Category: Financial Caregivers

News: Webinar Roundup

RobHLeave a comment

Global X: “Beyond Borders: Why International Equity is Capturing Attention”

This webinar (registration link) takes place on July 28 at 11:30am EDT. I don’t myself make bets on any particular segment of the market, choosing instead to maintain my geographic splits consistent, including international equity (see my latest report on that). But maybe you don’t have any exposure to international Equity at all; this might be worth checking out in that case.

Global X is the newish name of Horizons, a company I’ve been dealing with for a long time thanks to their innovative swap-based ETFs, namely HXT (Canadian Equity), HXS (US Equity) and HXDM (International Equity)1 . They are useful funds to hold in non-registered accounts because they pay no dividends of any kind; this allows you to defer tax until you need the money and sell them2.

Wealthsimple: Five Costly Retirement Spending Mistakes and How to Avoid Them

I listened to the recording of this webinar, and you can too by registering here. Fair warning: this webinar is at least partly a sales pitch for Wealthsimple’s managed portfolios3, and you can expect a follow-up if you do register.

Sales pitch aside, I thought the presenters did a decent job in explaining the common errors associated with

  • Asset mix
    • Getting the asset mix wrong based on your needs. I talk about the concept of asset mix here.
  • Order of withdrawal (RRIF versus TFSA versus non-registered)
    • This was something my fee-based financial advisor helped me with. Even a DIY investor can benefit from a bit of oversight as you make the preparations for retirement.
  • Age to start CPP/OAS
    • Lots of Canadians take the money as soon as they’re eligible (age 60 for CPP, 65 for OAS) but that’s not always the best choice. I used the CPP calculator to figure out what my best option was.
  • Underspending
  • Ignoring Estate and Final Tax costs
    • These can be significant. In the case of my mother’s estate, Final Tax (and not Probate) was the expensive one4. The easiest way to reduce Final Tax is to give away your money while alive.

  1. Full disclosure, I own all three in my non-registered accounts. ↩︎
  2. At which point you will have to pay tax on capital gains, naturally. ↩︎
  3. And although I like and am more than capable of doing a DIY retirement, I need a plan B in the event I lose the capability to do this sort of thing myself. And so I pay attention to service offerings out there. Wealthsimple’s fees seem less onerous so that’s a vote in their favor. I hate fees of all kinds. ↩︎
  4. They would have been horrified at the tax bill and probably would have more aggressively donated their wealth had they known. ↩︎

Death, Taxes and Estates: Part 3

RobH1 Comment

I am not a lawyer, accountant or tax expert. Your situation may be a lot different than mine. Seek professional guidance if needed.

Part 1 of this blog is found here, and Part 2 is here.

I’m in the tax season stage of wrapping up my Mom’s estate, who died a little over a year ago, a year and a bit after my father died.

Current status

I decided to hire a pro to do the Final Return and the Estate Return since I couldn’t figure out the fine details1 of doing an Estate Return. The Final Return (that’s the easy one, it’s just a regular tax return, except you have to inexplicably file it on paper) would have been within my skill set, but the Estate Return (the one that you have to file to deal with any income generated by the estate after death) was new and confusing to me.

I knew I was going to have to pay taxes on both returns, and using the tax calculators referenced here, I had a pretty good idea of what tax was going to be owed. In essence,

  • The Final Return takes the full value of the RRIF on the day of death as income. This will mean a lot of tax if the RRIF is sizable.
  • The Final Return also assumes any non-registered assets are liquidated on the day of death, which in the case of equity holdings, typically attracts capital gains and the associated taxes2.
  • The Estate Return is going to have to pay tax on any dividends, interest, or capital gains realized by the assets in the estate. Here the tax rate is high, because an Estate is treated as a Trust, and trusts don’t get personal deductions, meaning you get taxed on the first dollar of gains you manage.

A few wrinkles

Submitting the necessary paperwork to the accountant was the usual tedium of getting scans of T-slips, charitable donations and the like to the accountant. I did encounter a few problems.

BMO Investorline Problem 1: Sending T-slips to invalid addresses

My Mom’s assets were all held with BMO Investorline. Imagine my surprise when her retirement home let me know that snail mail from BMO (not BMO Investorline) had arrived at the home. I changed the address of all communications with BMOI to me nearly a year ago at that point, so you can imagine I was less than happy about having to drive across town to pick up what turned out to be a T-slip for the HISA I bought in her self-directed account. At that point, I was a few steps away from livid.

