Comments on: Money Tip: Draw up a Net Worth Statement

By: Julienne Koestner

Julienne Koestner — Sun, 04 Dec 2011 08:16:17 +0000

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By: The Plan, PART 1 | A Leveraged Life

The Plan, PART 1 | A Leveraged Life — Sat, 21 Aug 2010 05:58:16 +0000

[...] related links Canadian Capitalist talks about Drawing up a Net Worth statement Canada Revenue Agency information about the Life Long [...]

By: Money Tip: Keep a one page account summary | Canadian Capitalist

Money Tip: Keep a one page account summary | Canadian Capitalist — Mon, 19 Oct 2009 03:11:17 +0000

[...] pension accounts and any other valuables. In fact, if you are in the habit of updating your net worth statement, you could simply add extra information such as account numbers and where its held and add [...]

By: FinancialJungle

FinancialJungle — Sat, 19 May 2007 16:13:37 +0000

Phil, please look for section (d) of the following page for an example on how to calculate the dividend tax credits. The dividend tax rate is applied to the entired grossed-up amount (145%), not just the 45%. In Ontario, if you’re in the 24% bracket, you still get a tax refund. For BC, the bracket is 30%. For these folks, receiving dividends are even more tax efficient than rents.

http://www.taxtips.ca/divtaxcredits.htm#EnhancedDTC

By: Phil S

Phil S — Sat, 19 May 2007 11:20:39 +0000

A 12% provincial dividend tax credit means an extra $54 on $1000 of dividends. That plus the $85 federal tax credit still doesn’t seem like it would offset an additional $1450 of taxable income in any tax bracket north of the poverty line.

By: FinancialJungle.com

FinancialJungle.com — Fri, 18 May 2007 21:25:14 +0000

The 18.9655% is only the federal dividend tax credits. What about the provincial? In BC – where I live – you get an additional 12%. In Ontario, it’s 6.7%.

By: Phil S

Phil S — Fri, 18 May 2007 20:48:10 +0000

It seem as though you would have to be in the 6% tax bracket (so in other words, your income is so low that you’re probably not paying tax anyways) in order to avoid paying tax on that $1000 of dividend income in my example.

By: Phil S

Phil S — Fri, 18 May 2007 20:45:01 +0000

I don’t see how you can possibly get qualified dividends to be tax-free, near tax-free or tax-positive. Every dollar of dividend yield that you get is grossed up by 145% and added to your taxable income. Then after your tax is calculated, 18.9655% of only the grossed-up amount of the dividend (the 45% portion of the 145% gross-up) is applied to reduce your taxes paid.
So, if you receive $1000 of dividend income in one tax year, I don’t see how you can get that money tax free. You gross it up to $1450 of the dividend and add it to your taxable income. Then 18.9655% of the $450 (which is $85.34) is your tax credit. Unless your income is so low that you aren’t paying taxes anyways, then from what I can see, the $85 of tax credit is nowhere near enough to offset the additional tax associated with $1450 of grossed up dividend on your taxable income. In my tax bracket, that results in roughly $522 of additional taxes and $85 of tax credits. It’s hardly tax-free, to me that means that only 16% of the dividend income is tax free and the rest is taxable.

By: FinancialJungle.com

FinancialJungle.com — Fri, 18 May 2007 18:57:37 +0000

CC: You’re right. There are other intangibles that come with homeownership like pride etc. (I totally set you up for a home run swing on that.) It comes down to personal choices as you implied. I’m a relative mobile person, so it’s not so much work for me, and I also see many Vancouver homeowners moving around every 3 years or so, but I can see the other side of the discussion.

Phil: I’m making general statements, and do look at returns on after-tax basis for myself. For the general population, OAS clawbacks isn’t an issue, while dividend yields are tax-free or near tax-free, and sometimes tax-positive. Yes, people should look at tax-brackets, and I never said you shouldn’t.

Going back to the orignal discussion. I did leave my previous home on my balance sheet, because the home was saving me rents. A dollar saved is a dollar earned, so it was no different from my other investments that were earning in other ways.

By: Canadian Capitalist

Canadian Capitalist — Fri, 18 May 2007 17:51:40 +0000

FJ: The primary motive to own a home is to put a roof over our heads. The primary motive to own an auto is to move us around. Hence they are not investments in the strict sense.

Financial motives are secondary for most people in owning a home. They have other factors such as pride of ownership, lifestyle choice, the sheer hassle of selling and moving etc. Just the thought of moving makes me shudder. I’ll wager that there are not many people like you.