Yorkie's Place

A place to relax, kick back and talk about all things positive and negative in life.
 
HomeHome  RegisterRegister  Log inLog in  

Share | 
 

 With the HST coming into play do you think it will be ....

Go down 
AuthorMessage
BigBrownEyes29
Admin
Admin
BigBrownEyes29

Posts : 4527
Join date : 2009-10-23
Location : Ontario, Canada

PostSubject: With the HST coming into play do you think it will be ....   Mon 28 Jun 2010, 11:26 am

worth having an RSP or doing the good old fashion savings account instead?

http://www.windsorstar.com/business/will+affect+investors+across+Canada/3210867/story.html

HST will affect investors across Canada

By Jonathan Chevreau, Financial Post June 28, 2010 10:02 AM

Even as Ottawa seeks ways to help under-saving Canadians put away more for retirement, the shortfall will only be exacerbated when the harmonized sales tax comes into effect this week in Ontario and British Columbia.

Managed money — professionally managed investment portfolios — is subject to HST. That means mutual funds, wrap accounts, hedge funds, segregated funds, charitable trusts and even passively managed index funds and exchange-traded funds — the basics of most retirement portfolios — will see increased fees.

And the fee hikes won't be felt only in the two provinces ushering in the new HST on July 1. Ontario is the centre of the financial industry and B.C. is also a major player. Clients in other provinces served by financial firms in Ontario or B.C. will also experience tax hikes on their retirement savings as result of harmonization.

The new tax on retirement products, combined with the current government hand-wringing over pension reform (such as policy proposals to hike payroll taxes so that workers can get higher Canada Pension Plan benefits), just don't add up, the financial services industry says.

The Investment Counsel Association of Canada (ICAC) says European nations using value-added tax (VAT) impose it on the consumption of goods and services, but don't consider investment management as consumption.

Kate Walmsley, president of the organization that represents portfolio managers, argues that when Canadians hire pros to manage their money, "they are not consuming but rather preserving their wealth for later in life."

ICAC is urging Ottawa to refrain from imposing the 160 per cent tax hike that will occur when the tax rises from the five per cent GST currently levied, to 12 per cent HST in B.C. and 13 per cent in Ontario.

Pension plans are already suffering from funding difficulties and investment management accounts for 60 per cent of the cost of running pensions, Walmsley points out. This "sales tax policy is in effect running directly counter to the objectives of the Department of Finance in ensuring the strength and adequacy of Canadians' retirement savings."

Because advice is considered a service, it is caught by the HST. Investors who forgo advice and pick their own stocks or bonds through discount brokerages do not get hit by HST.

"Throwing darts (at stock tables) is tax-free," says Dennis Tew, chief financial officer for Franklin Templeton.

Indeed, the policy hits low- and middle-income Canadians' retirement savings harder than sophisticated investors, who tend to buy securities directly.

But even do-it-yourself investors who buy index funds, ETFs or F-class mutual funds, which are sold by fee-only advisers, are affected.

"HST will add to the headwinds investors face in trying to accumulate wealth," says Dan Hallett, a director with HighView Financial Group Inc., an asset management firm in Oakville. "No matter what kind of adviser you use, or their method of compensation, your investment costs will rise."

Most funds are sold through advisers, but requests by the Investment Funds Institute of Canada to exempt advisers from HST fell on deaf ears. IFIC president Joanne De Laurentiis says mutual funds will thus be taxed at four or five times the rate embedded in deposit instruments like guaranteed investment certificates.

Mackenzie Financial Corp. says someone with a $100,000 portfolio in mutual funds will pay an extra $2,500 in HST tax over a period of 10 years. That's assuming a standard management expense ratio (MER) of 2.28 per cent and 8 per cent growth. As investments grow, so does the HST charged.

ETFs have smaller MERs than mutual funds but are still subject to the increased harmonized tax. ETF investors will pay 0.02 per cent or 0.03 per cent more than they do currently, says Stephen Leong, vice-president of iShares Canada.

For the money industry and investors alike, the HST rules are ridiculously complex. The provincial portion of HST levied is calculated based on where investors in a particular fund live. IFIC expects most members to adopt a simplified approach that blends or averages HST across provinces.

