Capital Loss Without Economic Loss Denied Under the GAAR

In its latest GAAR decision, Triad Gestco Ltd. v. The Queen released on October 15, 2012, the Federal Court of Appeal applied the GAAR to deny the taxpayer’s capital loss on the basis that the taxpayer had not suffered a current economic loss. The court reached this conclusion even though the capital loss deduction rules do not expressly require an actual economic loss.

Click here to read an in-depth analysis of the case written by Richard Bennett and Patrick Lindsay and published in Tax Notes International.

18 octobre 2012 - Mise à jour du marché résidentiel

Market Commentary

Fall is a cold wind blowing in the housing market in Canada. September figures from the Canadian Real Estate Association show a fall of more than 15% of home sales compared to last year. More than half of the country markets show a decrease of at least 10%. This sharp decrease is attributed to tougher mortgage rules applied by Ottawa. However, September sales exceeded those of 2.5% in August. Despite this decline in sales prices rose by 1.1%, giving an average price of $ 355,777. Rising prices was in fact constrained by declines in Vancouver. Excluding Vancouver calculating the price increase is 3%. Although the federal government's efforts to calm the housing market seems successful, efforts to reduce household debt are blank. The ratio of debt to income ratio of Canadian households rose to 163.4% in the second quarter, against 162% in the previous quarter. Although this increase - compared to the previous figure of 150% - the result of a change in calculation methods, the quarterly increase observed indicates that owners ignore warnings about unsustainable levels of debt. In Canada, the ratio of debt to income ratio is now higher than it was in Britain and the United States before the real estate crisis strikes in both countries.

Parlons Vivant: Les cinq mythes de l'assurance invalidité/ Living Benefits talk: The five Disability Myths - dvk.b2b2c@gmail.com - Gmail

Les cinq mythes de l’assurance invalidité

Pourquoi les canadiens oublient d’assurer leurs chèques de paie? Parce qu’ils croient généralement à l’un des mythes en assurance invalidité.

Mythe 1 : Le gouvernement(CSST, SAAQ, AE, RRQ) va me couvrir si je deviens invalide.

Réalité : Les régimes gouvernementaux ne paient que des prestations pour une invalidité totale, qui est définie de façon très stricte. Ne couvrent pas l’invalidité partielle.

Mythe 2 : J’ai une assurance invalidité par mon employeur

Réalité : Beaucoup de gens ont la chance de travailler pour une entreprise qui se soucie de ses employés- c’ est un énorme avantage. Cependant, la plupart des plans d’assurance collective ne couvrent que 60% du revenu d’un employé avec un avantage imposable. Après impôts, ils reçoivent seulement 42% de leur revenu. S’ ils peuvent maintenir leur mode de vie sur 42% de leurs revenus, ils ne sont pas à plaindre, sinon ils devraient envisager une protection complémentaire.

Mythe 3 : L’assurance invalidité est trop dispendieuse

Réalité : En regardant la valeur reçue par rapport au coût, l’assurance invalidité est en réalité moins chère que l’assurance automobile ou habitation. Pour seulement quelques dollars par jour, une personne peur assurer des millions sans impôt sur le revenu. Que demander de mieux.

Mythe 4 : Je ne suis probablement pas assurable

Réalité : Très peu de gens ne sont pas assurables. Les compagnies d’assurance offrent des plans pour les personnes ayant une condition médicale quelconque, ceux ou celles qui travaillent dans les professions à haut risque et pour ceux ou celles qui ont des passe-temps à haut risque.

Mythe 5 : Mes chances sont minimes de devenir invalide….Je travaille dans un bureau

Réalité : 75% des invalidités est causé par la maladie plutôt que par des blessures, et les statistiques montrent qu’un tiers des individus âgés  de 30 à 64 ans sont invalides au moins une fois durant leur vie active au travail. Poser la question : pouvez-vous vous permettre de ne recevoir aucun revenu durant 6 mois ou plus?

Maintenant que savez les faits, vous serez surement d’accord que l’assurance invalidité est un composante essentielle de chaque portefeuille financier, et avec une économie plutôt chancelante, l’intérêt des consommateurs en matière de protection prend de l’ampleur. Il n’y a pas meilleur moment pour offrir cette protection, faites en une priorité.

The Five Disability Insurance Myths

Why do Canadians forget to insure their paychecks? Because they usually believe on of these disability insurance myths.

Myth 1 : Government(CSST, SAAQ, EI, QPP) will cover me if I become disabled

Reality: Government plans only pay to those with total disability, which is defined very strictly. Does not cover partial disability

Myth 2 : I have disability insurance through my employer

Reality: Many people are fortunate to work for a company that cares for its employees- that’s a huge benefit. However, most group disability insurance plans only cover 60% of an employee’s income with taxable benefit. After taxes, they receive 42% of their income. If they can sustain their lifestyle on 42% of their income, they’re in great shape, if not, they should consider a supplemental policy.

Myth 3: Disability insurance is too expensive

Reality: By looking at the value received compared to the cost, disability insurance ia actually less expensive than auto or home insurance. For just a few dollars a day, a person can insure millions in tax-free income. There’s truly no better deal.

