Personal finance columnist
David has been a practising financial planner and life advisor since 1982, specializing in helping clients identify and reach their most important goals, and then helping them manage all of their financial affairs, including investments. He leads Christianson Wealth Advisors and is a Portfolio Manager and Senior Vice-President of National Bank Financial.
In addition to being named a Canadian Top 50 Financial Advisor in 2014 & 2017, and a Fellow of the Financial Planning Standards Council in 2013, David has been awarded a number of professional awards such as Advisor of the Year and CAFP Member of Distinction.
He and his team were awarded the STEP Private Client Award for 2010 and 2011 and shortlisted in 2016, in the category of Independent Financial Advisor Team of the Year, by the worldwide Society of Trust and Estate Practitioners.
In 2012, David published his unique book Managing the Bull – A No-Nonsense Approach to Personal Finance and has been the Personal Finance columnist for the Winnipeg Free Press since 1994.
David is married to Vera and proud father of Sarah and Taylor. When he’s not in the office, he enjoys sailing, skiing, travelling with his family and playing bass guitar.
Recent articles of David Christianson
All year long, this column is about money — how to do better with what you have, how to earn more, how to reduce your taxes and other expenses, and how to maximize your returns.
The year 2022 will be remembered for a lot of negative things, not completely offset by Canada’s appearance in the World Cup. Maybe we can make the year a little better with our annual year-end tax planning checklist.
In our last column we reminded people about the potential effects that inflation can have on your purchasing power, if it persists for some years. The bottom-line message was to work these facts and realities into your financial plan and make any necessary adjustments.
Almost all regular readers of this column have a tax-free savings account (TFSA), RRSP or both.
And — not to be morbid — almost all of those readers will someday pass on to the great beyond.
What will happen to those registered investment accounts and other asset accounts when that event occurs?
That depends on the documentation you put in place to implement your estate plan, which can determine smoothness of your estate settlement and even some of the tax treatment for your beneficiaries.
Last week we talked about the scientifically-measured Principles of Money Happiness, based on the research of Dr. Elizabeth Dunn, co-author of Happy Money: The Science of Happier Spending and my own book Managing the Bull 2022.
As a refresher, here are the principles we mentioned:
• Buy experiences;
• Make it a treat;
So, because everything in the world has been so easy lately, let’s take on a challenge today and tackle the age-old question, “Can money buy happiness?”
Rather than just speculate on it, we will review the latest science and what it tells us about getting the most happiness value for money. The good news is that — like everything else to do with money – if you are smart, you can get a lot more value.
My thanks and acknowledgements to Dr. Elizabeth Dunn, a social scientist, professor, and researcher into happiness. Her book (with Dr. Michael Norton) Happy Money: The Science of Happier Spending is a terrific guide to some of the behavioural choices that lead to maximum happiness per dollar.
These are themes I explore at length in my own book, Managing the Bull 2022, but Dr. Dunn supports it all with recent high quality research to back up our joint conclusions.
With travel and winter sojourns having resumed, Snowbirds need to remember there are tax reporting requirements to which they may need to comply.
Specifically, many Snowbirds need to file Form 8840 — the “Closer Connection Exception Statement for Aliens” with the U.S. Internal Revenue Service by June 15 each year.
Any Canadian who has a “substantial presence” in the U.S. — as calculated using a weighted average of the days spent in the U.S. over the last three years — must file this form to prove a closer connection to Canada than to the U.S.
If you prove you have a closer connection to Canada, then the IRS exempts you from the requirement to file a U.S. tax return as well as Canadian.
Just when you thought all your tax deadlines were behind you (aside from a possible June 15 due date for your quarterly tax instalment), we are going to introduce another potential deadline of June 30.
This will apply specifically to married or common-law couples where one spouse is in a higher tax bracket and has substantial investment capital, while the other is in a low tax bracket.
Under current Canada Revenue Agency (CRA) rules, the higher income spouse can loan money to the lower income spouse at an interest rate of 1 per cent, and all of the interest, dividends and capital gains earned on that money when invested can properly show up on the tax return of the lower income spouse.
With many Canadian company share investments currently paying dividends of 4 per cent or more and even five-year GICs ramping back up to 3.5 per cent, this can be a great long term income splitting strategy.
Ladies and gentlemen, boys and girls, gather round. There is big news in the world of financial advice and investment management, a story which is more than three decades in the making.
Title protection is about to be proclaimed in Ontario.
“Huh?” you ask. What the heck does that mean? And why does it matter?
Well, I’m glad you asked.
There is a potential new tax deadline that many tax professionals are talking about, and that’s the date of the next federal budget, instead of the filing deadline of April 30.
Specifically, there are fears of an increase in the capital gains inclusion rate and the possibility of other forms of tax increases.
While we don’t know the date of the federal budget, it should be well before the end of April. What we know for sure is that the government has racked up huge deficits over the last two fiscal years, and may be looking at ways to raise revenues to address those deficits.
For the last decade or so, realized capital gains have had a 50 per cent inclusion rate. This means that half of the gain on the sale of any capital asset is included in taxable income.
Do you have any variable rate debts?
If so, you had a reprieve this week when the Bank of Canada decided to leave its overnight lending rate at 0.25 per cent, a historic low that was reached shortly after the pandemic began.
However, with the last 12 months’ inflation rate at 4.8 per cent and an estimated 75 per cent of economists calling for a rate increase, expect rates to rise in the next month or so, unless there is a significant drop in the next inflation report.
