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ductonius posted:So, what's the best way to invest regular contributions? Do you split the money according to your original balance or split it to restore balance to your portfolio? (assuming no transaction costs a la TD E-Series) The latter is the easiest way to rebalance.
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Feb 25, 2014 01:34
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ductonius posted:So, what's the best way to invest regular contributions? Do you split the money according to your original balance or split it to restore balance to your portfolio? (assuming no transaction costs a la TD E-Series) You're probably better off going with the former, and then do a manual rebalance annually or semi-annually. Personally, now that I'm fully onto ETFs after 'upgrading' from e-series - my rough plan is: accumulate savings cash in my Investorline account and then purchase whichever ETF(s) looks cheap with the goal of restoring balance back to the account. That will happen roughly every 2 months (with a reminder in my calendar), based on the opportunity cost / transaction cost tradeoff. Michael James has a great post on this technique.
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Feb 25, 2014 01:43
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I asked this at the top of the page and was told that it is the former.Kal Torak posted:Do you believe in rebalancing? Most people recommend you rebalance once or twice a year (Questrade commissions may prevent this from being worthwhile). This would also mean that any new contributions should be in your original weighting allocation. I also lost about 18 bucks today. Great start! time to buy 
Guest2553 fucked around with this message at 07:57 on Feb 25, 2014 |
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Feb 25, 2014 07:55
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Well this has been some interesting reading. I was under the impression that being in a low tax bracket currently, that I should add to an (R)RSP up to what my employer will match, then put any more into a TFSA holding TD e-series index funds. Then I found out it wasn't 40% matched, up to 4% of my income matched, but 40% matched, all the way to the contribution max (potentially 24k or even higher). I suspect that my limit while not that high, will be above what I plan to put into long term savings. So it seems my choice will be a simple, put money into an RRSP so I get the instant 40% gain from matching. I do have a question regarding the limit and employer matching though. Say my contribution limit was 1000 dollars. Would I contribute 715, leaving room for the 285 from my employer. Or does the employer contribution not go against my own personal limit, and I could put in 1000, plus 400 from my employer? Golluk fucked around with this message at 21:53 on Feb 25, 2014 |
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Feb 25, 2014 21:50
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Golluk posted:I do have a question regarding the limit and employer matching though. Say my contribution limit was 1000 dollars. Would I contribute 715, leaving room for the 285 from my employer. Or does the employer contribution not go against my own personal limit, and I could put in 1000, plus 400 from my employer? This is a good question, and I'm not sure of the answer. I'd like to know also.
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Feb 25, 2014 21:54
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That is a sick benefit.
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Feb 25, 2014 21:59
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Golluk posted:I do have a question regarding the limit and employer matching though. Say my contribution limit was 1000 dollars. Would I contribute 715, leaving room for the 285 from my employer. Or does the employer contribution not go against my own personal limit, and I could put in 1000, plus 400 from my employer? The employer and employee contribution amounts both count against your RRSP contribution room. edit: It's the same as DC pension plans. The two amounts added together will show up as a pension adjustment on your T4 and that amount reduces your contribution room. I do not know if that's the way your employer has it structured and whether or not it shows up on your T4, but the bottom line is that both amounts will count against your limit. Kal Torak fucked around with this message at 22:07 on Feb 25, 2014 |
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Feb 25, 2014 22:03
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Is the employer contribution portion treated as income?
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Feb 25, 2014 22:26
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Lexicon posted:Is the employer contribution portion treated as income? No. But you don't get a deduction for it either.
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Feb 25, 2014 22:32
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Mine is, I think - it shows up as an additional benefit on my T4, but since it's RRSP it's not taxable income. (Well it's immediately offset by the equivalent RRSP contribution, I suppose). It's not a match, though, they're just straight up depositing 6% of my salary as an RRSP (On top of my actual salary, so it's a pretty sweet benefit... Nothing like a bottomless 40% match, though, holy gently caress.) Ended up maxing out for 2013; throwing 4.8k on top of what I'd already put in there last summer saved me about $1500 in taxes. First year of my working life I don't end up with a refund, too 
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Feb 25, 2014 22:38
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Kal Torak posted:No. But you don't get a deduction for it either. Do you mean this: FrozenVent posted:Mine is, I think - it shows up as an additional benefit on my T4, but since it's RRSP it's not taxable income. (Well it's immediately offset by the equivalent RRSP contribution, I suppose). My guess was that it worked this way.
