Hubert / Sunova Common & Surplus Shares now RRSP/TFSA Eligible | Hubert Financial | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

sp_Feed Topic RSS sp_TopicIcon
Hubert / Sunova Common & Surplus Shares now RRSP/TFSA Eligible
February 26, 2012
12:15 pm
Yatti420
Guest
Guests

--
Hello Everybody,

I noticed Sunova shares are now RRSP/TFSA eligible..

did you know...
Investments in our member share program are now RSP eligible. Click the headline for more information.

See Emails Below..

--
That is correct. If you are only a Hubert member we do not currently offer RRSP but you can purchase common shares with your TFSA deposits. They are the only deposit that is not guaranteed by the deposit guarantee corporation of Manitoba but have paid very well over the years. I have attach our historical common share dividends. The best time to purchase common shares is December since the calculation is based on your balance as of December 31st of the previous year.

Year Common Share
2011 5.50%
2010 5.65%
2009 5.76%
2008 6.81%
2007 7.07%
2006 6.31%
2005 5.17%
2004 5.33%
--
A common share is money you contribute and a surplus share is the dividends we pay our members each year. You can’t purchase surplus shares and they are only earned based on the balance in your common share account. We do however pay you dividends on your surplus shares and they earn the same dividends as our common shares. If you have one common share it is help in a taxable environment unless you transfer the funds into a TFSA common share.

The program was recently modified to allow TFSA and RRSP purchases for Sunova member and the minimum share purchase for a TFSA is $25.00. Our offices are not open today as it is provincial holiday so I will have to confirm if this applies to Hubert members tomorrow. You will receive a dividend payment on your common share even if you only own one share and It will be paid in the middle of December 2012. I will email you tomorrow to confirm the minimum.
--

The program is a little different for Hubert members since your minimum share purchase is only $5.00. You must leave your minimum $5.00 share requirement in your common share account, for example if you had $10.00 in your common share account you can transfer $5.00 into your TFSA common share account.

You can find out the total number of shares by viewing Sunova’s 2010 annual report on their website. It is located until about us> who we are>annual report. Our 2011 annual report should be released sometime in the month of April.
--
That is correct the share minimum purchase is $5.00 which you already own and that has to stay in a taxable environment.
--

October 16, 2012
5:18 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 3717
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

This is a great thread, Yatti! I wish I'd thoroughly read and parsed every word as I would've likely had most of my answer before contacting a Hubert Financial CSR via online chat several weeks ago. :)

If you're interested, here is the information, which I have cross-posted (from my reply in an unrelated thread) on the share payouts. Dividends are paid annually in December based on your total relationship/deposit balances in December of the prior year. They are based on the number of shares you hold but also your total relationship with Sunova/Hubert. So, essentially, why I didn't receive a dividend in December 2011 was because I didn't become a member until July 2011 and in order to receive the 2011 dividend, I would've had to have been a member in December 2010.

Hope that clears things up! If not, more details below.

An update on Hubert Financial dividends from CSR "Tara" via an online chat session:
"Tara says:
Yes and here was my response. Our dividends are paid annually based on the previous years ending balance. You will be paid a dividend in December this year. If you provide me your member number and secret password I can confirm"

"Doug says:
So the reason no dividend was paid last year (2011) in mid-December was because I was not a member in 2010. Gotcha.
Tara says:
Exactly. Historically the dividends have paid very well so it is always exciting to find out. I will be sure to let you know."

I'll keep you guys updated on what the dividend amount will be for me (I have $100 in member equity shares; each share is $5).

However, since reading your thread, I'm a bit confused if one's deposit/relationship balance plays into it at all or, if as you said, it's only based on the total holdings of one's "share" account. That also explains what that "surplus" account is for on everyone's Hubert online banking!! :)

Cheers,
Doug

October 17, 2012
2:51 pm
Yatti
Guest
Guests

I was considering adding shares into my TFSA with the cash already in there but I decided that I am going to close it and just keep savings here for the time being.. I may purchase a few shares pending on what Sunova/Hubert rates do..

October 17, 2012
3:48 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 3717
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

Good point(s), Yatti.

Given the stated historical dividends you quoted above, if indeed the payout is only based on one's "share" holdings, it may be worthwhile buying maybe $10,000 in "shares". Sure, they're not Manitoba CUDGC insured, but it's unlikely Sunova Credit Union is going to fail.

