Maximize Tax Efficiency in a Canadian Cash Account | Dividends vs Capital Gains (Taxes)
ฝัง
- เผยแพร่เมื่อ 5 ก.ค. 2024
- 00:00 Intro
01:26 Sources of Taxable Income (Canada)
05:32 Dividends vs Capital Gains
11:03 Finding Income Sources on Stocks
11:39 Example of a T3 slip
12:35 3 TIPS
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#passiveincome #investing #dividendincome #financialfreedom #livingoffdividends
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
I feel your pain mate, as a fellow retiree, I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
@@RoseSmith-v7g That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well
@@PeterEdet-rh5ot My advisor is Victoria Carmen Santaella;
You can look her up online
@@RoseSmith-v7g The crazy part is that those advisors are probably outperforming the market and raising good returns but some are charging fees over fees that drain your portfolio. Is this the case with yours too?
Once you max out your TFSA, this youtube video is so important to watch.
You’re the best man. Was just wondering about this. Thanks Adrian.
I have learnt so much from you. You are a very smart guy, I wish I had discovered you 20 years.ago , when I didn't have a clue about investing.
Thanks for the tax video Adrian, I *really* appreciate how you present this information in an organized, easy to digest format.
A1 !
Appreciate the Canadian slant, great breakdown. Thanks for the info!
Thx Adrian for all the great help you give generously.
My pleasure!
I’ve never used RRSP’s I’m on track to earn $140,000 this year so I’m gonna drop $60,000 into RRSP’s so I can hopefully get around $25,000 on my tax return. Then I’ll use that $25,000 to fund my TFSA. I’ll do the same thing again in 12 months time.
SMART, you will understand the power of the RRSP right away
What's the reason y u never used your RRSP?
@@Mewzyc Well, over the years I spent most of my money on Woman, drugs, gambling and Alcohol. The rest I just waisted.
@@geggs1 makes sense. Ya TSFA and RRSP wouldn't make sense for those over regular savings/chequeing account.
😂😂👍
Exactly what I wanted to know. Thank you for a very informative video.
This is a great video, thanks.
Along these lines ,I just maxed the tfsa now what.
Love a vid on this topic.
Rrsp and cash !
Thanks a lot brother, appreciate the videos.👍🏾
Hi Adrian, thanks so much for this video. It cleared up the tax question I had before. A question on the RRSP contribution, rich dad poor dad don’t suggest people to continue to 401k which is the RRSP equivalent in the States. Reason being these are just a tax deferring tool. When you reach 71 in Canada you have to convert to RRIF. When you withdraw the required amount from it, you will get taxed according to the tax brackets at that time. So RRSP is only good for people who believe they’ll make less money in retirement. If you make more and more money from passive income, you’ll actually get taxed more when you retire. Is this thinking right? I could very well overlooked some key points. What are your thoughts on this?
Thanks dude! More interesting than I thought it was going to be!
lol its the topic i hate the most
Thanks - great video. Really informative
Thanks Adrian for the video, also from Quebec.I think I'm going to start looking for a shed in Ontario :p
A shed is probably all you’ll be able to afford right now ! lol kidding …
Love the Ontario example 👍
Thank you for this video!!
Leaving Quebec just before retirement you need to check the RRIF tax rates, they are twice as much in all other provinces.
That would mean you would need to make it way, way past 71 years old.
Awesome tips. Thanks Adrian.
Glad it was helpful!
Great information. Thanks.
What does cra categorize the yield payments of HYLD or something similar?
My tfsa is almost full and will be using cash account soon
Thanks Adrian! I have been waiting for this video. After became a PII, I finally have gains at the end of the year. So, naturally need to understand how to maximize tax efficiency. 😄 Nice video!
:) glad to help out. Stay Passive
Great content, glad I'm in BC :)
Me too!
