IN THIS ISSUE: ?
Financial Markets Overview
Mortgage and GIC Rates
The Sale of BCE Inc.
Getting Educated on RESPs
New Compliance Standards
Travel Insurance at Affordable Rates
Benefits of Flow-Through Partnership
Contribute Early for 2008
Tax Advantages of Donating to Charity
The New Tax-Free Savings Account
Contact Information 202 - 80 Tiverton Court, Markham, ON L3R 0G4 Phone: 905-470-5989 Fax: 905-470-5979 Danny W. Leung CFP, CIM, Ch.P., FMA, FCSI, TEP Director, Private Client Group, Portfolio Manager, Branch Manager Ext: 208 E-mail: email@example.com Michael Cornacchia B. Comm. FMA, Licensed Assistant Ext: 210 E-mail: firstname.lastname@example.org Abu Batasi, B. Comm. Business Development Ext: 212 E-mail: email@example.com Andrea Trant Administrator Ext: 213 E-mail: firstname.lastname@example.org
Financial Markets Overview by Danny W. Leung I would like to take this opportunity to address the current market conditions that you have been hearing about lately in the media. It's been a long and volatile month in the financial services industry. Markets are taking most investors on a wild and sometimes frightening ride, the news about corporate failures and bailouts is confusing and the economic news is almost certainly disheartening. Iâ€™m sure you would like to know how the market turmoil has affected your portfolio during these times of uncertainty and confusion. I would like us to re-visit the approach that INVESTWISE is taking to minimize the market risk associated with such downturns, and the importance of a holistic approach. When we first put your investment portfolio together, we developed a financial plan based on your financial objectives. That plan included a short-term, medium-term, and long-term outlook. The short- and medium-term approach is conservative and liquid, and has minimal exposure to the recent changes in the market. Only the equity portion of your portfolio, which focuses on long-term growth, will be affected by the short-term market volatility. Through our previous publications and reviews, we have been discussing the possibility of a market downturn for quite some time. Accordingly, our conservative approach has paid off. While those fully invested in the markets have had to bear the full brunt of the recent fluctuations, our conservative allocations in cash and bonds have decreased our exposure to this volatility. Furthermore, by having cash available in our portfolios, we can take advantage of some of the discounts that are available in these markets. Market corrections are not a time to sell off in a panic. On the contrary, they are a time to take advantage of some of the bargain prices that are available. For every significant correction that the markets have undergone, those with the patience and resources to take advantage of the markets have always been rewarded handsomely. You may be frustrated with the markets and wondering what the assetbacked commercial paper crisis all means, and that's natural. But history has shown that cooler heads prevail over the long run. Iâ€™m committed to helping you reach your financial goals. Using the INVESTWISE holistic approach allows us to achieve more effective results, especially in volatile environments such as today. If you have any investments elsewhere that you are concerned about, or would like to discuss your overall financial plan, please feel free to contact us. You may reach us at (905)470-5989 Ext. 212, or e-mail us at email@example.com.
Pauline Lew Executive Assistant Ext: 200 E-mail: firstname.lastname@example.org Dundee Securities Corporation, Member CIPF, is a DundeeWealth Inc. Company.
COMMUNICATOR | Sept/Oct 2008
MORTGAGE RATES Prime Rate 4.75%
Looking for the
TERM* 6 Month 1 Year 2 Year 3 Year 4 Year 5 Year 7 Year 10 Year VARIABLE** 5 Year
RATE 6.20% 4.70% 5.25% 5.35% 5.44% 5.39% 6.20% 6.25% RATE 4.15%
* Rates calculated semi-annually, not in advance. **Rate is Prime Rate less a factor of 0.25%. Rate changes when Prime Rate changes. Rate is calculated daily. All interest rates shown above are as of Monday, October 6, 2008, and may change without notice. They are calculated on a per annum basis, unless indicated otherwise. Mortgages provided by Dundee Mortgage Services powered by Invis.
Best GIC Rates in Town
Looking for a mortgage? Contact our office.