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Feb 25, 2014 22:58
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As it's tax time, I have a request for the more knowledgeable folks out there. I have a fairly good handle of tax deductions, and marginal rates and what have you, but I still have a hard time working through an example of the following: Given a resident of say, BC, with the following characteristics (purely for demonstrative purposes): - Earned $60,000 in salary income - Earned $500 in Canadian source dividends - Earned $750 in foreign source dividends - Earned $1000 in capital gains from sale of assets - Contributed $5,000 to RRSP - Qualified for volunteer firefighter tax credit, but otherwise had no other special tax credits/deduction beyond the basic personal amount. How do you precisely calculate the tax payable to BC and the Feds given these parameters? In particular, I have a hard time working out the interplay between the federal and provincial taxation. Anyone feel like working through it for me?  edit: obviously I can plug all this into TurboTax or what not, but I'd like a deeper understanding of the algorithm.
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Feb 25, 2014 23:05
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Lexicon posted:As it's tax time, I have a request for the more knowledgeable folks out there. I have a fairly good handle of tax deductions, and marginal rates and what have you, but I still have a hard time working through an example of the following: http://www.cra-arc.gc.ca/formspubs/t1gnrl/bc-eng.html
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Feb 25, 2014 23:10
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Lexicon posted:Do you mean this: You are talking about different things. There is a difference between employee and employer contributions. Contributions made by the employee show up in box 20 on your T4 and are deducted on line 208 of your T1. The employer portion is not added to your income nor allowed as a deduction. Instead, it gets added to the pension adjustment amount (box 52 on your T4) and this amount (which is the total contributions between employee and employer combined) reduces your contribution limit. This is difficult to explain so I hope that is clear enough. edit: The above explanation is in regard to registered pension plans. There may be a difference with employer RRSP plans. I will have to do some reading. edit2: Okay nevermind me, I'm an idiot. I guess employer portion for Group RRSP's get added as income (taxable benefit) and you get a contribution receipt for it. So there is a fairly big distinction between RPP and RRSP and how they are treated. Good to know. Kal Torak fucked around with this message at 23:30 on Feb 25, 2014 |
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Feb 25, 2014 23:13
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That's utterly unhelpful. I'm aware the CRA has a site with umpteen Schedules. I want to understand how it all fits together, without first needing to qualify as a CA.
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Feb 25, 2014 23:36
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Kal Torak posted:I guess employer portion for Group RRSP's get added as income (taxable benefit) and you get a contribution receipt for it. So there is a fairly big distinction between RPP and RRSP and how they are treated. Good to know. Cool - this makes sense.
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Feb 25, 2014 23:45
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Lexicon posted:That's utterly unhelpful. I'm aware the CRA has a site with umpteen Schedules. Your question is pretty loaded. I'm not sure you could cover everything you asked in an all day personal tax course.
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Feb 25, 2014 23:51
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Kal Torak posted:Your question is pretty loaded. I'm not sure you could cover everything you asked in an all day personal tax course. Let me start again. I understand each of these things in isolation. What I don't understand is how they fit together; in particular: how is the provincial tax payable calculated. Is it on the whole amount, the whole amount net of the federal take, or the whole amount net of the federal take adjusted for the RRSP, etc. It's a pretty damning indictment of the tax system that this isn't a simple procedure to calculate.
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Feb 25, 2014 23:56
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Perhaps this thread can answer this question -- I need to settle a petty argument.Hurricane Jesus posted:I need to settle a petty argument. I understand that available credit and credit utilization are key factors in assessing the maximum amount a borrower can get, I'm just skeptical that the relationship is that directly expressed. Can anyone answer this or is it one of those 'we don't release our algorithms' deals? I've heard multiple people say that mortgage lenders either a) remove every dollar of available credit from the maximum mortgage amount, or b) consider every dollar of available credit as a dollar of debt, which is supposed to have the same effect. Does anyone know anything about this that they can point me to?