Myth 4 : I am probably uninsurable

Reality: Very few people are uninsurable. Carriers offer plans for medically impaired individuals, those who work in high risk occupations and even for those with high risk hobbies.

Myth 5 : I’m not going to be disabled….I work in an office!

Reality: 75% of disability is caused by illness rather than injury, and statistics show one third of individuals between age of 30 and 64 are disabled at least once their lifetime. Ask the question: Can you afford to go without income for six months or more?

Now that you know the facts, you surely agree disability is an essential component of every financial portfolio, and with the unsteady economy, consumer interest in income protection is gaining momentum. There’s never been a better time to offer this protection, make it a priority

Montreal shifts to buyer’s market: Royal LePage

Hard hit by tougher mortgage rules, Montreal property sales slowed during the third quarter in a market that now favours buyers, Royal LePage Real Estate Services said Wednesday.

Residential prices, which were up slightly in Q3, year over year, are expected to dip by the end of 2012 - especially in the once hot condo market, where new construction continues to hit record levels. Condo inventory was up 23.4 per cent in the quarter, year over year.

“Price softening should be felt in the coming months, especially in condominiums,” said Dominic St-Pierre, director of Royal LePage for the Quebec region.

Compared to the same quarter in 2011, the average price of a Montreal home in 2012 rose:

-4.5 per cent to $287,500 for a detached bungalow.

-5.5 per cent to $387,786 for a standard two-storey home.

-.3 per cent to $236,989 for a standard condominium

Royal LePage blamed the downturn on new mortgage rules  - including a reduction of the maximum amortization period from 30 to 25 years. The change went into effect in July, when sales were already slowing in the country’s larger real estate markets. The new rules, which are applicable to CMHC-backed mortgages, hit first-time buyers who account for a third to half of the market, Royal LePage said.

“We don’t believe these measures were necessary,” St-Pierre said of the government’s tougher mortgage rules.

 According to the survey, the average price of a home in Canada rose between 1.8 per cent and 4.8 per cent in the third quarter of 2012 compared with the same period last year.

5 ways to get mortgage-free faster | Sympatico.ca Your Money

5 ways to get mortgage-free faster

by Kerry K. Taylor ..A mortgage-free home not only saves you money today, but could save you a quarter million dollars over a 25 or 35 year amortization.

Is that mortgaged roof over your head weighing heavy on your shoulders? Then maybe it's time to get serious about your mortgage and try to pay it off sooner. 

Don't believe me? The Canada Mortgage and Housing Corporation (CMHC) has a handyMortgage Payment Calculator that crunches the numbers and does the math, and it shows that a $250,000 mortgage on a 30 year amortization (at 5.50 per cent) costs you around $257,500 in interest alone.

If you have no desire to pay for your home twice (and who does?), then reduce your interest payments and trim your mortgage costs with these five tips, and get mortgage-free faster.

1. Know what you can really afford.

Before buying that lavish estate, take a look at your paycheque and figure out how much of a mortgage you can comfortably carry. A good way to see how a mortgage feels is to practice paying it before you buy. Try this tactic:

• 1. Pay your landlord your monthly rent. Tally the difference between your rent and your anticipated mortgage cost.
• 2. Put this additional money into a Tax-free Savings Account or a high interest account and use it later for your home down payment.
• 3. If you can't come up with this additional money every month, then your anticipated mortgage price is too high. Continue saving for a bigger down payment or look at lower priced homes.

The Investor's Education Fund offers a series of home buying articlesfor would-be home buyers looking to scrape together a down payment.

2. Use your prepayment privileges.

If your mortgage has prepayment privileges -- lump sum payments you make outside of your regular mortgage payment schedule, where 100 per cent of the payment goes against the principal -- then you should use them to pay off your mortgage faster.

On a $250,000 mortgage at 6 per cent over 25 years, one prepayment of $1,000 each year could save you around $26,000 in interest and pay off your mortgage two and a half years sooner.

3. Get on an accelerated bi-weekly payment plan.

Want to really end your mortgage faster? Consider paying your mortgage every two weeks, for a total of twenty-six payments per year, using an accelerated bi-weekly payment plan. Your mortgage payments will fall on different calendar days each month, but this minor inconvenience could save you a stunning $50,000 in interest over monthly payments, assuming that same $250,000 mortgage with a 30 year amortization at 5.50 per cent.

4. Round up your payments.

If your regular mortgage payment is an odd number like $14,04.88, then round up to a more memorable $1410 and save some interest over the life of your mortgage. The extra $5.12 should be painless to part with, and even a little top-up can make you a homeowner sooner.

5. Pay a lump sum when possible.

Did you get a bonus, a tax refund, or come into an inheritance? Rather than squander this cash on consumer goods, add this after-tax cash to your mortgage principal and discover the freedom of being mortgage-free faster.

Your Turn: What tricks do you use to pay down your mortgage faster?

Content in this section is provided by Investor Education Fund, a not-for-profit  organization established by the Ontario Securities Commission. IEF provides unbiased resources to help people make smarter financial decisions. GetSmarterAboutMoney.ca is IEF’s personal finance website.