After spending some time with hapless agents who could not tell me why the mail ended up at an invalid address, I penned a note to the formal complaint department of BMO. I just figured that if there was some systemic issue at play here, that at least I could help those who followed me.

The complaints department ultimately admitted it was a screwup on their part and offered their apology. Whether or not it will happen to someone in my shoes in the future is unknown to me, but beware.

BMO Investorline Problem 2: Not providing an RC249 slip

The RC249 is a CRA slip that covers the losses incurred by a RRIF post-death.

It makes some sense: as mentioned above, the owner of the RRIF is assumed to get income equal the the value of the RRIF on day of death. But the RRIF assets aren’t automatically liquidated; they remain invested in whatever they were invested in. If that includes stocks/ETFs and the like, then it’s possible for the value of the RRIF to actually decline post-death. And that is what happened in my case. This loss becomes a tax benefit to the estate return, but only if you have an RC249 to prove it.

Now, the RC249 is clearly intended to be filled out by the issuer/carrier of the RRIF, in my case BMOI. And so, you would expect that to be automatically provided, wouldn’t you? Wrong again.

Another set of back and forth, first with the standard BMOI agents, and then the BMOI estate department, eventually produced a valid RC249 that I could send to the accountant.

Paying taxes owed

As much as I disliked the entire process of working with BMOI’s estate department, the one thing I did like about BMOI was that their non-registered accounts can be linked with a bank account (AccountLink) against which cheques can be written3. (This is something I set up months ago to help distribute some assets early to the beneficiaries). So once the accountants informed me of the eye-watering tax bill (which was pretty much aligned with what I expected), I was able to write the cheques and drop them off with little fuss. Thinking about how you will do that is something to consider in dissolving the estate.

Final Return Notice of Assessment

This was received in pretty short order, a few weeks after it was submitted, and the tax bill was correct.

Next steps

I await the Notice of Assessment for the Estate Account, at which point my accountant will be able to apply for a clearance certificate from CRA. This certificate essentially tells me that CRA considers all business with my mom and her estate closed. Once I have this, I can fully distribute all funds from the estate without having the CRA come after me for monies owed. This takes “up to 120 days” per the website.

  1. More accurately: I couldn’t bear spending hours reading arcane text on various CRA websites hoping I didn’t make a mistake ↩︎
  2. Note that unless directed, the liquidation doesn’t ACTUALLY take place. In my case, I moved all assets to HISA accounts once I gained control of the assets via probate, (a delay of a few months) and then liquidated the assets at the end of 2024. This I did to avoid earning any income from the estate holdings in 2025, which would have delayed the estate return. ↩︎
  3. No matter how hard I tried, I could not convince anyone at BMOI/BMO to send me a debit card for the account, which would have allowed me to “Bill Pay” CRA instead of writing cheques. ↩︎

Useful: Trading Authorization for online accounts

RobHLeave a comment

Having Trading Authorization (often called “TA”) is useful in a number of scenarios, but it doesn’t cover every angle either. It’s a minor hassle to set up, but altogether a useful endeavour.

What is Trading Authorization?

Well, you can start with a formal definition here: https://www.investopedia.com/terms/t/trading-authorization.asp. In essence, it gives you control and visibility over another person’s investment accounts (non-registered, TFSA, RRSP, RRIF, it doesn’t matter what kind).

Wait, what? Isn’t that what is normally called “Power of Attorney”?

Well, sort of. Power of Attorney (a handy — and free — guide can be found here) gives you the right to have this sort of control over any sort of account (bank, investment) but most institutions will still require you to fill in THEIR paperwork.

Trading Authorization forms normally require you to specify which accounts, specifically, are being authorized, meaning it’s entirely possible to have TA for a person’s TFSA but NOT their RRSP.

Here are some links describing the process for a number of brokers1:

Scenarios Where I’ve used Trading Authorization

Managing Family Finances

Since I’m the prime manager of our family’s retirement funds, I have trading authorization over my spouse’s accounts. The prime reason to do this is so I can see all the accounts from my login3 — even if they are held exclusively in my spouse’s name. This just makes things faster and simpler to do portfolio rebalancing, or even more practically, to get paid in retirement.

My spouse still needs her own login, since things like account statements and tax forms are only available from her login since she is ultimately the owner of those accounts, not me.