Contact us today. Long-term GIC Rates
Short-term GIC Deposits
All rates are annualized and subject to change without notice at any time. GIC rates shown are as of October 6, 2008, based on information received from the issuers. Dundee Wealth Management does not guarantee the rates posted will remain in effect for the entire business day. Please contact our office for accurate rates at the time of interest. Minimum investment amounts may apply.
Q&A Question: How will the sale of BCE Inc. (Bell Canada) affect my tax bill? Answer: For the tens of thousands of long-standing shareholders of Bell Canada, it is important to look at the tax implications of the sale before this December. Because you are adding half your profit on the sale to your 2008 income, you could push yourself into a higher tax or health premium bracket, create an OAS clawback scenario, or affect your eligibility for government pensions and tax credits, just to name a few. Here are some strategies to minimize or defer taxes on the capital gains: - Donating shares to produce a charitable tax credit large enough to offset the tax bill on the rest - If you have unused contribution room, you could sell the shares and make a contribution to an RRSP before March, producing a larger tax refund than the tax bill on the gain - Offset your net gain on BCE shares by net losses from other investments - Reduce your income from other sources, like your RRIF, to avoid a higher tax bracket - Buy Flow-Through shares to reduce your tax bill For more information on how the sale of BCE Inc. (Bell Canada) will affect your tax bill, please contact us at (905)470-5989 Ext. 210, or e-mail us at email@example.com. www.investwise.com
COMMUNICATOR | Sept/Oct 2008
Getting Educated on RESPs If I told you the government was handing out money for free, would you be interested? Of course you would. All you need to do is set some money aside for your child's (or children's) education – something you may be considering doing anyway. According to information released by Statistics Canada last year, university tuition fees increased 4.3% annually, on average, between 1997 and 2008. In total, they've increased 209% since the 1990-1991 school year. In 2007, Canadian undergraduate students paid an average of $4,524 a year in tuition fees. Some professional programs charge significantly higher amounts than that – first-year tuition for a law student at the University of Toronto ranges from $6,000 to $20,000, depending on the program.Add in books, food and housing costs and you could be looking at a very significant expense. There are, fortunately, savings vehicles that can help you prepare. A Registered Education Savings Plan (RESP) is a little bit like a Registered Retirement Savings Plan (RRSP).You can't deduct the contributions, but your earnings do accumulate tax free, to be taxed in your children's hands when they withdraw funds. Since students tend to have little other income, they'll probably end up paying very little (if any) taxes on the money they receive. In 2007, the Conservative government also made some significant changes to the RESP rules.The annual contribution limit of $4,000 was eliminated, and parents can now contribute up to $50,000 – that's up from $42,000 – in total, to each child's RESP. There's also a lucrative Canada Education Savings Grant (CESG) available to anyone who opens an RESP.The government will top up your plan with a grant equal to 20% of your contribution, up to an annual maximum of $500 and a lifetime maximum of $7,200. You don't have to be rich to take advantage of the plan, either. In fact, if the child's family earns $37,178 or less a year, the plan is eligible for a CESG worth 40% on the first $500 you deposit every year.The Canada Learning Bond also offers children who qualify for the National Child Benefit supplement – a special $500 payment at birth, plus $100 each year they receive the supplement, until the child turns 15. If you're interested in learning more about the education savings options available to you, or if you’d like to increase your current monthly contributions, please contact INVESTWISE at (905)470-5989 Ext. 210, or email firstname.lastname@example.org.