Cheers,
Doug

October 19, 2012
11:29 am
cmore
Guest
Guests

Buy $10K in surplus shares of Sunova??? What would you base the buying decision and what would you classify this investment? Unlike buying preferred shares of a bank that are administered through a high degree of regulation, pay a consistent streem of dividends and are highly liquid for sale at any time, shares of Sunova are a mystery. They are not valued on the same financial & capital construct that the banks are, they do not have a history of consistent dividend returns (infact, I doubt they qualify under the dividend tax credit) and most IMPORTANT these are not liquid shares --- meaning you must hold them for a period of time and can only be purchased back by Sunova under certain conditions.

Don't get me wrong...I am a supporter of credit unions and believe in both their values and strength. In fact, I have been a previous member of Coast Capital and a very long-time customer of Achieva Financial, which I routinely review the financial performance of their parent Cambrian Credit Union, which is much stronger than Sunova and does not offer any surplus shares.

All I am suggesting is that people should have all the facts and look very closely as to what you are looking to gain by buying these type of shares.

October 19, 2012
11:18 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 3717
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

I disagree that Sunova is financially not as strong as Cambrian Credit Union - both are roughly the same size and have a similar clientele. Coast Capital Savings is probably stronger for sure - it's probably one of the best-managed and admired credit unions in Canada, based only on anecdotal evidence.

How would I classify them? They're not like 'preferred shares' in a Canadian bank at all (which are more like a fixed income security than an equity security). They're the equivalent of owning common shares in a Canadian bank, but the company is incorporated under provincial credit union incorporation legislation rather than the federal Bank Act or Canada Business Corporations Act.

There's no reason to suggest these shares wouldn't be eligible for the federal dividend tax credit. So long as they're not "trust distributions", I would think they would be - even dividends from privately-held corporations would be eligible, I would assume, no? Until evidence presented to the contrary, I would argue against stating they're not eligible. Thanks.

They may not be as liquid as other publicly-traded securities, true, and they do require Board approval to redeem large amounts, according to Hubert's website.

As for other credit unions allowing you to purchase surplus shares, all or most credit unions (including Coast Capital, I believe) allow you to purchase additional member equity shares in the credit union; however, I believe you only get one vote per member as opposed to one vote per share like the Canadian publicly-traded banks. They may not refer to them as 'surplus' shares, but it's the exact same thing.

Hope that clarifies things somewhat. :)

Cheers,
Doug

October 19, 2012
11:32 pm
Yatti
Guest
Guests

The redemption and what point does Sunova member's stop acquiring more shares scares me a bit.. If these shares are simply created then its just more dilution? It looks like $1000 minimum before redemptions are even possble? Sunova members pay quite a bit more then Hubert members however.. Im not sure if members can just buy/banking-scam-email at will leaving their 1 (hubert min) shares in the account..

October 19, 2012
11:59 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 3717
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

Share dilution like publicly-traded companies wouldn't occur, but it would affect their "members' equity" portion of their balance sheet. That said, this sort of capital would likely count as so-called "Tier 1 capital" and make them better capitalized than, say, issuing a bunch of debt securities (although, as a credit union, they may be limited in what sort of securities they can issue anyway...I'm not too sure!).

It's only a bit scary because it's unknown territory - we're used to publicly-traded company shares! :)

Cheers,
Doug

October 20, 2012
8:03 am
cmore
Guest
Guests

While I am not looking to be argumentative, however, these shares do not pay a dividend that qualifies for the dividend tax credit, rather must be taken as interest income. Don't take my word, do your own research. Now as fo financial strength...if I all of a sudden forgot 25 years of accounting and finance experience, Sunova is not the same size as Cambrian, has an entirely different form of capital and operates with much higher expenses. Again, don't take my word, simply review their annual financial statements.

October 20, 2012
11:39 am
Yatti
Guest
Guests

I haven't read through the statements in full yet.. I look forward to it in the future.. I am not sure these shares will qualify even as interest income.. The way I understand it you receive surplus shares based on your common balance as of dec 31st the previous year..

On a side note I was reading through Summer edition of brightnotes it looks like Sunova is capping the amount of shares available for purchase at one time.. https://www.sunovacu.ca/resource/File/Brightnotes_summer2012_eversion.pdf

October 20, 2012
11:40 am
Yatti
Guest
Guests

Yatti said

I haven't read through the statements in full yet.. I look forward to it in the future.. I am not sure these shares will qualify even as interest income.. The way I understand it you receive surplus shares based on your common balance as of dec 31st the previous year..