What would reits be considered interest or capital gains the reits have distributions
Nice informative video. Thanks. New to PIII. On the tax chart, 2022 taxable income (first column), is that only salary, rent etc. And not including any returns from the PIII?
That’s salary and interest income ( it’s your marginal tax rate )
Great video, ive made quite of few financial changes based on the information you've provided. Big one retirement! Question thought. I to have a large portion of my non reg trading account with hyld. I can't find any documents as to what portion of the distribution is capital gains and dividends. Dividends outside of canada are taxed similar to GIC's. Capital gains are the same. We will only find out in February when we receive our t3's. My advisor said that hdiv might be better tax wise than hyld. Any thoughts?
yes its possible but it should be a small difference probably. It will be mostly capital gains i think. HDIV does have more Canadian focused ETFs so there could be eligible dividends, you can find HDIVs 2021 tax info on their site. 81% was capital gains, 15% was e. dividends and the rest F. I.
Hi... So what am I missing here:
With income tax levels, when you reach a higher tax bracket, it doesn't apply all the way down. You still pay the lower tax rate on the portion of your income under the first bracket, the higher tax rate only applies to the amount above the lower bracket.
I am assuming that it is the same here? Does one pay the lower rate on the portion of dividends that fall within that bracket, one doesn't suddenly pay the higher bracket tax rate all the way down?
Because if that is the case, then it would have to be an astronomical income before capital gains became more desirable than eligible dividends? Just because a bit of your income has reached the higher bracket, so cap gains are better for that bit, all the rest of your dividends are still assessed in each of the lower tax brackets... So you'd need mad cap gains advantages to offset that...
What am I missing?
Thank you
Excellent video! I did not know that there was such an "horribilis" difference between Ontario and Quebec! If you give me permission, for those living in Quebec, there is a site giving very well done information on taxes, for different type of people: maried, single, over 70, under 60, etc...etc...but it is in French....the tables are in $ 😁
yes QC is terrible when it comes to taxes (among st other things ) :)
As always, thank you for the value you create for the community. Much appreciated, Adrian. Could you clarify my concern? Let's say you have an annual income of 50K. 48K came from capital gains, and 2K from dividends. Does it mean I'm being taxed 11.43% on the 2K dividends? Thank you in advance.
If you are in the tax bracket and province associated with that rate : yes
Awesome video Adrian, definitely clarified things that was questionable in my mind. Thank you so much
My pleasure!
Adrian.. I was hoping that you would tough base on US "Interest , Dividends and Capital Gains" received in a Canadian Cash (non registered) account. I hold CLM, QYLD, RA, RIV and a few more in my account to generate income that I use while Snow Birding in Florida. Can you comment on which is more efficient for us Canadians when filling our Income Tax.... thanks and keep making those helpful content videos
That should all be foreign income , but the roc would be roc . The most tax efficient thing is NOT having us listed funds anywhere besides a rrsp or lira
Love the information thank you so much! However... I have a few GIC's. I feel ashamed now. :/ lol
Great video, how do preferred shares from split funds get taxed in a cash account
check their website its all there. typically its all e. dividends
Could talk about *the merge* of ETHY? What’s gonna happen to the stock?
What about QYLD in a non reg account? Is the foreign ROC considered ROC in canada or is it fully taxable like foreign income?
Roc is roc . That I can confirm
Thanks Adrian for the content! If you have a chance please take in consideration the 2nd Vote Option as well "Income Investing vs Growth Investing if you DON'T NEED the INCOME"
of course! its on the "list" :)
Adrian excellent video! Question. I noticed capital gains has different rates in taxation on the chart? I thought it was 50% for all gains period?
only 50% is taxed but the rest is taxed according to your bracket and province as shown. the lower the bracket the lower overall taxes paid.
@@PassiveIncomeInvesting thanks!
Foreign income gets taxed the same as regular income according to your marginal tax rate, in a non registered(cash) account. So, based on that principle, does foreign income contribute to your rrsp room?