Here’s your shot to win a $10,000 RESP certificate!* Enter today and you could be the winner of a $10,000 Dynamic Funds** RESP Certificate from DundeeWealth Inc., along with a free consultation to help you make the most of this prize. You could also win: 1 of 3 Regional Prizes of a $1,000 Dynamic Funds RESP Certificate A framed, autographed Michael Owen Team England Umbro jersey Autographed apparel from Toronto FC stars * Contest commences Monday, May 19, 2008 and closes Friday, December 26, 2008. Draw will be held on Monday, December 29, 2008. Winners will be posted at www.littlechipssoccer.com and will be notified via email. Odds of winning are dependent upon the number of eligible entries received. Skill testing question required. Entrants must be residents of Canada and must be 18 years of age or older. No purchase necessary. For
COMMUNICATOR | Sept/Oct 2008
New Compliance Standards It's a sensitive subject, but I wanted to take this opportunity to let you know about recent legislative changes that could affect our planning relationship. For most of you, it might seem like we're being more nosy than usual about your background. Others might wonder why we're suddenly asking to see your driver's license or other documentation to verify your identity at every meeting, even though we've known each other for years. Please don't take these changes personally. In June, the government of Canada enacted new legislation to combat money laundering. Until recently, this country was apparently out of step with international standards. Casinos, real estate agents and accountants have needed to comply with money-laundering rules for years now - compliance standards are also extended to financial service relationships. In order for the financial services industry, including us at Dundee Securities Corporation, to comply, it means we must report transactions to the Financial Transactions Reports Analysis Centre of Canada (FINTRAC), identify "politically involved foreign persons," their families and close associates - those with significant political involvement or position in other countries.We also must meet all prospective clients face-to-face before opening new accounts for them. All of this means we'll be asking more questions than we have in the past. Please be assured that this message is not intended to cause alarm, merely to inform you about the changes made this summer. If the investment and planning we do for you and your family does fall into the realm of activities FINTRAC is interested in, however, you can be assured that we will do our best to answer your questions and file the appropriate paperwork needed for you. If you have any questions at all, feel free to contact our office via telephone at (905)470-5989 Ext 210, or e-mail us at email@example.com.We would be happy to hear from you.
Travel Insurance at Affordable Rates Travelling can be an adventure at the best of times.To keep your vacation or business trip from becoming too much of an adventure due to an unexpected illness or accident, you need a backup plan. TIC Travel Insurance offers you an affordable â€œjust in caseâ€? plan that can save your vacation if you have an unexpected illness or accident. Contact us to learn how you can ensure you get the care you need at an affordable rate. You can reach us via telephone at (905)470-5989 Ext. 210 or e-mail at firstname.lastname@example.org.
COMMUNICATOR | Sept/Oct 2008
Benefits of Flow-Through Partnership To promote the development of oil and gas and other natural resources, the government of Canada allows Canadian natural resource companies to fully deduct specific exploration expenses, known as a Canadian Exploration Expense (CEE). Many of these companies issue Flow-Through Shares to raise capital, and in turn renounce CEE to shareholders. Investors can buy units in a partnership that in turn buys shares in the companies, party to an agreement for this CEE sale. Some flowthrough structures include shares in privately held production and exploration firms not available on the market. The tax credits are realized by the unitholder, writing off up to 100 per cent of the total of the original year of investment, and in some cases, additional benefits can be available in the second and following years. Some of the notable advantages of using Flow-through Limited Partnerships include the ability to: - Apply current and previously unused capital losses - Increase deductions against income beyond RRSPs - Reduce or eliminate the need for tax installments - Reduce or eliminate the tax bite on one time income - Reduce or eliminate OAS clawback - Reduce corporate tax
Contribute early for 2008 Contribute early for 2008, rather than waiting until the March 1, 2009, deadline. By making your 2008 contribution now, or as early as possible, you begin accumulating tax-free income on the contribution as soon as possible. For 2008, you can contribute the lesser of 18 percent of your earned income in 2007, or $20,000. Contact INVESTWISE at (905)470-5989 Ext. 212 to start contributing today.
To begin discussing how to use Flow-Through Limited Partnerships in your financial plan for 2009, give us a call at (905)470-5989 Ext. 210, or e-mail email@example.com.
