A Question Regarding Taxation

On January 3, from Mike Parsons, President of Abutment Direct

Question:

I logged in yesterday and read most of the blogs. Interesting ideas. I am strongly considering eliminating my money manager.

My biggest questions are regarding tax issues when buying foreign currency and ETF’s. What are the implications for Canadians?

Monday Morning Millionaire Program Answer:

As a general statement, we quote Warren Buffett.

“I have worked with investors for 60 years and I have yet to see anyone – not even when capital gains rates were 39.9 percent in 1976-77 – shy away from a sensible investment because of the tax rate on the potential gain.”

Conversely, the Monday Morning Millionaire Program is designed to protect members from investments set up for their tax advantages. These have always made money for the folks who designed them. Investors have rarely done as well. To add insult to injury, such investments have lacked liquidity making it difficult to get out.

It was certainly easier to get better investment results before the introduction of “temporary” income taxes in 1913. Outside their tax advantaged (registered accounts) investors are taxed annually on earned interest and dividends and on capital gains when the investment is sold. Investors are deemed to have sold all assets just before death at fair market value. If there is a gain, half of it is taxable in the terminal tax return. That creates major problems with illiquid investments such a business, a professional practice, an art collection and so on. The taxman wants his take in the year of death.

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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me