Surtax the big 6 | General financial discussion | Discussion forum

@dealjunkie, if you're looking for better returns, just buy their shares! There's no deposit guarantee, but who cares about that anyway? Some of the banks are on sale right now. For example, Scotiabank and CIBC are yielding approximately 5.0% and 5.6-5.7% - CIBC is yielding roughly the same as Laurentian Bank and it's arguably a much higher quality bank.

Wealth taxes are silly ideas. One would not be able to discriminate, so we'd have to apply the tax on your personal deposits in excess of a certain amount, too. You'd be shooting yourself in the foot to spite your face. 😉

For me, the current yield on my approximate book value per share of my three Canadian bank stocks is as follows:
- (1) CIBC - 8.89% (on book value per share of approximately $65.00)
- (2) Scotiabank - 6.54% (on book value per share of approximately $55.00)
- (3) TD Bank Group - 9.9% (on book value per share of approximately $30.00; would be higher but I averaged up a few years ago and doubled down on my share purchase, bringing my book value per share up from approximately $20.00)

Cheers,
Doug

Banks and lifecos that didn't have the proper risk management practices in place got slaughtered in the last recession and have not recovered I.e. some US banks and Manulife. The rest have come back nicely.

Kidd said
The entire system is broken. When a bank can bleed $1 billion NET out of an economy every 30 days and then at years end, pay little to no tax to the country it pillaged... clearly shows the lack of government leadership. Banks produce no product, they are paper pushers. Their profits come from fees and margins. …

ADDED LINK
https://www.cbc.ca/news/business/royal-bank-earnings-1.5254376

Those kind of statements come from a position of ignorance. One should get the full story instead of just half the story.

Royal Bank of Canada had $3.26 billion in net income for the quarter ended July 2019, after paying about $818 million in income taxes in the quarter. About $1.52 billion of the $3.26 billion is paid out as dividends to shareholders.

If one wants a slice of those quarterly $1.52 billion payouts, then buy some shares as Doug and AltaRed suggested. Unlike some credit unions, one isn't forced to take those dividends in shares.

dealjunkie said
Dougie are you cheering for the hundreds of millions billionaire class. Perhaps theyd rather we vote ndp.

Buying bank stocks now Lmao

Alta are you gonna ride them down or use derivatives  

Sure, they could go down in price. If you're worried about that, you can write covered calls on the bank stocks, but realize you're giving up upside growth potential and only slightly limiting your downside.

I'm with AltaRed. I have owned the bank stocks for more than 10 years - they've gone up 20% some years and gone down 20-30%. I just collect the dividends and don't worry about the day-to-day price movements.

GICs, while deposit guaranteed to certain limits, may be a risk-free asset class, but the returns are paltry. If you can keep up with inflation net of taxes, you're very, very lucky. In short, there's no "free lunch."

What's more, you strike me as about my age, dealjunkie/hotmony. I'm surprised you're so exclusively in GICs and HISAs.

Cheers,
Doug

Doug said

Second, on the income trusts, I assume you're referring to the then Liberal government's so-called Halloween massacre whereby they changed the rules of the game overnight. That was both concerning and disturbing, to be sure, but that's not unique to stocks. I'd point out that government could change deposit insurance rules, including lowering limits for or even eliminating deposit insurance. So, I'd tend to be dismissive of that argument.

Hope that clarifies,
Doug  

While I can't stand Bill Morneau, wasn't it actually Jim Flaherty who imposed the taxes on income trusts?
I do agree with your comments on canadian bank shares - have proven to be a great investment - they recover very well and keep paying a super dividend during the down times.

Looks like the Dept of Finance had the new policy ready in 2005 and it got leaked out. It appears the Conservatives actually implemented it in 2006 after being elected. Maybe the Liberals would have implemented it if they had been elected.

https://www.cbc.ca/news/business/flaherty-imposes-new-tax-on-income-trusts-1.573751

Kidd said
https://www.cbc.ca/news/business/zero-income-tax-high-income-canada-1.4087033

I see nothing wrong with reducing one's income tax to zero using losses from previous years or from RRSP contributions. Those methods are available to everyone.

To the ignorant, it looks really unfair that that a woman is able to avoid all income taxes for two years on the $50,000/year profit from her successful bridal boutique. To the informed and to CRA, there's no problem. She just applied the $100,000 in business losses she racked up from her previous failed lingerie store.

Is it really unfair to not tax profits that are just offsets of previous years' losses?

Here's a link to tvo show about Canadian tax avoidance. Dated 2019.

https://www.tvo.org/video/documentaries/the-great-canadian-tax-dodge

Tax avoidance is perfectly legal. The tax laws are completely under the control of the governments. Governments can update the laws.

Those are the same laws that allow Canadian-owned businesses to rightly avoid Canadian taxes.

If a Canadian owned a business where socks are made by a subsidiary in China, designed by a subsidiary in Honduras, and sold by subsidiaries in US, Europe, and Canada, then the Canadian government is rightfully not entitled to taxes on the profits in the US and Europe unless those profits are sent back to the Canadian owner.