level. No idea how it works at the foreign corporate level.

Stopped by for this discussion.


Tax treaties are mainly about income taxes.  The tax owed on The disposition of assets with jurisdiction are generally unaffected by treaty.  For example, if a foreign owner of property in BC wishes to sell that property, they must pay a hefty withholding tax out of the proceeds of that sale.

This isn't the problem that the Former finance minister was addressing, but it's an example of why reference to tax treaties is not particularly relevant.

And speaking of property, The people who are going to be hurt by this are the people who are going to be inheriting their parents property in the next 10 years or so.  The property in their hands will be taxed at the full gain realized by the estate and the price of that just went up.

Also, this is a really odd policy for a claim that they are taxing the wealthy.  The wealthy aren't going to be touched by this at all.  As we discussed in another thread, the wealthy have other tools available to them to have a very lavish lifestyle without ever selling any of their stock.

This is really going to hurt the development of the middle-class and those who are already in the middle class.

Almost as if they wanted to make a broad claim that they were addressing generational injustice, but didn't really know what they were doing or didn't think that the people they are trying to appeal to won't know What these tax changes really mean.

Take for example, a small business person who has used a small business corporation as their retirement vehicle. I to note that all governments have always encouraged small business people to do exactly this.  Now, The person who was expecting to be able to retire on the assets accrued in their corporation will have to pay more as the corporation those shares so that the money can be taken out to fund the retirement.

That's really sticking to the big corporations isn't it?

I am all for taxing corporate profits, and particularly adding a higher rate of taxes after reaching certain rates of profitability.  it seems to me that is good public policy as it will encourage money to be spent by corporations to increase productivity rather than simply being stated as profit on the bottom line.

But This is the reverse.  it's penalizing corporations for becoming more valuable.  If you penalize something for becoming more valuable you create a disincentive for research and development and gains in productivity.

Now there is an incentive to simply pull money out by way of dividends and forget about increasing the value of the shares.

[Grey Fox]

It could maybe make sense if they just had small, single slices you can buy as that's something that a chain here in the UK does (Greggs). Agreed that I don't know who would want full pizza from their coffee/donut place.

Turns out they are flatbread pizzas. That sounds more manageable for a fast frozen food place.

https://kitchener.citynews.ca/2024/04/16/tim-hortons-launches-pizza-nationally-to-stretch-the-brand-to-afternoon-night/

So I went to Tim's to just get a coffee, but saw the pizzas were already available.  I stepped up and ordered one.  I suffered so you don't have to.

I mean - it's what they say about pizza - even really bad pizza is okay pizza.  And this was bad pizza, but I mean it still has crust, sauce, cheese and pepperoni.  It had the basic test you'd expect.  But I feel like my assessment that it'll taste like frozen pizza was born out - and not even very good frozen pizza.

Apparently the pizza is prepared fresh, but on a frozen dough.  The dough did seem very bready and like you'd get from a grocery store.  The coverage of the toppings was not great - the corners in particular led to some very bready bites (to be fair this was their first day).  There was not a particular wait for it though which was surprising.

No one will ever go "I feel like pizza - lets go to Tim Horton's!", nor should they.  For lunch I would much rather get one of their sandwich options.  But if you find yourself at a Tim Horton's for supper, with no where else to go, the Pizza is a tolerable option.

Your sacrifice will be remembered.

[HVC]

Since i was copied i'll reply this one time. Capital gains  effects items beyond property, like stocks.

[crazy canuck]

Since i was copied i'll reply this one time. Capital gains  effects items beyond property, like stocks.

Yep, and that's why I had other paragraphs if you went on to read it that dealt with that issue

I'm back out thanks.

[Josephus]

My RRSPs will also be taxed when I retire. So I'm not gonna worry too much about a business owner being taxed on his million dollar business he sells when he retires.

[viper37]

I need to read more about that.

they are raising the exemption threshold so that is good.
They are taxing more the sale of rentals and secondary homes, so that is good.

The rest, I'm not sure of what I'm reading.

[Barrister]

My RRSPs will also be taxed when I retire. So I'm not gonna worry too much about a business owner being taxed on his million dollar business he sells when he retires.

So I've actually heard it argued that RRSPs are in some ways not a great investment vehicle.

So any money you put into an RRSP isn't taxed - but is taxed as income.  The RRSP is taxed though when it is withdrawn - again as income.  But if, while in the RRSP, the value of your investments say triples, you'd eventually be paying three times as much tax once you finally withdraw it.  (There's all kinds of calculations about the time value of money and the like, but the basic point stands).

Going back to the small business owner, they had a couple of different options with corporate profits.  They could pay them out in dividends over the years - or they could keep them within the corporation and invest them.  Lots of business owners, knowing the tax system at the time, kept the money in the business.  They knew they'd be taxed as capital gains once they sold however, but thought that was a wise investment strategy.

All those that did so just had a one third tax increase.

[viper37]

So I've actually heard it argued that RRSPs are in some ways not a great investment vehicle.

So any money you put into an RRSP isn't taxed - but is taxed as income.  The RRSP is taxed though when it is withdrawn - again as income.  But if, while in the RRSP, the value of your investments say triples, you'd eventually be paying three times as much tax once you finally withdraw it.  (There's all kinds of calculations about the time value of money and the like, but the basic point stands).

The thing is, for people my age (and Josephus' age), RRSP was all that was available to us when we began saving.  The idea was that you would max out your RRSP, then you would seek out other investment opportunities.

People with a pension fund usually had an equivalency factor, so they had less to invest in a RRSP.


Nowadays, you have TFSA and at least in Quebec, the employer is obligated to offer a collective retirement plan.

So you do have something when you retire, other than your government pension (CPP or RRQ).

For people like you, on top of this, you have your employer's pension fund, probably quite generous since your entire career was as a public servant.

When you retire, you will have a significant taxable income.

As such, maximizing your RRSP now is not the wisest move.

You could still invest a little to drop your tax bracket by a notch, but not too much because it is added to your significant retirement income.  Or for any remaining amount, taxable to your heirs (not your spouse though).

The wisest move is to maximize your TFSA.  And for the younger generation, to mazimize their FHSA along that.

Once that is done, you can invest in RRSP.


If you maximize all of these every year, you should seek a financial planner.

[Barrister]

Yeah I drop some money into a spousal RRSP, but don't actively contribute to an RRSP for myself.

If my government-run pension plan goes tits-up I'd be completely screwed.

[Jacob]

The CPP is well run, so I think you'll be fine.

I would be less sanguine if my pension got pulled into an Alberta run plan, but even so it's probably fine.

[Barrister]

The CPP is well run, so I think you'll be fine.

I would be less sanguine if my pension got pulled into an Alberta run plan, but even so it's probably fine.

CPP is fine, but I couldn't live off a CPP pension.

My pension is through MEPP, which is part of AIMCO, which is what Smith wants to run a separate Alberta Pension Plan.

[Jacob]

As long as Smith and her successors don't indulge in using the pension funds as a political tool you'll be fine. Even if she does you may be fine, but with less certainty.

[Grey Fox]

FHSA only last 15 years tho and then the money gets transferred to a RRSP. It's not a long term investment vehicle.

[viper37]

If my government-run pension plan goes tits-up I'd be completely screwed.

It your government-run pension goes tits-up, you will have other problems to worry about by then...