# Discussion on Budget 2013



## Koala (Jan 27, 2012)

I caught some of the budget info. It sounds like all non-registered investments will be taxed as income now.
I wasn't fully paying attention though, so may have misunderstood.

Is this the end of strategically placing investments in registered vs. non-registered accounts ?


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## andrewf (Mar 1, 2010)

No, they are just closing some esoteric tax loopholes, offshore investing etc.

No change to investment taxation for the vast majority of investors. 

Background:
http://www.thestar.com/news/canada/...loopholes_hidden_offshore_money_targeted.html


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## Charlie (May 20, 2011)

they've increased the maximum federal rate on ineligible dividends (typically those not from big cdn corps) from 19.58% to 21.22%. This compares to a max rate of 29% on other income.

It may impact salary/dividend decisions for business owners, depending on their province. Integration used to be just about spot on for BC -- not sure how it will be with this change and recent provincial changes. 

But it won't impact where it's best to hold portfolio dividends. And even the new higher rate is lower than what's payable on interest or other income.


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## Koala (Jan 27, 2012)

Thanks! I saw a comparison of what someone would have paid in the past and what they would now and wished I had paid attention to what preceded that!


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## Charlie (May 20, 2011)

took a quick look at my integration charts. (integration is the concept that there is no advantage to taxing money as a salary or a dividend from a private corp). In BC there used to be a 1% tax advantage to ineligible dividends. So it's really just a tweak to adjust for changing rates over time.

Kind of disappointed (though not surprised) by the news coverage. Even so called respectable media like the globe and mail are chirping about this being a big hit to business owners and making it harder to take money out of companies or closing a dividend loophole they had previously enjoyed. Simply not true. It's almost a nothing. Its a small shuffle to keep integration intact.


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## CanadianCapitalist (Mar 31, 2009)

Here's my take on today's budget. I found a number of things that are of interest in this budget. Examples: elimination of tax deduction for safety deposit boxes, elimination of tax credit for venture capital fund investments (yay!) etc.

http://www.canadiancapitalist.com/how-budget-2013-will-affect-your-pocketbook/


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## OptsyEagle (Nov 29, 2009)

Why would they implement a first time donation credit. First of all, do they really think that once a person starts giving away their money, it will become addictive and secondly, it feels like the Ally adds all over again for me. I give money to charity, but even though I might give a new donation ... theirs is newer then mine, so they get more money back. 

Pretty insulting if you ask me.


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## none (Jan 15, 2013)

I wish they had brought the GST up a couple cents (at least - maybe even 3). It's a tax that doesn't really hurt the economy and would have a less dampening effect than what they've been cutting.

If they want to get the deficit under control that would have been a smart move I think.


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## rikk (May 28, 2012)

none said:


> I wish they had brought the GST up a couple cents (at least - maybe even 3). It's a tax that doesn't really hurt the economy and would have a less dampening effect than what they've been cutting.
> 
> If they want to get the deficit under control that would have been a smart move I think.


OT: Well if it's really bothering you, you can always start a fan club ... "Donate $0.03 to Harper" ... let me know how that goes.


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## none (Jan 15, 2013)

That wouldn't work. You need to drag the dogs full pack to make any difference. anyway, hopefully a party a little more interested in effective governance rather than just politics will help fix things up after these bums get voted out.


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## andrewf (Mar 1, 2010)

If we doubled the GST, we could eliminate corporate income taxation. Roughly speaking.


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## none (Jan 15, 2013)

andrewf said:


> If we doubled the GST, we could eliminate corporate income taxation. Roughly speaking.


That's kind of random. Are you suggeting that that would be a good idea?


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## sags (May 15, 2010)

2013.............record deficit.

2014.............record deficit.

2015.............balanced budget............just in time for an election.


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## sags (May 15, 2010)

Speaking of the GST ..........a round table discussion of the cuts on BNN said it may go down as the worst economic mistake by a government in Canadian history.


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## andrewf (Mar 1, 2010)

Hmm... Not sure. It might be interesting to try it. We could then simplify the personal tax system, as dividends could then be taxed the same as other income. Also, companies would have less preference to use debt over equity financing.

It's another good point: if we eliminated corporate income taxes, you may not see much revenue impact: it would show up in either withholding taxes on foreign shareholders, or in personal income taxes. Corporations are just legal fictions: all their net income eventually shows up in incomes of persons, etc.


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## rikk (May 28, 2012)

none said:


> That wouldn't work. You need to drag the dogs full pack to make any difference. anyway, hopefully a party a little more interested in effective governance rather than just politics will help fix things up after these bums get voted out.


I thought by "I wish they had brought the GST up a couple cents (at least - maybe even 3)" you were wishing for an additional nation-wide 3% tax on consumers ... Fraser Institute says in 2012 for the average Canadian, for every dollar earned and spent, $0.442 (44.2%) went to various taxes ... and you were wishing to make that 47.2% ... irate:


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## none (Jan 15, 2013)

I was. Obviously because we are running a deficit there is a revenue problem - which is partly a function of an employment problem, no doubt spending as well.

GST really shouldn't have been reduced. If they wanted to reduce taxes, income taxes would have been a better choice - the GST cut was bad for Canada but good politics.


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## rikk (May 28, 2012)

none said:


> I was. Obviously because we are running a deficit there is a revenue problem - which is partly a function of an employment problem, no doubt spending as well.
> 
> GST really shouldn't have been reduced. If they wanted to reduce taxes, income taxes would have been a better choice - the GST cut was bad for Canada but good politics.


I'm not of the opinion that increased taxation of the consumer is an acceptable solution to the problem.


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## none (Jan 15, 2013)

I guess we can agree to disagree then. I certainly think that it is part of the solution to the problem (depends on the tax of course and the gst is one that should never have been cut).


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## rikk (May 28, 2012)

none said:


> I guess we can agree to disagree then. I certainly think that it is part of the solution to the problem (depends on the tax of course and the gst is one that should never have been cut).


I should at least offer a solution ... employ 3% more people. The GST thing happened, it's past, HST/GST is in my opinion a good thing, it's transparent, unlike the problem which was (is ?) the financial crisis, abuse/misuse of credit ... my opinion.


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## none (Jan 15, 2013)

Here's an interesting article in the globe today. The comment section is, for a change, actually pretty good.

http://www.theglobeandmail.com/comm...p-the-conservatives-tax-code/article10198519/


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## rikk (May 28, 2012)

Fwiw, budget, and other interesting topics ... http://www.conferenceboard.ca/ ... create an account to download papers ... e.g. "Reinventing the Canadian Tax System: The Case for Comprehensive Tax Reform".


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