Tax Advantages of Donating to Charity Charities play an important role in society, and as a result tax incentives have been created to encourage gifts by individuals and corporations to registered charities. Only donations to charities registered with the Canada Revenue Agency (CRA) offer the opportunity to reduce income taxes, so it is best to verify whether a charity is registered by searching for it in the CRA Charities Listings (www.cra.gc.ca/charities). Gifting Publicly Traded Securities CRA offers an additional tax incentive to those individuals that wish to donate publicly traded securities such as stocks, bonds and mutual funds to a registered charity rather than the equivalent cash amount.When you donate publicly traded securities in-kind, the donation is considered a disposition for Canadian tax purposes. In other words a donation of publicly traded securities to a registered charity results in a capital gain or a capital loss to the donor. Donating Flow-Through Limited Partnership The tax benefit of donating securities is further enhanced when donating units of a mutual fund that was originally purchased as units of a Flow-Through Limited Partnership. Generally investors receive a meaningful amount of their original investment in the form of tax savings. Once all the tax deductions have been claimed, normally after 18 to 20 months, the Flow-Through Limited Partnership is converted into a mutual fund.Although there are many different ways to give to charities, the flow-through strategy is by far the most advantageous. A donation of $10,000 can end up costing as little as $700 (or less) on an after-tax basis, depending on the market value of your rollover proceeds and your marginal tax rate. To find out more about the tax advantages of donating to a charity, call us at (905)470-5989 Ext. 210, or e-mail us at firstname.lastname@example.org. www.investwise.com
COMMUNICATOR | Sept/Oct 2008
The New Tax-Free Savings Account The new Tax-Free Savings Account (TFSA) is the biggest innovation to encourage personal savings since the creation of the Registered Retirement Savings Plan (RRSP). The TFSA is an exciting new vehicle which allows individuals to let their savings grow free of tax. Benefits of the new TFSA include: - Ability to save more free of tax to pursue personal projects - Generate invested sums (investments, investment income, inheritances, donations) in a tax shelter - Maximize their savings with retirement in mind
Q. What is the proposed Tax-Free Savings Account? A. The proposed Tax-Free Savings Account ("TFSA") is a registered savings account that allows taxpayers to earn investment income tax-free inside the account. Contributions to the account are not deductible for tax purposes, and withdrawals of contributions and earnings from the account are not taxable. Q. According to the 2008 Budget, who would be eligible to open a TFSA? A. Any individual (other than a trust) who is resident in Canada and 18 years of age or older would be eligible to establish a TFSA. You would be able to open an account at most financial institutions such as Canadian trust companies, life insurance companies, banks, and credit unions (the same institutions that are currently eligible to issue a Registered Retirement Savings Plan). You would have to provide the issuer with your social insurance number when the account is opened. You would be permitted to hold more than one TFSA, subject to the contribution limit. Q. When can I open a TFSA? A. The 2008 Budget proposes to allow opening a TFSA starting in 2009. To register early to open an account, get your name on our waiting list today. Please contact Andrea at (905)470-5989 Ext. 213, or e-mail her at email@example.com. Q. How much can I contribute to the TFSA per year? A. Each year you could contribute an amount up to your contribution room for the year. Your contribution room would be made up of three amounts: Each year you would be allocated and allowed to contribute at least $5,000 (this annual amount will be indexed to inflation and rounded to the nearest $500 on a yearly basis). See also Q.14. Any withdrawals made in the previous year would be added to the contribution room for the year. Any unused contribution room from the previous year would be added to the contribution room for the year. Q. If I don't have the money to invest in a given year, would I be able to use any unused contribution room in a future year? A. Yes, the 2008 Budget proposes no limit on the number of years unused contribution room could be carried forward. Q. What happens if I contribute more than my contribution room? A. The 2008 Budget proposes that excess contributions would be subject to tax of 1% per month, for each month that the excess remains in the plan. We have much more information on the new Tax-Free Savings Account, including a free report which further outlines the features and benefits of the TFSA . If you have any questions about the TFSA, please call Mike at (905)470-5989 Ext. 210, or e-mail firstname.lastname@example.org Source: http://www.cch.ca/newsletters/FinancialPlanning/July2008/Article3.htm This newsletter is solely the work of Danny W. Leung for the private information of his clients. Although the author is a registered Investment Advisor with Dundee Securities Corporation, a DundeeWealth Inc. Company, this is not an official publication of Dundee Securities Corporation and the author is not a Dundee Securities analyst. The views (including any recommendations) expressed in this newsletter are those of the author alone, and they have not been approved by, and are not necessarily those of, Dundee Securities Corporation.