Next to actually paying your taxes, the most frustrating thing about tax-time is waiting for all your T-slips to arrive.
If you jumped on high interest rates for guaranteed investment certificates, then you’re now waiting for T5 slips to document your interest income. T5s are also used to report dividend income, while T3s are used to report distributions from mutual funds and exchange-traded funds. All of these examples apply to non-registered accounts, naturally.
Wondering when your T slips will arrive? In recent days, I noticed some helpful direction from two financial players. If your bank or investment dealer isn’t doing something similar, reach out to ask for a change in policy.
The first communication about T slips was an e-mail from an online bank that helpfully provided timeframes for T5s – they’ll be posted online at the end of February. Slips for contributions to registered retirement savings plans in the last 10 months of 2023 will arrive by early February, while RRSP contributions made in the first 60 days of 2024 will arrive in the last week of March.
The second communication was provided by an online broker on its landing page for clients after they log in. T5 slips are coming the week of Feb. 26, while T3 slips arrive the week of March 25. Direction like this is helpful because it saves you logging into your account repeatedly to see if your slips can be downloaded.
Given how records are kept electronically these days, you have to wonder why it takes banks and investment companies so long to churn out these slips. But never mind that for now. It’s helpful to at least know when these slips are coming so you can get your tax return completed as expeditiously as possible without missing anything.
The Canada Revenue Agency receives copies of your T slips, so they know what to expect when you file your taxes. If you omit a slip in your return and thus don’t report your full income, you could be penalized.
One final note about T-5s: Banks don’t typically issue them for amounts less than $50. You’re still required to report the income, though.
— Rob Carrick, personal finance columnist
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The Rundown
Short sales on the TSX: What bearish investors are betting against
Larry MacDonald is back with his monthly highlights, which this week include a look at how investors are easing up on their bets against the TSX 60 index. He also reports on the remarkable success of activist short sellers over the past three years. The only bet that went wrong was Brookfield Infrastructure.
With Tesla faltering, the Magnificent Seven look vulnerable
We’re down to the Magnificent Six. After Tesla released disappointing quarterly financial results this week, the sinking stock diverged further from the pack of big tech companies that dominated the stock market last year. Does Tesla offer a warning sign of what’s at stake for this narrow group of outperformers? David Berman has some thoughts.
This industry has been the toast of the TSX for decades – and it’s not the big banks
For the past three decades, the TSX has consistently been dominated by a business that revolves around just two companies moving stuff on a pair of parallel steel rails. The Canadian railway duopoly, consisting of Canadian National Railway and Canadian Pacific Kansas City, sports a mighty average annual return of 15.5 per cent, which is best in class by a decent margin. As Tim Shufelt tells us, that track record at least raises the argument that every Canadian investor should own shares in one of the two railways, if not both.
As China’s markets stumble, Japan rises toward record
This year was set to be a tumultuous one for global markets, with unpredictable swings as economic fortunes diverge and voters in more than 50 countries go to the polls. But as the New York Times reports, there’s one unforeseen reversal already underway: a change in perception among investors about China and Japan.
Betting on beans – exploring bullish indicators for soybeans
Stephen Donovan kicks off a new technical analysis series with a look at why soybeans could be poised for a breakout. (Interested investors may want to check out the soybean fund SOYB-A for a way to gain exposure.)
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Ask Globe Investor
Question: I have three self-directed investment accounts: a registered retirement income fund, a tax-free savings account and a non-registered account. All three currently hold some cash, which I want to put back into the market. I am considering investing some of that cash in the Magnificent Seven technology stocks. For Canadian income tax purposes, which of my three accounts would be best?
Answer: In a TFSA, there are no taxes on capital gains, which is the main objective of investing in tech stocks. What’s more, while you would still face a 15-per-cent withholding tax on U.S. dividends in a TFSA, only three of the Magnificent Seven – namely, Apple Inc. AAPL-Q, Microsoft Corp. MSFT-Q and Nvidia Corp. NVDA-Q – pay any dividends at all, and their yields are tiny. So the amount of withholding tax would be minimal. For these reasons, a TFSA would be a perfectly acceptable place to invest in big tech.
In a non-registered account, on the other hand, you will face capital gains tax when you sell stocks that have appreciated. You’ll also face a 15-per-cent withholding tax on U.S. dividends, as well as Canadian income tax on foreign dividend income, although you can usually claim a foreign tax credit for the tax withheld (which is not the case with a TFSA). What softens the blow somewhat is that, in a non-registered account, only 50 per cent of capital gains are included in income.
As for your RRIF, there are no Canadian income taxes on capital gains or dividends and no withholding taxes on U.S. dividends, thanks to the Canada-U.S. tax treaty.
Keep in mind, however, that a RRIF consists of pre-tax dollars. If you have, say, $500,000 of assets in a RRIF and your marginal tax rate is 40 per cent, the theoretical after-tax value of your RRIF is effectively $300,000 (60 per cent of $500,000).
Similarly, if you were to invest, say, $50,000 of your RRIF money in the Magnificent Seven, at a tax rate of 40 per cent that would be economically equivalent to investing just $30,000 in your TFSA or non-registered account, both of which are funded with after-tax dollars. In other words, a dollar invested in a RRIF will effectively give you less exposure to the Magnificent Seven than a dollar invested in a TFSA or non-registered account.
There are a lot of moving parts here, including whether you have other investments that might generate even greater tax savings by parking them in your TFSA or RRIF instead of using your finite registered account space for your tech investments.
Finally, while many tech stocks have produced fabulous returns in recent years, remember to maintain a diversified portfolio and not get too overweight in any one sector lest the trend stops being your friend.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
