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.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
