Hap Sneddon's Top Picks: AltaGas, AbbVie and Kirkland Lake GoldBNN.ca Staff MARKET OUTLOOK The current market structure reflects a positive pro-growth and rising inflation view, with financials, energy, materials, discretionary and industrials and now Canadian technology showing strong relative strength while defensives and interest-rate sensitive sectors such as utilities, bonds and consumer staples show weaker. The underpinning for this situation is based on expectations on economic data, inflation, and major central banks rate path and speed. On the plus side, housing, jobs, inflation (growth) and earnings data are decent, but there’s more backfilling required as retail sales, total hours worked, real wages and manufacturing come in weak or declining. The two biggest inputs to price increases (housing and wages) are a bit of a mixed bag, but are generally supportive of growth. In Canada housing sales are down, yet prices are up for the most part. In the U.S., housing has seen a recovery just under or over their 2007 highs depending on the region. Wages aren’t inflationary today, but tight labour markets and minimum wage increases across Canada will work into prices eventually. Rising rates at the U.S. Federal Reserve (the Bank of Canada is trying its best) were quietly a watershed event eight months ago well before the markets began pricing them in. Time will tell how this second phase of central bank experiments plays out and if they’re appropriately getting in front of the curve or trying to manufacture investor consensus. If we’re yet early for rate normalization (that businesses, governments and individuals really can’t handle a steady march higher in rates), there will be opportunities in the next few months in defensive and interest-rate sensitive securities as rates weigh on the market, and eventually, the economic cycle.
| | Talking Tax with Karen SlezakBNN.ca Staff TAX TIPS FOR THE 2017 TAX YEAR DISABILITY TAX CREDIT Anyone with a severe and prolonged mental or physical impairment is eligible for a special tax credit called the disability tax credit. This non-refundable credit is $8,113 which results in tax savings of $1,626 for 2017. An additional $4,733 credit is available for disabled persons under age 18 subject to adjustments for the costs of their care. Viewers should review the disability tax credit with their aging parents. Often there are seniors with health conditions that qualify for the credit that aren’t taking advantage of it. The qualifying taxpayer needs to have a medical practitioner certify on form T2201 that they have a condition that markedly restricts the activities of their daily living. This can be either their vision, hearing, speaking, walking, feeding, eliminating, dressing or mental functioning. The condition must be expected to last for more than 12 months. After completing the T2201 form, the taxpayer needs to send it to the CRA for review. The CRA will send back a letter indicating their approval. Only then can the amount be claimed on the disabled person’s tax return. On the T2201 form, the medical practitioner will indicate when the condition began. Frequently, this could be several years ago, meaning the taxpayer should have been able to claim the credit on prior tax returns. In the past, the CRA made the taxpayer file amendments to his/her prior returns in order to get the tax savings. Now, there’s a box on the front of the T2201 that can be checked that tells the CRA to amend prior returns. This saves the cost and hassles of doing prior amendments. I have had taxpayers recover up to 10 years of prior claims and receive refunds over $10,000. CAPITAL LOSSES IN THE YEAR OF DEATH Deceased persons are considered to have disposed of all of their capital properties as of the date of death at their fair market value. An exception applies to properties passing to a spouse or common-law partner, which are deemed disposed at their cost amount; we call this a rollover. In some cases, the deemed dispositions result in an overall net capital loss (that is, losses exceed deemed gains). Alternatively, the deceased person may have net capital losses carried forward from prior years. Review the notice of assessment from 2016, as it will indicate if there are unclaimed capital losses. Special rules apply when you die to allow the net capital losses to be used. First, the net capital loss is reduced to the extent that the deceased made a prior capital gains exemption claim. Any remaining balance can be deducted against any source of income (not just capital gains) on the final return of the deceased or the return for the year prior to death. If the adjusted net capital loss balance cannot be fully utilized, consider electing to forgo rollovers. Instead, it may be advantageous to realize capital gains on death and offset the gains with the net capital losses. In this way, the adjusted cost base of the property is stepped up for the inheriting beneficiary.
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