Managed Money Reporter Newsletter — Issue 243, March/April 2008


Editors: Carl Spiess & Allan McGlade


Featured Articles



2008 Budget – New Tax Free Saving Account (TFSA)

Carl Spiess

New Tax Free Saving Account (TFSA) Announced For Canadians

By Carl Spiess, CFP, CIM, FMA, FCSI, MBA, Director, Financial Services

The latest budget was released in late February, with no major changes for investors. Most tax rates stay the same, but the tax on dividend income will actually increase in 2010, and flow through share arrangements are extended to March 2009.

The best summaries of the budget were "Flaherty will get you nowhere" and "much ado about nothing". To be fair, there were two items that will interest investors.

The big news is the Tax Free Saving Account (TFSA). This vehicle will allow $5,000 a year to be saved, beginning in 2009, with the income sheltered from tax. For the average Canadian with investable savings, figure on saving $72 a year. More details about tax implications of transfer from non-registered accounts and and a full analysis of TFSA vs. RRSP strategies, will follow in future months. Based on preliminary analysis below, the TFSA and RRSP wind up with the same net benefit, if an investor's pre and post retirement tax rates are the same.

Additionally, RESPs will see the maximum time allowed for your RESP to be open increased from 25 years to 35 years.

Details about Registered Disability Savings Plans, announced in the 2007 budget, are still being finalized, with a view to being able to offer these plans in late 2008.

Find out more

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Tax Time – Your Tax Receipts

RRSP receipts for most lump sum contributions have been mailed daily as received. For clients in Group RRSPs, receipts for contributions made up to February 29, 2008 will be mailed by March 10th.

For other tax slip and information mailing dates, please see the statement insert from December 2007, below.

Find out more

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What's your burn rate?

Meet the family of four that spends like fourteen

Burnrate.ca (a free site from Mackenzie Financial) can give you a push to get started on a plan or to help stay focused on an existing one. Complete with free podcasts, executive book summaries, investment calculators and more, it's the perfect destination for Canadians who have everything — except a plan. (PS, we can help with the plan part...) See:

  • www.burnrate.ca

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Fund News

RBC buys PH&N

Royal Bank of Canada announced on Feb. 21 it has agreed to acquire Phillips Hager & North Investment Management Ltd. The firm manages an estimated $69 billion in institutional and retail assets. No changes to the portfolio management teams of either company are expected. Please recall that both RBC and PH&N funds can be purchased, consolidated and held in your ScotiaMcLeod account, providing one source of information on all your fund holdings.

AIM Trimark Loses Another Manager

After losing 3 key portfolio managers and their Chief Investment Officer in the last year, AIM Trimark has now lost another manager. Richard Jenkins, manager of the Trimark Select Growth Fund, is moving to join former Trimark manager Bill Kanko at Hartford Investments. We had previously placed Trimark funds on a performance watch, and are continuing to review holdings based on the ongoing news.

Trimark Advantage Bond Fund Re-opening

After being capped since May 30, 2003, Trimark Advantage Bond Fund is reopening. AIM/Trimark cites two main factors; recent events in the credit markets have presented more compelling valuations for high-yield securities, and the Fund's increased foreign content limit of 49% allows the Trimark fixed-income team to broaden their search for great-quality high-yield securities. The Trimark fixed-income team can capitalize on these attractive opportunities that were once previously unavailable. The fund has generally been a good low cost way to get exposure to higher yield bonds, which could make up 10% of a fixed income portfolio.

We will speculate that there is a third reason for reopening the fund. As reported earlier, AIM/Trimark are facing a string of manager departures and many funds are in net redemptions. Reopening this popular fund will provide the firm a source of new assets.

Scotia Announces Climate Change Fund

Scotia Securities Inc. has unveiled a new investment mandate tied to the theme of climate change. The first of its kind in Canada, Scotia Global Climate Change will be sub-advised by Boston owned State Street Global Advisors. The fund's mandate encompasses a variety of industries including those related to clean energy and power generation, low-waste technology and transportation, water industries and environmental finance. The fund's lead manager is Bill Page, of State Street Global Advisors and head of its environmental, social and governance investment team. The Scotia fund will be broadly diversified by nine climate-related themes and by industry sector. Climate change presents risks for financial markets in general, but also an enormous opportunity for investments in the right sectors.

The fund may also appeal to those interested in Ethical Investing, please contact us for more information:

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Canada Saving Bonds on Sale Until April 1st

The rates for this year's CSBs seem like an early April Fools joke:

Rates are 2.45% for the regular bonds, and 2.75 to 3.05% for the premium 1 – 3 year bonds. See more rate information the CSB website.

Please recall that we have cashable GICs from 3 issuers (best rate as of March 3, 3.5%), and 1-5 year GICs from 9 different issuers (best 5 year rate as of March 6, 4.51%). See chart, below. As your one stop guaranteed rate shopping service, we can help ensure you get the best rates available for your fixed income investments.

Find out more

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New Life Income Fund (LIF) Rules

For Ontario residents, there is good news for locked in accounts. A new Life Income Fund (the "New LIF") was introduced in January, 2008. It provides more flexible payments and allows owners a time-limited opportunity to withdraw up to 25% of the amount of money transferred into the New LIF. Clients have been mailed details, and there is no urgency to move to the new LIF, and any LIFs being opened after Dec 2008 will automatically have the new rules.

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Recommended Link of the Month

The Canada Revenue Agency's website has lots of tips and information. You can see your refund online or check out the tax tips. Use the site to learn more about pension income splitting, transit deductions, children's fitness credits and more...

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Contact Us

T.  416.863.RRSP (7777)
     1.800.387.9273
F.  416.863.7479
E. carl.spiess@scotiawealth.com
    allan.mcglade@scotiawealth.com

ScotiaMcLeod is a division of Scotia Capital Inc., member of CIPF.

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