No
Hi I have a question
I am confused in a cash account does the money I invest in the account get taxed too or just the dividends
Example
I invested 10k into TD in cash account and that the investment produces $35 quarterly and $140 annually
Would the 10 k get get taxed or the $140 annual dividend
Thanks
You get taxed on the gains, the dividends in your case.
What about US dividends and ETF?
Hello Adrian
Which Broker (outside of EU) do you recommend for European citizen living in EU ?
I want to invest in EEUU & CAD ETF but unfortunally I could not find anyone reliable. Btw, I can't open a Questrade account from EU
Not sure … try interactive broker
@@PassiveIncomeInvesting thanks for replying. Interactive brokers not too. I used DeGiro and Xtb without luck too.
What means negative % tax on dividends?
Thank you….Hi5
Thanks for the video Adrian. One thing I’m wondering is when you start extracting/using your passive income, which account should you take it out of first?
I would say there’s no right or wrong answer to this question . Up to you
maybe use your cash account because in your tfsa you can just reinvest your dividends tax free. but i’m new so that may not be the smartest answer!
@@nathanyuki but if you take your dividends out of your TFSA you can increase the room of your TFSA for the next year🤔
I am one of those ppl in Quebec, This video showed me just how much more it costs to live here. Just thoses darn houses in Ont. are too $$$
time to move to Nunavut! lol
Hi Adrian. Thanks a lot for your channel. Learning a lot from you. Im in debate now. Need your opinion. I have about $40k available right now and thinking what to do. One option is to invest in these income funds or to put as downpayment to get a condo and rent it out. What do you think will be better way to do. Im in Canada. Thanks
Hard question! Both good options but the condo thing can be a lot more work . Also condo prices should drop in the coming year . I would do stocks for sure
@@PassiveIncomeInvesting thanks man! appreciate the reply!
If u watched his older videos, he sold his condo and rented instead and used the money to invest in passive income.
Could you please make more video canadian/us tax efficient stock for margin/cash account ?
i think i said all there is to know about cash account taxes in this video
When do you see ffn paying again?
Thx for the great work
When fear is over and the financial stocks inside recover
@@PassiveIncomeInvesting Thank you
Great Video! I watch your videos every time you put one out.. you said that one of the tips to lower your tax bracket is to contribute to your RRSP for Canadians. If you contribute say 60,000 and your income was 50,000. would the deduction be 50,0000. and can the other 10,000 be forwarded to the next year. or do you just lose the rest .I dont know if Im explaining this right. can you forward any unused amount on your next years taxes .if your contribute more than your actual income that year. Dont really know how this works.
good questions, i know 50k would be deducted but im not sure about that extra 10k
You can definitely defer the other 10,000 to the next taxable year. There are diminishing returns though, and deferring your contribution to a year where you might be making say 80,000 would be a better use of that contribution. In your scenario it likely wouldn't make sense to deduct the full $50,000, you would probably only contribute enough to drop yourself into a lower tax bracket and carry the rest forward (I'm no expert though)
@@devocracy1089 Great! Thanks!
@@PassiveIncomeInvesting ok thanks
Is EIT taxable as capital gains or as interest income??
Go look it up like I discussed or watch my tax video
What category would a REIT be under maybe capital gains or dividends
it can vary, all tax info on the ETF providers website
It is not an etf the company is called smart centre real estate
So a chequings account at the bank is considered a non-registered account?
no, that's a bank account. im talking about investing accounts, not bank accounts
Has the information changed recently?
Great Video once again Adrian, quick question...
We reside in yes "La Belle Province" with high income and I've started mastering your passive dividends strategy last year. Now why is there difference of 9% between eligible and non-eligible dividends? What do you suggest for us quebecers...
Many thanks again for your insight my friend
I never saw non eligible dividends in any funds . I wouldn’t worry about it
Good video. Informative. Who is responsible for calculating the dividend gross up on eligible dividends? Is this already factored in the T3 numbers, or would the accountant calculate this? Would the accountant automatically know this needs to be done to receive the dividend tax credit?
