# Tax efficiency. Self managed funds. Capital gains. Unemployed.



## Banalanal (Mar 28, 2011)

I am unemployed and managing my own assets. I will have 6 figure capital gains for 2014. I had minimal in years past. Besides utilizing a TFSA, what are my best options for lowering taxes? Is there a way to incorporate as an investment vehicle or personal fund of some sort? 

Thanks very much.


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## gt_23 (Jan 18, 2014)

Banalanal said:


> I am unemployed and managing my own assets. I will have 6 figure capital gains for 2014. I had minimal in years past. Besides utilizing a TFSA, what are my best options for lowering taxes? Is there a way to incorporate as an investment vehicle or personal fund of some sort?
> 
> Thanks very much.


If the gains are realized, there's little you can do now except offset them with losses.

If they are unrealized, you can spread them out over this year and next.

The trick is to shelter the funds before you incur the gain....not much you can do now.


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## Banalanal (Mar 28, 2011)

Thanks. What about going forward? Is there a way to incorporate as a private investment company, or some such thing? And how can you spread the gains out over two years if you are selling in a specific year?


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## gt_23 (Jan 18, 2014)

Banalanal said:


> Thanks. What about going forward? Is there a way to incorporate as a private investment company, or some such thing? And how can you spread the gains out over two years if you are selling in a specific year?


It really depends on the nature of your investment earnings. If they are considered active investments, 50% of your CGs will be taxed at the highest corporate rate, which may or may not be higher than your personal rate depending on a number of variables. You also won't be able to deduct expenses against passive earnings or be eligible for the lifetime capital gains allowance, as you would if your investments generate active income. If your primary business is trading your capital then it would probably make sense to incorporate, your CGs would be treated as active income and you could deduct expenses to lower your tax paid.

A trust might be a good option if you wanted to hold the investments and accrue CGs indefinitely. But if you plan to regularly realize CGs by turning your investments, it probably wouldn't make much of a difference. CGs are one of the least taxed forms of income for individuals already. It can also be good to use an RRSP, if you have no other forms of investment income, as it will allow you to defer the tax for a long period of time, in addition to the TFSA.

You can only spread the gains out if you haven't realized them yet (i.e. sold the investments), in which case you would sell some in CY 2014 and the rest in Jan 2015.


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## MoreMiles (Apr 20, 2011)

Yes. But it is too late for your old investments.

In the future, you may consider "corporate class funds". These are mutual funds that allow selling into cash (ie, Money Market) and buying back another equity later without realizing capital gains. Just google and read about it.

For those who hate mutual funds and want to do them yourself with ETF... you are in luck, try "Purpose"
http://www.purposeinvest.com/purpos...n-for-the-etf-industry-and-low-fee-investing/


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