The Department of Finance Canada’s recent letter to the Canada Revenue Agency (CRA) stating that paying investment fees for registered accounts out of non-registered accounts does not constitute a tax advantage is a big win for investors, who are now free to pay their investment costs from any source they choose.
There are various advantages for investors to pay all investment fees out of a non-registered account. At the core, though, investors will end up with more money, after taxes, if they pay all the investment fees for a tax-free savings account (TFSA) or registered retirement savings plan (RRSP) from assets held outside of those accounts.
So, how did this all come about? In 2016, the CRA announced at a tax conference that its position on paying investment fees for registered accounts from non-registered accounts constituted an unfair advantage. Furthermore, the CRA stated that as of 2018, any taxpayer who engaged in this activity would be subject to a special advantage tax equal to the amount of fees paid outside of the registered account. The implementation was then postponed a couple of times pending a review from the Department of Finance.
Then, the Department of Finance sent a letter this past August recommending that the Income Tax Act be amended to reflect its finding that there is no advantage to paying registered fees outside of a registered account and that such a decision by a taxpayer may not necessarily be tax motivated. In effect, it means the CRA will not penalize a taxpayer for paying investment fees for a registered account from a non-registered account.
For financial advisors and investors, there are various benefits to taking this approach, which is a way to increase assets with no added risk.
For one, investors may have investments that are less liquid in the registered account. So, paying for investment fees from a non-registered account can provide ease of cash management over the portfolio. In addition, paying all investment fees out of one account rather than from multiple accounts may be easier from an administrative perspective.
The main advantage for investors, though, is that registered accounts have an ability for greater compounding of returns than non-registered accounts because of the registered accounts’ tax-deferred or tax-free nature. That was the CRA’s main issue with this practice.
As an example, let’s consider an investor who has $100,000 in a TFSA and $100,000 in a non-registered account. Each account incurs investment expenses of 1.5 per cent, or $1,500, annually.
If all expenses are taken from the non-registered account, it results in more assets growing tax-free within the TFSA, as they’re not impeded by investment costs. Furthermore, it helps the investor save taxes as the capital base in the non-registered account will be lower, which will result in lower taxes against the income within that account as well as lower taxes on the capital gains when the funds are withdrawn.
The strategy is similar for an RRSP, except that the income from the RRSP will be fully taxable when it’s withdrawn from an RRSP or from a registered retirement income fund (RRIF) once the investor reaches retirement. Thus, the investor reduces the capital in the non-registered account today in favour of a much larger payment from a RRIF in the future. Although that payment will be taxable, it will presumably be when the investor is retired and in a lower tax bracket. In addition, as inflation will erode the value of money, it’s preferable to pay $1 of taxes in the future than $1 of taxes today.
Although the advantage in the TFSA is clear, the advantage for the RRSP will be dependent on many factors, such as an investor’s tax bracket now and in retirement, inflation and even potential changes in tax policy.
For investors, this may not be the top tax-saving strategy available, but they should take advantage of every opportunity to improve their returns and reduce their taxes – especially when it can be executed with a simple administrative change.
Matthew Ardrey is vice-president and wealth advisor at TriDelta Financial Partners Inc. in Toronto.
New report finds VC investment into climate tech growing five times faster than overall VC – TechCrunch
VC and corporate investment into climate tech grew at a faster rate than overall VC investment as a whole between 2013-2019, according to a major new report — to the tune of $60 billion of early-stage capital.
The new research by PwC (“The State of Climate Tech 2020“) found that although it’s still early days for climate tech in terms of the overall VC market (approximately 6% of total capital invested in 2019), VC investment into the space is growing at a clip: it increased from $418 million per annum in 2013 to $16.3 billion in 2019. According to the report, that is approximately three times the growth rate of VC investment into AI over the same period, and five times the average growth in VC.
The reasons are, predictably, to do with market economics. It’s quickly becoming more capitally efficient to prove and scale the technologies involved, and carbon-neutral or even carbon negative solutions have fewer costs than carbon-producing ones.
Nearly half of this venture cash ($60 billion) went to U.S. and Canadian climate tech startups ($29 billion), while China comes in second at $20 billion. The European market attracted $7 billion. The majority of investments for the U.S. and China go to mobility and transport solutions.
Climate tech startup investment in the San Francisco Bay area, at $11.7 billion, was 56% higher than its nearest rival, Shanghai, which reached $7.5 billion. Europe is more invested in renewable energy generation (predominantly photovoltaics cells) and batteries.
