Author: kiara

With the December 27, 2023, deadline fast-approaching, contact your Rothenberg Wealth Management Advisor to see if your investment portfolio can benefit from this strategy, and if you can save money on your 2023 personal income tax return.

Investing is the key to growing your wealth, but you can’t always expect to take profits from all your investments. There’s always some risk involved, and losses are inevitable. Tax-loss harvesting may sound like a fancy concept, but it’s a rather straightforward and highly effective strategy that can find a silver lining in those losses, when implemented by an experienced investment professional like a Rothenberg Wealth Management Advisor.

What is Tax-Loss Harvesting?

Tax-loss harvesting (also called tax-loss selling) involves selling an investment within a non-registered account that has depreciated in value and leveraging these losses to offset capital gains from other investments. The primary objective is to minimize the tax liability that comes with capital gains.

But wait, what are capital gains?

To understand tax-loss harvesting, it’s important to understand capital gains. You have a capital gain when you sell an investment for more than its purchase price, which means you make a profit.

In Canada, capital gains are included in your annual taxable income and taxed at your marginal tax rate. However, only 50% of the total capital gains is taxable.

Capital losses, on the other hand, are triggered when you sell an investment for less than what you purchased it for, meaning you are taking a loss.

Implementing Tax-Loss Harvesting

Not every investment will be profitable, but that’s the risk you accept when you make an investment. However, you can find a silver lining to losing investments with tax-loss harvesting.

With tax-loss harvesting, the strategy is to sell an investment that’s declined in value and losing money so you can use the loss to reduce the total amount of capital gains you would otherwise be taxed on when you file your personal income taxes.

Finally, you reinvest the proceeds from that initial sale in different investments and better position your portfolio going forward.

Example of the Power of Tax-Loss Harvesting

You buy XYZ stock for $1,000 and it’s now worth $2,000, so you sell it and trigger $1,000 in capital gains. You also bought ZYX stock for $800 but it’s now worth $200, so you sell it and trigger $600 in capital losses. You can net the capital gains and losses to report only $400 in capital gains on your tax return.

Since only 50% of the total capital gains are taxable, using the above example, only $200 in capital gains will be subject to your marginal tax rate. Without tax-loss harvesting, you would have to pay tax on $500 of capital gains from XYZ stock. As you can see, tax-loss harvesting as a strategy can actually help you save money on your tax bill.

The above example is relatively straightforward, using small quantities of securities and manageable investment amounts, but normally your portfolio will be more complex. You’re not just holding one type of security, your portfolio likely includes a diverse asset mix, including but not limited to stocks, ETFS and Mutual Funds.

Applicable Investments & Limitations

• Applicable Investments: Tax-loss harvesting can only be applied to investments held and sold within a non-registered account. This can include securities like individual stocks, bonds, ETF or Mutual Funds, which incur taxable capital gains. Tax-loss harvesting is not useful in registered accounts like a RRSP or TFSA, since they are tax-exempt.
• Superficial Loss Rule: You should not sell an investment at a loss and buy the same investment within 30 days before or after the sale, otherwise you cannot use the capital loss for current income tax purposes.
• Year-end deadline: To offset capital gains realized in a calendar year, losses must be settled within that same year. The last day for Canadian and U.S. tax-loss selling is December 27, 2023, for your 2023 income tax return.

The last day for Canadian and U.S. tax-loss selling is December 27, 2023. With the deadline fast approaching to take advantage of the potential tax benefits of tax-loss harvesting, contact your Rothenberg Wealth Management Advisor to get personalized support. Your Rothenberg Advisor will be able to help you make an informed decision about whether tax-loss harvesting is a strategy you can benefit from. 

With interest rates at an all-time high, right now is the time to invest in GICs for long-term security and peace of mind.

Guaranteed Investment Certificates (GIC) provide a reliable source of income and are a great way to get closer to your financial goals. With competitive fixed interest rates, you can rest assured that your funds are invested safely and securely regardless of stock market fluctuations. It can be time-consuming, however, to shop around for the best rates. That’s why you may want to consider working with a GIC broker.

GIC brokers like Rothenberg & Rothenberg specialize in finding the best possible GIC rates on the market. As a broker, they monitor rates across dozens of institutions daily and compile this information to make sure you have access to the highest interest rates.

“We know what’s happening with the GIC rates on a day-to-day basis. We do the homework for the client,” said Tina Patel, GIC department coordinator at Rothenberg & Rothenberg. “We shop across Canada to get the best rate for our clients, and we don’t just deal with one financial institution. We deal with over 25 financial institutions across the country.”