Managing My Parents’ Finances

As my parents aged, they passed on management of their retirement assets to me. I sat with them in a BMO branch as they filled in the paperwork4 to open their self-directed BMO Investorline accounts. This included filling in BMO Investorline’s paperwork designating me as the Trading Authority over their RRIFs, their TFSAs, and their joint non-registered account.

Having trading authorization on my parents’ accounts gave me my own login to the BMO Investorline platform, and from that screen I could see all the accounts and make trades. It also allowed me to call their support line myself and seek help doing things like in-kind RRIF payments to my folks’ non-registered account.

Limitations of Trading Authorization

Trading authorization isn’t an identity-based concept; rather, it’s an account-based concept. This means, for example, if you have trading authorization over three of your spouse’s accounts, and your spouse opens a fourth account, you do not automatically get trading authorization over the new account. The paperwork has to be filled in for the new account.

Trading authorization is only good for people who are alive. Trading authorization has no meaning if the account holder dies. Once that happens, you lose access to the account. Getting it back usually involves going through the probate process.

Different platforms treat accounts managed by trading authorization differently. In QTrade and BMO Investorline, there was no distinction at all between my and my spouse’s accounts. I had to give them nicknames to help me remember whose accounts were whose. In Questrade, I can only get a unified view of accounts from Questrade’s Edge platform, which although powerful, is a bit of an assault on the senses.

  1. all found by googling “trading authorization” <broker name> ↩︎
  2. A pretty interesting gap for a company that doesn’t have too many ↩︎
  3. Interestingly, Passiv doesn’t care who owns a linked account. If you have the login credentials of ANY user from a Passiv-supported broker, you can link them to your Passiv login. ↩︎
  4. One example of only a few where the relationship between BMO and BMO Investorline was useful. ↩︎

News: Extended Tax Filing Deadline for some of us

RobHLeave a comment

Summary: If you have capital gains to report for the 2024 tax season, your tax filing deadline has been extended by a little over a month, until June 2, 2025.

Much ink has been spilled about the proposed/delayed/killed changes in the tax treatment of capital gains in Canada. All the fuss simply means that some of us get an extension to our 2024 tax filing deadline. Does it apply to you? It might. Here are some1 scenarios where you might get a chance to file a bit later.

You Have a Non-Registered Investment Account? Read on.

Some people get confused over capital gains. Capital gains don’t apply to TFSAs, RRSPs, RRIFs, LIRAs or FHSAs. So if that’s all you have for your investments, you don’t need to worry. But if you do have a non-registered account, then the extended deadline may apply to you.

Did you get a T3 or T5 slip? Read on.

Box 21 of the T3 slip and box 18 of the T5 slip shows capital gains realized by funds you held in 2024. If you have values in these boxes, then you can procrastinate!

These boxes will be non-zero if you held ETFs or mutual funds that sold shares behind the scenes and made a profit. My go-to investment asset-allocation ETF (XGRO) made capital gains of nearly 15 cents per unit held2, per https://www.blackrock.com/ca/investors/en/literature/tax-information/distribution-characteristics.pdf.

Some people are confused by the idea of having to declare a capital gain on an asset they didn’t touch in the course of the year. While you didn’t do anything, the people who manage the fund on your behalf did. The alternative would be to hold individual stocks yourself, but I myself prefer the massive diversification of funds like XGRO.

Did you SELL an asset in a non-registered account in 2024? Read on.

In many circumstances, the sale of a stock/ETF/mutual fund/foreign currency3 in a non registered account will generate a capital gain. While this scenario doesn’t apply to me in 2024, in 2025 it certainly will since part of my retirement income comes from this exact source.

None of this applies? No extension for you, probably.

If you answered “no” to all the previous questions, then you should file your taxes per the usual deadlines. And even if you answered “yes”, there’s no harm in filing your taxes anyway, since modifying a filed return is pretty easy to do online. Be aware, though, that some providers may delay getting T3s and T5s to you, so if you’re expecting these documents and haven’t seen them yet, you should probably wait for them before attempting to file. The providers I deal with typically don’t issue all documents until the last week of March, so I’ll get started on filing my own taxes starting in April.

  1. There are almost certainly other scenarios where you get an extension. I’m not an accountant or a tax lawyer. Caveat emptor. ↩︎
  2. In my case, I don’t actually hold XGRO in any non-registered account at the moment. It’s all in RRIFs/TFSAs where I don’t have to worry about such things. ↩︎
  3. Interactive Brokers issued me a statement showing me the money I made buying and later selling a chunk of USD in 2024. That counts too. ↩︎