Celine Herweijer, global leader, Innovation & Sustainability, PwC UK, said in a statement: “The analysis shows the urgency of the opportunity, and gap to close, to support and scale innovative technologies and business models to address the climate crisis. Climate tech is a new frontier in venture investing for the 2020s.”
“Some of the technologies and solutions critical to enabling this transformation are proven and need rapid commercialization, which is why venture capital is key. It will not need trillions invested in startups to make a difference. But for the trickier technologies and markets it will need targeted support, including from governments, to make it through research and development, and the early stages beyond which capital increasingly is lining up,” she added.
The biggest drivers for growth in climate tech, according to the report, relate to mobility and transport, heavy industry, and Greenhouse Gas (GHG) capture and storage. These are followed by food, agriculture, land use, built environment, energy and climate and Earth data generation.
Anyone who reads TechCrunch will be well aware of the electric scooter and e-bike wars that have broken out in recent years. And sure enough, the report finds that investment in these micromobility startups has grown dramatically, recording a CAGR of 151%, and representing 63% $37.4 billion of all climate tech funding over the past seven years.
Azeem Azhar, senior advisor to PwC UK, founder of Exponential View, and co-author of the report, said: “The climate tech market is maturing. As a society we are seeing more entrepreneurs launch startups, more investors back them, and an increasing number of larger funding rounds for later-stage high-potential deals. But PwC’s analysis shows the ecosystem is still nascent, with key gaps in the depth and nature of funding available to founders and tricky structural hurdles for them to navigate as they scale their businesses.”
Where is the investment coming from? From a wide range of sources: traditional VC firms and venture funds specializing in sustainability, corporate investors, including energy majors, global consumer goods companies and big tech, government-backed investment firms and private equity players.
The report found that corporate venture capital (CVC) looms large in the sector, especially startups typified by high capital costs aimed at disrupting incumbent industries with high barriers to entry, such as in energy, heavy industry and transport. For mobility and transport, 30% of the climate tech deals include a CVC firm, and in energy, 32% of capital deployed came from CVCs. Overall, nearly a quarter of climate tech deals (24%) included a corporate investor.
Herweijer said: “The involvement of corporates will be key to the continued success of climate tech – both in terms of their net-zero commitments driving demand for new solutions, and their investments into commercializing innovation. It’s not just the financial means they bring, but the commercial know-how, and industry knowledge to help startups navigate how to rapidly deploy and scale new innovations into the market.”
Amongst the top 10 cities for climate tech startup investment — outside of the U.S. and China — are Berlin, London, Labege (France) and Bengaluru, India, attracting $1.3 billion, mainly across energy, agriculture and food and land use.
The sections perhaps most relevant to a TechCrunch audience occur on page 44 onwards, which shows that the climate tech market is starting to behave like the high-growth tech startup world. Where barriers existed before, such as technical risk, product risk and market risk, these are being addressed. Recognizable VC names such as Sequoia, GV, Kosler, Horizons, YC, USV are all getting involved.
And although almost 300 global companies have committed to achieving net-zero emissions before 2050, “with just ten years to reduce by half global greenhouse gas emissions to limit global warming to 1.5C, climate tech needs a rapid injection of capital, talent and public-private support to match its potential to build and accelerate faster, bolder innovation,” added Herweijer.
How to Buy Gold for Investment for 2021 – GlobeNewswire
New York, NY, Sept. 23, 2020 (GLOBE NEWSWIRE) — Financial expert Ken Poirot, who oversaw the investment of billions in client assets, shares how to buy gold and how to invest in gold for an incredible return on investment in 2021.
According to Ken Poirot’s article titled, How to Buy Gold: How to Invest in Gold, he states, “Owning physical gold is the best way to buy and invest in gold.” In this article he also reveals where to buy gold and the mistakes the average investor might make when investing in gold.
As Ken Poirot explains, “Rather than investing in physical gold, many investors attempt to pick the best gold mining stocks, ETFs, or even try the gold futures market; all these alternatives to physical gold investing could cost investors their potential return on investment.”
In contrast, Ken Poirot says, “When investing in gold, it is best to keep it simple: buy physical gold.”