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Feb 25, 2014 23:58
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Lexicon posted:Let me start again. I understand each of these things in isolation. What I don't understand is how they fit together; in particular: how is the provincial tax payable calculated. Is it on the whole amount, the whole amount net of the federal take, or the whole amount net of the federal take adjusted for the RRSP, etc. Both federal and provincial tax are calculated based on your taxable income. You have 3 stages of income, "total income", "net income" and "taxable income". Different things are included in each of those calculations. Once you get to your taxable income, both federal tax and provincial tax are calculated off that and then adjusted for various credits. For instance, let's look at Alberta because it's a flat 10%. Let's say you have 60K of taxable income. Federally, you take that 60K and multiply it by the tax rates at each level. So 15% up to about 43K and then 22% on the rest. That number is then adjusted by various credits you are eligible for such as the basic personal amount, public transit, interest on student loans, etc. Provincially, you take the 60K of taxable income and multiply it by the flat 10%, so 6K. And then you adjust for various provincial credits to get the amount of provincial tax.
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Feb 26, 2014 00:13
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Kal Torak posted:Both federal and provincial tax are calculated based on your taxable income. You have 3 stages of income, "total income", "net income" and "taxable income". Different things are included in each of those calculations. Once you get to your taxable income, both federal tax and provincial tax are calculated off that and then adjusted for various credits. That's really helpful. So it's basically the same calculation over again, but for the province? And do the same deductions apply - i.e. given my $5,000 RRSP example, the taxable income would be $55,000 for each level?
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Feb 26, 2014 00:39
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Lexicon posted:That's really helpful. So it's basically the same calculation over again, but for the province? And do the same deductions apply - i.e. given my $5,000 RRSP example, the taxable income would be $55,000 for each level? Yes, the federal and provincial calculations are essentially the same, just with different credits and/or credit amounts. For instance, the donation tax credit is a different percentage for federal than it is for provincial. The income levels are the same for federal and provincial. Think of it as two sections or steps. Step 1 is determining your taxable income. Step 2 is determining the tax on your taxable income. The provincial and federal tax amounts are based on the same number, the taxable income number. To be more specific, you start with your total income. Total income includes things like your employment income, pension, dividends, capital gains, rental income, farming income, self-employment income, etc. Then you determine your net income, which is your total income less deductions such as RRSP contributions, split pension amount, child care, moving expenses, support payments, interest expenses, etc. Then to get to your taxable income, you take your net income and deduct things like net capital losses and capital gains exemption. Obviously there are other things included in those three income levels, but I just named those ones off the top of my head. You can google to see all the income/deductions that would be included in each of those levels. Once you have your taxable income, you calculate that by your tax rates both federally and provincially and then adjust for any tax credits. edit to add: Given your example, the total income would be 73,500 (60 + .5 + .75 + 1). I am assuming your capital gain of 1,000 is the taxable amount and the 500 in dividends is the grossed up amount. The net income would then be 68,500 (73.5 - 5) which would also be your taxable income as you have no adjustments that would change taxable income from net income. Kal Torak fucked around with this message at 01:47 on Feb 26, 2014 |
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Feb 26, 2014 01:43
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tuyop posted:That is a sick benefit. Given it is matching by 40% (Up to 20k matched), with a max contribution room of 24k, the company would only be giving up to 6.86k before hitting the limit. Assuming a 50k income, and standard 100% match to 8%, total contribution limit is 9k. 4k from employer Max for 4k from employee, with 1k contribution room left. In my case, I could put in 6.43k, and get 2.57k match, for the 9k total. I think I'd rather have 100% match to 6% personally unless I'm missing something like it being worth it to go over the contribution limit, or some creative accounting.
