Canadian MoneySaver magazine has provided Canadians with balanced insight into personal-finance issues since 1981. Through an exclusive arrangement
with The Costco Connection, Canadian MoneySaver’s experts provide Costco members with answers to their questions about financial issues.
In the September/October issue of The
Costco Connection you stated that there
is a capital gains tax on the sale of shares.
Why doesn’t the lifetime capital gains
exemption apply? (I believe it was $500,000
and it’s now $750,000.)
The capital gains tax exemption that you
are referring to is only for a Canadian-con-trolled qualified small business. You, as an
individual, would have to pay capital gains tax
in a situation like that described in my answer
to the original question in the magazine.
—Brenda MacDonald, CFP
Independent Financial Counselor
(To see the original question and answer
for this and other topics, check out The
Costco Connection’s electronic archives on
May I use RRSP funds to purchase a second residence?
—C. W., e-mail
You may use RRSP funds to do anything
you wish. The withdrawal, of course, will be
subject to withholding tax.
If your question is pertaining to the
Home Buyers’ Plan (HBP) and you currently
Send to: Canadian MoneySaver,
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370, Bath, ON K0H 1G0. Or e-mail
ca (please include “The Costco
Connection Q&A” in the subject line).
Canadian MoneySaver will
answer selected questions in this
bimonthly column. Unpublished
questions may be answered on the
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own your principal residence, you will not
qualify under the program. Amounts withdrawn and repaid under the HBP are not subject to tax.
—Becky Wong, CFP, Financial Planner
ABF Financial Services
Can I deduct the full 6 per cent borrowing cost on my income taxes? I’m thinking that the tax deduction and dividend
will cover the majority of the 6 per cent
borrowing cost. Does this leave me with
a capital gains opportunity?
—J. W., e-mail
My wife has capital gains from stock
investments. I have no capital gains, but
I have a small capital carry-forward loss
from a previous real estate transaction. I
understand that a spouse can “buy” capital losses by buying the losers. Is there
any way my wife could “buy” my capital
losses? Of course, I don’t have the real
estate any more.
Unfortunately, you cannot use this strategy with your realized loss carry-forwards that
you have from real estate.
This strategy works only when one spouse
can access unrealized capital losses from the
other spouse, which means that the spouse is still
holding the asset with those unrealized losses.
In your case, because your losses have
been realized (you already sold that asset), you
cannot take advantage of this strategy.
—Sandy Cardy, CA, CFP, TEP
Senior Vice President, Tax & Estate Planning
Mackenzie Financial Corporation
I am looking to borrow $100,000 at 6 per
cent interest to invest in Canadian blue-chip stocks with a 3 per cent dividend.
Although there is always a question
about deductibility of interest expense when
it exceeds investment income, as a practical
matter I have never really seen it challenged
by the CRA.
—Ed Arbuckle, CA
Fee-Based Family Wealth Planners
I am the sole owner of an incorporated
business and have no employees. Can I
set aside a specific amount monthly for
a health spending account and use it for
items such as hearing aids when and as
I need to?
I would recommend you investigate
Private Health Services Plans through the
Olympia Trust Web site (www.olympiatrust.
com), as they provide a good description.
Certified General Accountant, Tax Detective
Members can also find information on health
insurance on www.costco.ca. See page 81 in
this issue, or click on “Services” and then“Life
and Health plans.”—Editor