But it’s not only a matter of easy and flexible access to great GIC rates from Canadian banks, trust companies and credit unions. When you choose to go with a GIC broker instead of buying from the issuer directly, you can potentially maximize your returns.

By purchasing directly from the issuer, your funds are at risk if you invest more than the $100,000 amount covered by the Canadian Deposit Insurance Corporation (CDIC). You want your interest protected, so you should always invest less than the eligible insured amount. By purchasing a GIC through a broker like Rothenberg & Rothenberg, you can increase your insurance coverage and invest across multiple financial institutions.

Further, using the services of a broker like Rothenberg & Rothenberg to purchase GICs has no cost for you as the client. Much like a mortgage broker that is paid by the provider and not by the client, GIC brokers are paid a fee by the financial institution offering the GIC.

“There is no fee charged to the client if a client were to come into Rothenberg. If we quote them a one-year GIC rate at six per cent, that is the rate the client will get,” Patel said. “The commission paid to Rothenberg does not affect the rate of return to the client in any form.”

With the help of a GIC broker, achieving your financial goals becomes a lot more realistic. Through their guidance and expertise, you can be confident knowing your investments are in good hands.

Rothenberg & Rothenberg has been serving the GIC needs of Canadians since 1979. With offices in Westmount, South Shore, Pointe-Claire in Quebec, and an office in Calgary, Alberta, we are conveniently located to serve your GIC needs. To see what rates they currently have available or to get in touch with a GIC broker, you can visit www.rothenberg.ca/gic-rates.

For those who are interested in wealth management, Rothenberg Wealth Management helps clients manage their investment portfolio and provides strategies to grow their wealth. Contact us today for a free, no-obligation consultation to review your financial situation.

This article originally appeared in the Montreal Gazette. To view the original article, click here.

Please note: Rothenberg & Rothenberg, the company mentioned in this article, deals exclusively with GICs and operates independently of its sister company Rothenberg Wealth Management, which provides a full suite of wealth management solutions.

Eligible Canadians can contribute up to $8,000 each year to an FHSA up to a lifetime contribution limit of $40,000 to help them buy their first home.

Purchasing a home is an important decision that requires careful financial planning. Fortunately, there is a specialized tool designed to help Canadians save tax-free towards their goal of buying a first home – the new Tax-Free First Home Savings Account (FHSA).

The FHSA is a game-changer for aspiring homeowners. This unique type of savings account allows eligible Canadians to contribute up to $8,000 a year with a lifetime maximum contribution limit of $40,000 towards the purchase of their first home. This can help you break down the cost of buying your first home into tangible yearly savings goals.

Once funds are deposited in an FHSA, you can watch them grow tax-free. This means that any interest earned, or investment gains made within the account are also free from taxes, allowing for potential compounding and greater returns. Most importantly, any qualifying withdrawals are tax-free. You also have the option to transfer existing RRSP amounts into the FHSA.

Adding to its appeal, contributions made to the FHSA are tax deductible, meaning you can claim them on your personal income tax return filing to lower your taxable income and potentially save more money in taxes. In this way, an FHSA is similar to an RRSP.

To be eligible to open an FHSA, you must meet certain criteria set by the government. These eligibility requirements are designed to ensure that the FHSA is accessible to those who genuinely need it and are committed to buying their first home.

Once you’re ready to purchase your first home and have a written agreement to buy or build your home, you can use the money in the FHSA towards a qualified home purchase, which can include a down payment, closing costs, and other related qualifying first home expenses.

You can even use an FHSA in conjunction with the Home Buyer’s Plan (HBP) to have an even greater amount to use for the purchase of your first home. It’s important to note, however, that the money in an FHSA can only be withdrawn for the purpose of buying your first home but you won’t need to pay it back like you do with the HBP.

If you already own a home, unfortunately, you cannot use the funds for a second home or investment property. You may also incur penalties and tax consequences if you withdraw funds from an FHSA for a non-qualified purpose.

But should you decide to forego your first home purchase and use your funds for something else, you can always transfer the money to your RRSP or RRIF on non-taxable basis until December 31 of the year following the year of your first qualifying withdrawal, without affecting your RRSP contribution room.

For complete details, please review the FHSA resources available on the CRA website. You can also find all applicable definitions for FHSAs here.

Starting on November 20, 2023, Rothenberg Wealth Management is offering clients the option to open their FHSA.