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Feb 26, 2014 15:45
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Kal Torak posted:Yes, the federal and provincial calculations are essentially the same, just with different credits and/or credit amounts. For instance, the donation tax credit is a different percentage for federal than it is for provincial. This is perfect - exactly what I was hoping someone could provide when I wrote the question. Thanks a ton. So one final point on tax credits: once you've done that computation of taxable income and the relevant tax rates and you end up with $X owed to the Feds and $Y owed to the Province. Tax credits reduce the amount actually owed, right? So for this one: quote:Children’s fitness amount If you paid $400 for your kids activity, 15% = $60 could be used to reduce $X? So your federal owed would drop to ($X - 60)?
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Feb 26, 2014 17:20
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Lexicon posted:This is perfect - exactly what I was hoping someone could provide when I wrote the question. Thanks a ton. Yes, exactly. A deduction reduces the amount of taxable income. A tax credit reduces the amount of tax you owe. It's an important distinction.
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Feb 26, 2014 17:23
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Kal Torak posted:Yes, exactly. Cool, thanks. 
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Feb 26, 2014 17:35
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Quick question for anyone using RBC Direct Investing. I'm trying to view the performance of my individual Mutual Funds. I own 4 different funds, but all RBCDI shows is a far-too-detailed breakdown of what's actually inside those equities. What I want is something like: My Canadian Index Fund ABC = $Current Value My Bond Index Fund ABC = $Current Value But here's what I see: Jolarix fucked around with this message at 19:25 on Feb 26, 2014 |
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Feb 26, 2014 19:19
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22.5 million in TFSA penalties for 2012. http://www.theglobeandmail.com/glob...hboard/follows/ I can't believe people continue to misunderstand a very simple rule about over contributing. If anyone has over contributed or knows anyone who has, make sure you ask CRA to waive the penalty. It doesn't take much of an argument to get them to agree to do so but people are apparently not taking advantage of that. 
Kal Torak fucked around with this message at 16:00 on Feb 27, 2014 |
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Feb 27, 2014 15:57
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Kal Torak posted:22.5 million in TFSA penalties for 2012. There should really be some kind of relaxing or reworking of the rules. Terrible disincentive and mixed message to have everyone say "Canadians need to save for retirement!" and then when Canadians go "Here's a shitload of money for our retirements!" the government goes "Oooo sorry, that was too much. Take this tax hit, bitches." I don't know, maybe some kind of allowance to move spillover amounts into your RRSP?
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Feb 27, 2014 17:36
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Kal Torak posted:22.5 million in TFSA penalties for 2012. I tried to read the CRA's site for info, but as I understand it there's an annual limit that you can deposit in to a TFSA? From the article, it sounds like people were withdrawing money and then putting it back in.
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Feb 27, 2014 17:39
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Ashley Madison posted:I tried to read the CRA's site for info, but as I understand it there's an annual limit that you can deposit in to a TFSA? From the article, it sounds like people were withdrawing money and then putting it back in. Yes, people get tripped up because any withdrawals get added back to the contribution room in the next calendar year. So if in 2009 you put in 5K on January 1st and withdrew it on January 2nd, you couldn't contribute again until January 1, 2010. Apparently this quirk is still an issue for thousands of Canadians.
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Feb 27, 2014 18:05
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Lobok posted:There should really be some kind of relaxing or reworking of the rules. Terrible disincentive and mixed message to have everyone say "Canadians need to save for retirement!" and then when Canadians go "Here's a shitload of money for our retirements!" the government goes "Oooo sorry, that was too much. Take this tax hit, bitches." The rules really aren't that difficult. There's a contribution limit for RRSP's as well but few people over-contribute to those. The main problem here is that people are trusting the banks and financial advisors who don't understand the rules themselves.
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Feb 27, 2014 18:07
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Kal Torak posted:The rules really aren't that difficult. There's a contribution limit for RRSP's as well but few people over-contribute to those. The main problem here is that people are trusting the banks and financial advisors who don't understand the rules themselves. Exactly. People seem to have no trouble at all quoting batting averages with fantastic precision or who won Survivor in 2007 or whatever else inane bullshit. Part of being a formed adult is learning this stuff.