On a side note I was reading through Summer edition of brightnotes it looks like Sunova is capping the amount of shares available for purchase at one time.. https://www.sunovacu.ca/resource/File/Brightnotes_summer2012_eversion.pdf

Member Share Program Changes
When you join Sunova, you are becoming
part of a vibrant, innovative and friendly
financial institution unlike any other.
Each encounter with our organization is
a memorable experience showcasing
our distinct and unique service offering.
One of the benefits of your membership
is ownership. By purchasing common shares
when you open your membership, you are
investing in Sunova and becoming a partowner of our organization. This means you
are eligible to participate in our earnings
each year. As financial results permit,
we reward our common shareholders by
paying a dividend on their common share
investment. These dividends are paid to
you in the form of surplus shares.
Due to the success and demand of
Sunova common shares, Sunova has limited
new sales of shares as of April 2012. New
share purchases are currently available to
a maximum of $1000 or 200 common shares.
This per member maximum is in place to
ensure that the benefit of common share
ownership can be distributed evenly to
all members.
For more information on our Member
Share Program or to become a member
(and part-owner) in our organization,
please contact your local branch.

October 20, 2012
5:28 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 3717
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

cmore said

While I am not looking to be argumentative, however, these shares do not pay a dividend that qualifies for the dividend tax credit, rather must be taken as interest income. Don't take my word, do your own research. Now as fo financial strength...if I all of a sudden forgot 25 years of accounting and finance experience, Sunova is not the same size as Cambrian, has an entirely different form of capital and operates with much higher expenses. Again, don't take my word, simply review their annual financial statements.

I realize you're not trying to be argumentative but the "burden of proof" falls on you to prove the tax treatment of Sunova Credit Union shares as well as its form of share capital. My understanding is all Manitoba credit unions operate the same way and have the same share capital structure. Having higher expenses would not mean Sunova is "less safe" or "less financially sound" than Cambrian; it just means they're net income isn't as high. Cambrian may not permit additional member share purchases but that's their choice. And, as Yatti's pointed out, it appears Sunova is "capping" additional share purchases at 200 shares (or $1000) per owner, presumably so their capital structure doesn't get way "out of whack" (as I said above).

As for the federal dividend tax credit, again until you can prove otherwise, they are treated as dividends. Even the CRA's own website indicates this - as long as it is paid by a taxable corporation in Canada, whether provincially- or federally incorporated, they are dividends. Credit unions are taxable corporations - it's just their incorporating legislation is a different act than the provincial Company Act or federal Bank Act or Canada Business Corporations Act. The only thing not eligible would be distributions paid by a trust, which would be treated as trust income and taxed to the end recipients/beneficiaries of said trust.

Hope that clarifies! :)

Cheers,
Doug

October 21, 2012
2:03 pm
cmore
Guest
Guests

Below is a simple ruling regarding what doesn't qualify for dividend tax credits in Canada and my point on capital is the fact that retained earnings is the highest grade of capital (period) and Cambrian's entire capital is made-up of retained earnings...

Record the actual amount of dividends other than eligible dividends in Box 10 of the T5 form. These are dividends from taxable Canadian corporations. Do not include dividends paid to individuals who are not eligible to receive the federal dividend tax credit, capital gains dividends, dividends paid from a credit union to a member who has shares in a credit union if the share is not registered on a designated stock exchange, or taxable dividends and dividends (excluding capital gains dividends) that were paid by a mortgage investment corporation to any of the corporation's shareholders as stated by the Canada Revenue Agency.

Read more: How to Prepare a T5 for Dividends | eHow.com http://www.ehow.com/how_696839.....z29y7gUjn3

October 21, 2012
3:40 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 3717
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

I'm not going to argue this anymore; you may be right on the federal dividend tax credit but to state that Cambrian has a better capital structure than Sunova is misleading to readers. So, to future readers, this thread should have no bearing on Cambrian having a better capital structure or being more solvent than Sunova. Please take the contents of this thread with a "grain of salt" as they are just that, opinions not facts. Thank you.

Cheers,
Doug

October 21, 2012
3:53 pm
Yatti
Guest
Guests

I found an article explaining the taxation.. Haven't read it completely yet..

coopzone.coop/files/Credit%20Union%20Taxation.doc

October 22, 2012
7:55 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 3717
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

Cool. Thanks for the update, Yatti. Will try and look later! Let me know your thoughts when you've had a chance too. :)

Cheers,
Doug

Please write your comments in the forum.