Furthermore, Ken Poirot documents in his recent article, Gold: Investing in Gold?, “More and more Wall Street gold analysts are coming forward with bullish forecasts for the future price of gold…analysts say $3,000 is assured; $10,000 is likely; $20,000 is possible.” To put these predictions in perspective, today gold is trading at less than $2000 an ounce.
Just like most gold analysts, Ken Poirot has also increased his predicted future return on investment for gold as recorded in a recent press release, Money: Investing in Gold for a Huge Return on Investment in 2021.
Ken Poirot cites the global recession, the crumbling US economy, China’s looming economic collapse, and the Fed’s new willingness to let inflation rise unabated all as factors contributing to higher gold prices. For these reasons he believes investors may double their money by investing in gold over the next year.
Contact Email: email@example.com
VIDEO: NDP leader calls for investment in the economy of care – TheChronicleHerald.ca
SYDNEY, N.S. —
Nova Scotia NDP Leader Gary Burrill spent some time in Cape Breton this week meeting with the party faithful and chatting with selected candidates for the next provincial election. On Wednesday, Burrill sat down with Cape Breton Post municipal affairs reporter David Jala to talk about Nova Scotia’s political landscape and his vision for a post-COVID economic recovery. Burrill, who has led the NDP since 2016, weighed in on a number of provincial and local issues that included equalization transfers, centralization and how to best spend economic stimulus monies.
Q: Welcome back to Cape Breton. So what the heck are you doing out and about while most people are home with the hatches battened down awaiting whatever tropical storm Teddy has to offer?
A: (laughs) Well, I remember living here as a United Church minister when I was running for the leadership of the NDP, so I am well used to driving in and out of Sydney when there are different forms of weather. The real purpose of my conversations down here this week is to talk to people about the impact of COVID and hear the many different points of view from the different sectors. We are asking what are the things that are needed from the government of this province in terms of investments as we move into this coming period of recovery.
Q: Before we delve into the NDP plan for economic recovery, what is your assessment of the McNeil government’s handling of COVID-19 in this province?
A: It’s been a mixed bag. On the substance of the public health directives, I think they’ve done a very fine job. But on the basic communication and clarity and coherence of how this is all implemented, I think that they have done a less good job and it has become less effective as time has gone on. There have been inconsistencies in coherences in their approach that have not improved public confidence and compliance. For example, when we opened up the borders between Nova Scotia, P.E.I and New Brunswick — the other provinces were way ahead of us with a whole regime in place for how to track people coming into the province. We didn’t have any of this. We were behind the 8-ball. I also think about how the economy was reopened before childcare was reopened and that caused all kinds of chaos. So, overall, I think the advice Nova Scotians got from the public health directive has been strong and we’ve been happy to participate and do our part as an opposition party, but at the same time, the core elements of good communication and coherence around that communication has been lacking.
Q: Summarize the NDP plan for economic recovery?
A: Over the past six months, we have seen that there are particular areas of our society in need of investment and in need of improvement. At the same time, we know that as we come into the recovery period, every government, everywhere, is going to have signature levels of investment and stimulus spending. So, in our view, that mega investment, that mega stimulus that is going to be required everywhere to come out of the contraction of the COVID period must be directed to those places where in the pandemic we have seen a particular need. High on this list is the whole economy of care. Regarding long-term care, another report was issued earlier this week that said we don’t have enough people to provide the adequate levels of care in our nursing homes. And that having two or three people in a nursing home room is a highway to the transmission of infection. We need to move to a place where we have one bedroom for one resident. Imagine the jobs that would be created and the economic stimulus that will be provided to the whole province. If the government directed the investment that is required in order for us to come out of this contraction to building nursing homes, where every one of those 8,000 people in long-term care in Nova Scotia had their own bathroom and where everyone had their own room, then this would be a wonderful economic development program that would fulfil a wonderful need.
Q: The NDP economic recovery plan also addresses childcare. Please elaborate.
A: The economy of care is paramount and it also applies to childcare. One of the most jarring experiences of the pandemic in Nova Scotia came three or four months ago when, as I mentioned, the economy was reopened before childcare was reopened so there was a period of a week or 10 days that families all over the province were in chaos and didn’t know what to do. So again, imagine the jobs that would be created and the overall economic development stimulus that would be produced if investments were made to provide childcare that is affordable, high quality and available across the board. Not only would you have early childhood educators going to work in all areas of the province but you’d also open the door for parents to go to work.
Q: You have stated that this present economic depression is not of the “garden variety type” and that the road to recovery must be mapped out more differently than other depressions of recent years.