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Feb 27, 2014 18:17
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Kal Torak posted:The rules really aren't that difficult. There's a contribution limit for RRSP's as well but few people over-contribute to those. The main problem here is that people are trusting the banks and financial advisors who don't understand the rules themselves. This seems pretty contradictory. The rules aren't difficult but one can't trust even a bank or financial advisor to understand them?
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Feb 27, 2014 20:13
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Lobok posted:This seems pretty contradictory. The rules aren't difficult but one can't trust even a bank or financial advisor to understand them? Not contradictory. People don't take the time to learn and understand. That includes the average Canadian as well as the low paid, under-educated, bank employees. The rule is as stated above. Any withdrawals are only added to the contribution room as of next year. That's it. What about that rule makes it difficult to understand? Can you understand it? Why do you think the average Canadian and "bank advisor" were unable to do so?
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Feb 27, 2014 21:03
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Kal Torak posted:Not contradictory. People don't take the time to learn and understand. That includes the average Canadian as well as the low paid, under-educated, bank employees. If lots of people don't understand then doesn't make it hard to understand? But my problem is the penalty. Drilling into everybody's heads for decades that they need need need to save up for retirement in this account over there and then penalizing people for over-contributing in this other account over here when the battle has always been to get people to meet their relatively huge RRSP limit just seems like very poor policy or a tax grab and is another example of how confusing the TFSAs have been from day one. This very thread has a litany of people wondering what the hell the differences are for use as retirement funds. And as much as we in the thread might not trust employees in the financial business, I think it's naive to think that the majority of Canadians could or would. Who are people supposed to turn to if not them?
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Feb 27, 2014 21:21
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Kal Torak posted:
My guess is there may not be a simple way to check how much contribution room you have left. Once you start withdrawing, and getting interest accumulations, it's no longer as simple as going to the next 5k each year. That and your average person and employee is probably rather dumb outside limited expertise. Always bet on stupid.
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Feb 27, 2014 21:24
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Lobok posted:If lots of people don't understand then doesn't make it hard to understand? But my problem is the penalty. Drilling into everybody's heads for decades that they need need need to save up for retirement in this account over there and then penalizing people for over-contributing in this other account over here when the battle has always been to get people to meet their relatively huge RRSP limit just seems like very poor policy or a tax grab and is another example of how confusing the TFSAs have been from day one. This very thread has a litany of people wondering what the hell the differences are for use as retirement funds. The TFSA has been around for 5 years now and the CRA has waived the penalties for pretty much everyone who has bothered to make the request. I don't know how you can take issue with something like that. Calling it a tax grab is pretty ridiculous since it costs the Federal Government millions every year (66 billion is currently sheltered tax free in these accounts) and is really the exact opposite of a tax grab. They are not hard to understand. Anyone who takes 5 minutes to read about it, will understand everything they need to know. The problem is that some people are too lazy or don't care enough to do so.
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Feb 27, 2014 22:14
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Guys, I got my first tax slip for interest. I didn't even know these things existed, but it means I got more than $50 in interest in my 1-2.5% savings accounts last year.  Kal Torak posted:The TFSA has been around for 5 years now and the CRA has waived the penalties for pretty much everyone who has bothered to make the request. I don't know how you can take issue with something like that. Calling it a tax grab is pretty ridiculous since it costs the Federal Government millions every year (66 billion is currently sheltered tax free in these accounts) and is really the exact opposite of a tax grab. Wait, less than 240 000 Canadians have maxed out their TFSAs? 
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Feb 28, 2014 04:17
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I was about to jokingly say welcome to the 1%, except going by that your in the 0.8% percent if you do... It's getting easier and easier passing on a new(er) motorcycle in favor of saving more. Just out of curiosity, if we got hit with another market crash like what the US had a few years ago, which savings investments wouldn't likely be hit. Or would only regular/high interest accounts to 100k be safe? At most I only intend to get some index funds going in a TFSA in the next few years, and long term even a big drop in the markets should still recover well before I take anything out. But I still feel like it might be best to just use a high savings account until a crash or less talk of one. I haven't really gotten the lost opportunity calculations figured out.
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Feb 28, 2014 04:47
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