The numbers are the the correct boxes so when you put them into the tax program it does it for you.
Your broker will provide the statements
no need to do anything on your part. its done automatically by your accountant or tax software
The gross up situation is a Complicated math calculation. I studied how it was done and...well, basically it is super complicated. Fortunately we do not have to do it and it is calculated by the software you use or the software of the accountant or if you do it using the very old fashion way by the CRA paper format. Trust me, its complicated! 😳😐
great info!! if you have maxed out TFSA and RRSP investment accounts does the Non Reg investments create more RRSP room?
nope only regular income does that, not investment income
Let's say you have 50k in capital gains and 50k in dividends. Say you contribute 50k to your rrsp. Would you be taxed at the cg tax rate or dividends tax rate?
It’s an “overall thing “ with the rrsp . Best to ask an accountant.
What is the difference between a T3 tax doc and a T5? Thank you 😊
T5 is only eligible dividends T3 is for funds that have multiple sources of income
@@PassiveIncomeInvesting 💡 I see! Thank you for clarifying
Do you have to apply for the dividend tax credit or is it automatically applied?
You don't really apply for it, when you do your taxes there are some calculations you do to get the number you put on your tax return.
@@matthewpekelny9761 beauty. Thanks!
auto
If you use a software you will see as you work through it that the dividend tax credit is already applied, thank goodness!👍💯. So is the pension tax credit, if you are retired, thank goodness again😊
Doesn't ROC get taxed as interest after the ACB hits 0
no, capital gains
Loved this video !!! also from QC.... gross...
lol i know, go to Ontario! Hawksberry is like 30 mins from border
Me too arggh...
Thanks Adriano, you've changed my life for the better since we talked.
My dividends will add up to 88,000 for the year and I live in BC.
Good news since I'll be able to income share with my wife.
Cheers!
Enjoy the easy 💵💰brother
What about Foreign Income? Is it taxed at full marginal rate?
Google your question and it will be answered in detail.
Pretty much . There is a tax credit but it’s pretty small . I would put it in that category
RRSP only makes sense for high income. I am using it to limit my marginal tax to about 43%. TFSA is for everyone.
not necessarily. it can offset taxes even at lower brackets. i contributed even when I was making less than 40k/ year back in the day and do not regret it
@@PassiveIncomeInvesting My parents did. They regretted making RRSP controbutions while making low wages. They would have been better off collecting from government. Mind you, they never made high wage in this country as new immigrants. I am making sure that the lesson is not lost on me.
Now that I am looking at retirement in the next decade, I am in position to put 50k plus per year into RRSP to limit my tax liabilities. No, don't feel right about government taking 50% or more.
So glad to live in Montréal^^ #not :)
What about Alberta?
www.taxtips.ca/marginal-tax-rates-in-canada.htm
Bc tax eligible dividends.
Can I get an address in Ontario someone? 😀
Been trying to get a strait answer about usoi.
It seems they pay out in coupons or inco.e from bonds so we definitely want this one in a registered account. Being that is not dividend it doesn't matter if it's in rrsp or tfsa because the 15% withholding tax is on dividends. Is that correct?
It seems like a good one to have in the tfsa for sweet tax free income
Thanks
i have had conflicting reports about this so i cannot say for sure. Buy 1 share and let me know :)
Awesome Thanks.
Rrsp account it is
I was looking at the history. It looks to me like the divy fluctuates but seems pretty good even at its lowest.
Ive had USOI in my tfsa for a long time. They have never taken 15% witholding tax😊😊😊
@@jimheifetz6117 I own USOI in my RRSP in August I was paid 17% yield and in Sept my yield was 24% which is after the reverse split. So not sure they lowered the monthly distribution? Unless that will show up next month (for month of October distributions).