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Surtax the big 6
August 29, 2019
8:27 pm
Bud
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They are making record profits while ripping off depositors and sowing division. Take the wealth tax on them and billionaires to lower taxes for everyone else.

August 31, 2019
2:45 pm
Doug
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@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

August 31, 2019
3:17 pm
AltaRed
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I am a shareholder of 4 of the big 5 and I use almost nothing of their deposit or loan services. I am thus very happy with how the banks are performing for me and hope they keep up the good performance.

August 31, 2019
6:38 pm
Bud
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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

August 31, 2019
7:19 pm
AltaRed
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Just look at their 20, 30, or 50 stock charts. I am not willing to bet against them.....period!

August 31, 2019
8:57 pm
Bud
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Right they have always cratered the last three recessions and come back pretty strong. But, keep in mind what happened in the U.S. Citi Banc Amer and others still havent fully recovered their equity and dividends. Using insurer manulife as an example their stock and dividend are still half. Same pattern for banks last three recessions. My point is i'd wait till they sell off more. I refuse to watch my stocks crater, they arent yet, even if i miss some upside. If i had significant gains in bank stocks now i wouldnt sell everything but id probably have takin some of my gains or pay for a hedge which is confusing

September 1, 2019
1:46 am
Kidd
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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. So to say... i don't deal with the banks, i just own their shares, is short sighted.

Money is best served in the hands of the consumer.

We should talk about my 2019 home insurance premium, wow... talk about a corrupt business practice.

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

September 1, 2019
7:17 am
AltaRed
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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.

September 1, 2019
7:35 am
Bud
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Does "lower client deposit margins" refer to gic investors? So they're blaming them

"Its (Rbc) investor and treasury services division reported third-quarter net income of $118 million, down 24 per cent from the same period in 2018, due to lower client deposit margins"

September 1, 2019
8:03 am
Norman1
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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.

September 1, 2019
10:06 am
Kidd
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Norman, i normally agree with your statements but in this case, you are wrong. The CBC did an investigative show a few years ago about Canadian banks using offshore means to avoid taxes.

https://www.thestar.com/news/canada/2018/02/28/ottawa-promises-to-close-loopholes-that-let-big-banks-avoid-billions-in-taxes.html

September 1, 2019
10:08 am
Doug
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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

September 1, 2019
10:13 am
Kidd
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September 1, 2019
10:58 am
Bud
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Why suprised D. i dont do stocks where would i be had i done them income trusts shifting out of losers in 09 is the index really an accurate determinant of returns. Losers long gone swept under carpet. Am i suppose to cross my fingers a bit more transparency would help. I buy rich guy sells repeat.

September 1, 2019
11:34 am
Doug
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dealjunkie said
Why suprised D. i dont do stocks where would i be had i done them income trusts shifting out of losers in 09 is the index really an accurate determinant of returns. Losers long gone swept under carpet. Am i suppose to cross my fingers a bit more transparency would help. I buy rich guy sells repeat.  

Lots to unpack there, dealjunkie/hotmony. First, there is the perennial passive versus active investing debate, for which there's merits to arguments on both sides.

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

September 1, 2019
1:16 pm
canadian.100
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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.

September 1, 2019
1:19 pm
Doug
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canadian.100 said

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.  

Nope, a common misconception actually. I believe it was Ralph Goodale. 😉

Source: https://www.cbc.ca/news/canada/rcmp-to-investigate-allegations-of-income-trust-leak-1.543497

Jim Flaherty and the Conservatives, though, had their own share of controversies.

Cheers,
Doug

September 1, 2019
1:42 pm
canadian.100
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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

September 1, 2019
2:53 pm
Doug
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canadian.100 said
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  

That's a technicality. The Conservatives weren't ideologically opposed to it, so they went through with it (that is to say, they didn't abandon the plan already put in motion by the Liberals). We need to be careful with assigning 'blame' though as things like this often happen. It was, practically speaking, the Liberals and Ralph Goodale that implemented it. (Note the mention of the advance tax ruling from the article I mentioned.) sf-cool

Cheers,
Doug

September 1, 2019
3:39 pm
Norman1
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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.

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