Anyone with variable-rate loans might want to look at their options for fixing the interest rate at a slightly higher level for an extended term. This will lock in today’s rates and ensure predictability of payments going forward.
Yes, once again it is suddenly December, with year-end tax deadlines approaching, So, it’s time to put all your tax ducks in a row before you start tucking turkeys into the oven.
Last week we talked about the great opportunities for donating appreciated securities to charities, which makes the capital gain tax free, while providing you with a full tax receipt.
We suggested that you request a realized capital gains and losses report from your investment provider and ask about projected distributions for any funds or ETFs you own.
Tax Loss Selling If you are approaching year-end with a large amount of realized gains and/or expected distributions, then carefully comb through your investment statements to see if you have any securities in a loss position. Consider selling those to offset the gains that will otherwise be half taxable.
IT’S been a big year in Manitoba, including three premiers (and counting?), the elimination of fees on probating wills, PST changes and the unlocking of locked-in registered accounts.
With November being Financial Literacy Month across the country, it’s a great time to catch up on all those changes. Here’s a partial list:
Pension Benefits Act Revisions As of Oct. 1, locked-in accounts such as a LIRA (locked-in retirement account, similar to an RRSP) or LIF (life income fund, analogous to a RRIF) can now be unlocked by anyone 65 or over, and people any age (with spousal consent) suffering a list of financial hardships.
A LIRA or LIF is created when money is rolled over on a tax-deferred basis from a registered pension plan. The locking-in is a way to make sure the assets continue to support the pension member for their life expectancy.
The Disability Tax Credit or DTC reduces the taxes otherwise payable for a person with a disability or the parent of a minor with a disability. Approval for the DTC also opens the door to a number of other related federal and provincial government programs, including the Registered Disability Savings Plan.
Most people involved with the community of other-abled people will attest that the DTC application process is complex and cumbersome. Others further argue that the qualification decisions often seem arbitrary and are not explained.
The government acknowledged such problems several years ago, setting up a Disability Advisory Committee in 2017. The DAC issued its first annual report in 2019 and it second in April 2021.
This process resulted in proposals to significantly broaden and clarify the eligibility criteria, potentially opening up the DTC to an additional 45,000 people who had been deemed ineligible before. Many of these are people with diabetes or otherwise dependent on life-sustaining therapies, which are usually very expensive and time consuming.
In last week’s column, we talked about some of the emotional, practical, and personal considerations of providing gifts to family members or charities while you’re alive, versus in your will, and hence through your estate. Or both.
We also talked about the new educational initiative of the Canadian Association of Gift Planners called Will Power (willpower.ca) and how even a one per cent gift of estates to charity by all Canadians could raise $40 billion for charities over the next 10 years. Take a look at that website and be inspired.
Today’s column is about the dollars and cents of each of those, focusing on tax ramifications of donations.
Making significant gifts to either family or charity should be preceded by good financial and tax advice. You’ll see just some of the reasons why below.
OK, so you’ve determined that you now have more money than you’ll need to support yourself for the rest of your life, even if you need long-term care and if everything goes wrong with your investments.
Do you give some money away now? To family, charities, or both? What are the implications of each?
What about your estate? Do you plan to leave some to charities? Do you know how much that can reduce the taxes that your estate pays and if that will affect the amounts left to your family?
These are some of the many questions we review with clients in that situation, and those questions are especially timely right now.
As we enter September, a traditional time of reflection, renewal, and fresh starts, it’s a good time to spend some quality time deciding what’s most important to you in your life, writing down those priorities, getting specific about those goals and then designing a financial plan to reach each one.
OK, there may actually be a few choices and trade-offs that have to be made along the way and possibly even a few sacrifices.
But after the last 18 months, aren’t we all used to that?
A funny thing happened on the way to the Senate… in June the House of Commons passed a private member’s bill with bipartisan support, followed shortly thereafter by Senate approval.
The bill then received Royal Assent and became law on June 29.
Even more unusual is that this bill involved the Income Tax Act, the kind that almost always originates with the government.
Bill C-208, An Act to Amend the Income Tax Act, was the work of Larry Maguire, Conservative MP for the Brandon-Souris constituency in Manitoba. Its purpose was to “establish uniform tax treatment” for the sale of farm and fishing operations whether sold to a family member or not.
Last weekend we asked a friend how his grandmother was doing. We are always interested in her for a variety of reasons, one of which is that she was an instructor and mentor to my late father 60 years ago when he returned to university in middle age.
“She is still working”, came the reply, “though she claims she’s getting tired more often now.” She’s 101 and was still travelling halfway across the world to give sold-out lectures before the pandemic stopped such shenanigans.
Meanwhile, the TV show 60 Minutes recently did an update on the American National Institutes of Health-funded research study on aging called “90+”. It started in 2014 with a group of people in their 90s and tests them regularly on factors like mobility, cognition, memory and dementia.
Most of the participants are still going strong. The early findings were that exercise, social engagement and adding a few pounds as we age were all contributing factors to longevity. Not surprising, but the shocker was when the lead researcher stated that “Half of all children born today in the United States and Europe are going to reach their 103rd or 104th birthday.”
As I always told my kids, don’t be too anxious to get what you want. I believe the old saying is, “Good things come to those who wait.”
But I think real “financial planners” have now paid their dues.
What am I talking about?
Everyone in Canada, outside the province of Québec, can call themselves “financial planners” or “financial advisers.” There is no restriction on the use of those titles, and there is no protection for practitioners who have the professional designations CFPR or R.F.P. and actually practice financial planning.