A: I think it’s important to recognize the unique character of the present economic moment. This is not the 08-09 recession, this is not the dot.com bubble of 20 years ago, anybody under the age of 85 has never experienced an economic contraction like we are in at the moment. This is a Depression-level contraction. So, it changes the economic conversation for us. For years that conversation has included questions like how are you going to pay for it, where are you going to get the money, but in this moment, every jurisdiction in the western world, every province, every state, every nation is going to move into a deficit position. So the question is no longer about whether or not there is a deficit, that is no longer in the conversation. The question now is what are you going to do with the deficit you are going to have. What we are saying is spread that stimulus to places where, during the pandemic, we have seen a particular need. How better to direct investment and economic development than to develop the local jobs that would be created by a major investment in commercial and residential building retrofitting, and in local renewable energy production. These are major job creation programs, major economic development programs and major stimulus programs that could address exactly the needs of the present moment.
Q: Stephen McNeil is stepping down as the premier of Nova Scotia after a 17-year run as Liberal leader and seven years as premier. How does his pending departure affect your party as it prepares for the next provincial election?
A: I think it has created a moment of real volatility and fluidity in which anything can happen. And because of COVID, we were already in a moment of that kind. So, overall, so many of the fixed points on our political landscape aren’t fixed at this time, they’re not in cement, they’re floating all everywhere, there’s a fluidity and a possibility that has been deepened and underlined by the resignation of the premier. We’re now in a situation where anything is possible.
Q: There is a possibility there could be a provincial election as early as next spring. Given that, how would you describe your party’s election readiness?
A: We’re excited about our candidates. We’re excited to have nominated former CBRM mayor John Morgan to run in Glace Bay, we’ll nominate Kendra Coombes again in Cape Breton Centre where she is the incumbent and we’re excited to have Madonna Doucette back running in Sydney-Membertou. We have about half of our Cape Breton slate ready, so the team is coming together well.
Q: The issue of federal equalization transfers has become a hot topic in the Cape Breton Regional Municipality. Many residents believe the CBRM deserves more than the $15 million it gets annually from the province which in turn receives a yearly equalization transfer payment of more than $2 billion from the federal government. PC Leader Tim Houston said that if elected premier he plans to double it and then negotiate. What’s your position?
A: We cannot have success as a province that has two cities, one of which has had an inordinate concentration of decision-making and power and the other, the CBRM, does not have the capacity to direct its fundamental affairs. We need a system that municipalities can derive their revenue in such a way as to provide comparable levels of service for comparable levels of taxation. That’s what equalization means and is what we support.
Q: What message do you have for Cape Breton residents who feel the CBRM is being ignored by the province of Nova Scotia?
A: We are living in the midst of the greatest centralization that has ever taken place in Nova Scotia history. In the seven years since the Liberals came to power in 2013, there has been this hyper-concentrated withdrawal of decision-making power from the communities and municipalities across the province. Those powers have been relocated to Halifax. So, in those seven short years, we have seen the abolition of local school boards that was replaced with a Halifax-based advisory council of education. We have seen the abolition of the local district health authorities that was replaced with the Halifax-based Nova Scotia Health. We have seen the abolition of the department of regional and rural development that was replaced by the Halifax-based department of business. In our judgment, this is not a model that accords to the nature of Nova Scotia. This province is by nature a highly decentralized society. What works on the South Shore won’t necessarily work the same way on the Eastern Shore or the Acadian Shore. Previous generations devised systems that had local decision-making power for things like health and education. So, when people in Cape Breton say that they have lost their voice, they are absolutely right, they are absolutely describing the processes that occurred over the past seven years. The present government dedicated itself to a program of withdrawing and shutting down local voices across the province and relocating them to Halifax. In our view, the road forward for the province has to be one of re-establishing the integrity and the capacity at local levels across Nova Scotia.
Q: What is your favourite sport? Are you any good at it? And, do you have a favourite team you cheer on?
A: I’ve coached baseball for many, many years. I love ball and have worked with a lot of kids, but I am a singularly poor ballplayer. And, I never cheered for the Expos or Blue Jays. I’m from Yarmouth so I grew up cheering for the Boston Red Sox. My other favourite team, of course, is the Cape Breton Eagles. They are a big part of the community. When I lived here, I knew never to schedule any church meetings on a game night. That would have been a no-no.
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