Contact a Rothenberg Wealth Management Advisor to discuss your goals and get advice on how to customize your investment portfolio in your FHSA to maximize your future savings potential. If you are not eligible (or are unsure you are eligible) for the FHSA, a Rothenberg Advisor can assess your situation and help you explore other savings options to meet your financial goals.

Travel personality and bestselling author Robin Esrock has reported from over 100 countries on 7 continents.  We’ve invited him to share his summer travel inspiration.     

Global Dream of the Summer:  Slovenia

Of all the countries that once made up the former Yugoslavia, Slovenia has emerged as the undiscovered gem of Central Europe.  The country boasts lush countryside, medieval fortresses, the sweeping Julian Alps, crystal lakes, and the culture-rich capital of Ljubljana.  Straight out of a central European fairytale, mountains overlook green valleys so smooth you’d think they grow vegetables on manicured fairways.  Romantics will love the old church sitting in the middle of Lake Bled, a vista you may have seen in popular screensavers. Horse-lovers will relish a bucket list visit to Lipica, the ancestral home of the classic white Lipizzaner.  Ljubljana is quintessentially European: think cobblestones, churches, old town squares, canals, parks, bicycle lanes and busy outdoor cafes.  Easy to get to via air or if visiting from neighboring Italy, Austria, Croatia and Hungary, Slovenia offers great European value with abundant options for nature, culture, food and history.

Canadian Dream of the Summer: Prince Edward Island

What do you do with an abandoned province-wide railway line? You turn it into a 400km-long recreational trail running tip-to-tip across Prince Edward Island, resulting in an unforgettable bucket list East Coast adventure. With your bags shuttled ahead to homely inns and B&B’s, the trail takes you through gorgeous forest, beaches, rivers, farmland, restored railway stations and small towns bursting with Maritime charm. Kick off at the Confederation Bridge, load up on local lobster, pop into bays with the world’s best oysters, and work it off with some healthy daily exercise.  An optional e-bike upgrade can make it especially easy and fun for the whole family.

Leaving the Pandemic Behind

In May 2023, the WHO officially declared that the COVID-19 pandemic no longer constitutes a global health emergency.  Instead of wild celebrations that the pandemic is finally behind us, we’ve quickly moved onto new fears and uncertainty, heavily promoted by media that thrives on bad news (remember: if it bleeds it leads).  Tourism continues to boom, with heavy demand for airfare, accommodation and activities.  Prices are skyrocketing, as operators and airlines eagerly recoup lost profits.  It’s been a year since The Great Chaos of 2022, and the tourism industry has prepared for the rush.  Industry employment is almost back to pre-pandemic levels, and efficient new technologies have been implemented.  It’s going to be busy out there, but summer 2023 will see a significant improvement over 2022.

Pro Tips: Staying Safe

A surge in tourism brings a surge in opportunistic crime.  You’ll often hear “Use Your Common Sense” but little about what common sense actually means.    Very simply:  Avoid flashing your wealth or drawing unnecessary attention to yourself.  If a local or guide advises you not to go somewhere, take their advice seriously.   If something looks or sounds too good to be true, it usually isn’t.  Keep secure online back-ups of your passport, banking and insurance details (you can just email it yourself or leave a copy with someone at home).  Credit cards are accepted just about everywhere, so don’t carry too much cash.  Avoid unnecessary confrontation, and when in doubt, ask for help.  With a little common sense, it’s highly unlikely anything terrible will happen. Scams and crime grabs attention, but both are statistically rare for travellers worldwide.

Don’t Quote Me:

“Travel is fatal to prejudice, bigotry, and narrow-mindedness.”

Mark Twain

If you have any travel-related questions or inquiries, feel free to email me at robin@robinesrock.com

Which area of wealth management would you like to learn more about? We’d love to hear from you and invite you to join the conversation on our Facebook page – with a chance to win a $100 Amazon gift card!

Wealth management is more than just growing your investments or managing your money. It’s a holistic and comprehensive approach that considers various aspects of your financial journey and overall well-being, including investment management, tax planning, retirement planning, estate planning, risk management, and more.

While many wealth management firms focus on offering core services, we understand that every individual has unique needs and goals. To help us better understand your interests and preferences, we invite you to participate in our Facebook giveaway. Share your opinion about the wealth management service you’d like to learn more about and get a chance to win a $100 Amazon gift card.

To enter our giveaway, simply visit our Facebook page and find the post about the Amazon Gift Card Giveaway. Leave a comment sharing your thoughts and let us know which area of wealth management you’d like to explore further. Don’t forget to follow the other giveaway rules for an eligible entry.

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