Financial crisis looming, again?
The headlines say it all: 'Flaherty issues crisis warning,' 'IMF concerned over Greece's debt,' 'Markets tumble amid global financial conditions.'
Since the markets crashed in 2008 and the world went plummeting into a recession, positive news regarding the financial industry has been bleak, almost as hard as finding a good stock to invest in.
With countries such as Greece, Spain, Italy and Portugal having difficulties managing their debt, and with Hellas (known as Greece) on the verge of defaulting, Western political and economic leaders are watching carefully, hoping the European Union will step in sooner rather than later.
With such volatility in the market place leaving many investors with little returns - if any, diversifying your portfolio is essential. A portfolio primarily based on the traditional model of 40/60 stocks and bonds, tends to leave investors vulnerable during these hard economic times, because all their eggs are in one basket.
But a diversified portfolio brings investors more flexibility, allowing them to manoeuvre through some of the turbulence while obtaining returns. At WealthCo, we ensure our clients are not taken for a ride on the stock market's roller coaster. Our advisors are able to strategically guide you through the process, because everyone's portfolio differs with their goals.
Here is an article that was featured on Advisor.ca regarding Canada's Finance Minister's concerns about another global financial meltdown.
http://www.advisor.ca/news/flaherty-issues-crisis-warning-59186
Flow-Through Shares
The month of April is closer than we all think. It's the time of year when the taxman wants his money, and when everybody scrambles to file their personal income tax.
For most, panic kicks in. Some are wondering if they will have to pay up, or which sunny destination they'll spend their tax returns on.
Saving tax deductions through adding more RRSPs has been the norm for many individuals. However, Flow-Through Shares is another, easy to manage option, if completed on time. They also need to be used by the end of the year.
Flow-Through Shares allow you to claim a deduction up to the amount of the share price against your income. This option is usually geared towards individuals who pay $25,000 in taxes. The deduction reduces your risk associated with an investment in Flow-Through Shares, and may help you manage your taxes. But remember, Flow-Through Shares need to be completed ahead of time, before the taxman comes knocking.
Introduced in 1954, Flow-Through Shares are beneficial to your corporation as well, especially if you have a Capital Loss carry forward. Another key element is that disposition of the shares may lead to a capital gain. Half of that gain will ultimately increase the capital dividend account (CDA) for the corporation. A CDA is an account where untaxed gains are deposited within a private company, and are typically dispersed to shareholders tax free.
Another avenue for both individuals and corporations to save on their tax returns is still through a Flow-Through Shares mechanism, but these shares are issued in mining, oil and gas, specifically to finance exploration or development in Canada.
Through this method, it allows the purchaser of the shares to claim a deduction up to the amount of the share subscription price against any income pertaining to the resource expense by a publicly traded issuer.
There are two options of investments: REGULAR, is a 100% deduction for exploration, and SUPER, which is an additional 15% federal tax credits for grassroots exploration, with additional provincial and territorial deductions and tax credits.
More tax saving options
Another option is through a product called GORR, or Gross Overriding Royalty on oil and gas. It's an investment that offers investors up to 100% tax deduction with no premiums over a period of time.
GORR's target audience:
• High net worth individuals
• Individuals paying $25,000 or more in income tax
• Anyone with large capital losses carried forward
• Anyone with large capital gains from 2007-2010 tax year
• High net worth investors seeking diversification through tax deductions, yield and capital gains.
• Investors interested in participating in Canadian Oil and Gas production
This is a specific solution so in order to ensure that it makes sense for your situation, schedule a meeting with your advisor so they can see if any of these options fit your portfolio. Click here to set up a time to meet Sophie to discuss these tax saving investment options. Info@wealthco.ca Flow-Through Shares are not for every investor. Investment objectives, timelines, and risk tolerance will be used when determining suitability.