Some other retirement products, like life insurance and annuities, are currently exempt from GST and will continue to be for HST, says Dave Schlesinger, indirect tax manager for KPMG. But costs for insurers will still go up because they will now pay tax on services like accounting and rent, that weren't taxed before harmonization. And, as exempt businesses, insurers can't recover HST via input credits.

Employers offering pensions will also face higher costs, both on managed money and on extra costs to comply with the new HST regime.

Costs will also rise for banks and credit card companies, Schlesinger says.

But exemption doesn't always pay. Michael Firth, national leader for PricewaterhouseCooper's indirect tax services, says harmonization will cost banks $400 million a year through "taxation by exemption." They can't recover the extra HST-related costs via throughput credits, nor can they pass it on to consumers paying fixed-price contracts running over many years, such as mortgages.

© The Financial Post

Back to top Go down
Trinnity
Newbie
Newbie
Trinnity

Posts : 37
Join date : 2009-10-27

PostSubject: Re: With the HST coming into play do you think it will be ....   Wed 30 Jun 2010, 2:07 pm

I can't read about RSP's or anything financial without my eyes going cross-eyed. :lol:

Technically.. I should know all about this stuff since I'm taking Business at school, but
even so, it's like reading jibberish to me everytime.

Untill I get my butt into gear, I won't be saving or investing money any time soon.
Back to top Go down
BigBrownEyes29
Admin
Admin
BigBrownEyes29

Posts : 4527
Join date : 2009-10-23
Location : Ontario, Canada

PostSubject: Re: With the HST coming into play do you think it will be ....   Fri 02 Jul 2010, 11:51 am

Trinnity wrote:
I can't read about RSP's or anything financial without my eyes going cross-eyed. :lol:

Technically.. I should know all about this stuff since I'm taking Business at school, but
even so, it's like reading jibberish to me everytime.

Untill I get my butt into gear, I won't be saving or investing money any time soon.

:lol: I hear ya!

I was going through some papers yesterday and came across a pamphlet that was sent to me in the mail when I got my HST deposited into my bank account. There was a part on the pamphlet that says

"Ontario's tax changes and the HST will help create nearly 600,000 more Ontario jobs over the next 10 years."

What I don't understand is some of the maritime provinces have already had this tax in place for a few years now. I still don't see if creating more job in the maritime provinces, maybe it is IDK. But I do see a lot of people moving from the maritime provinces to Ontario and Alberta (mainly Alberta because that's were the jobs appear to be now).
Back to top Go down
JJ
Learning the Ropes
Learning the Ropes


Posts : 172
Join date : 2009-11-17

PostSubject: Re: With the HST coming into play do you think it will be ....   Mon 05 Jul 2010, 9:40 pm

All I know about the HST at the moment is that everyone in BC does not like it.
We are pissing and moaning. ...lol...
I am because an XL Tim's coffee used to be $1.75. As of July 1st is now $1.87. 12 frickin cents for the same coffee? Yesterday when I got 2 coffees they got paid in dimes, nickles and pennies. We told the kid at the window he needed to learn to count the old fashioned way anyway.

Sorry for high jacking your thread BBE.
Back to top Go down
Guest
Guest



PostSubject: Re: With the HST coming into play do you think it will be ....   Tue 06 Jul 2010, 10:17 am

In Ontario we don't have to pay the HST on less then $4.00
Back to top Go down
BigBrownEyes29
Admin
Admin
BigBrownEyes29

Posts : 4527
Join date : 2009-10-23
Location : Ontario, Canada

PostSubject: Re: With the HST coming into play do you think it will be ....   Tue 06 Jul 2010, 11:05 am

jamn53 wrote:
In Ontario we don't have to pay the HST on less then $4.00

I've noticed that and am glad, I also have a Tim Hortons coffee addiction. :lol:
Back to top Go down
rottnmom
Warmed up
Warmed up
rottnmom

Posts : 2647
Join date : 2009-11-16
Age : 64
Location : Nova Scotia, Canada

PostSubject: Re: With the HST coming into play do you think it will be ....   Tue 06 Jul 2010, 8:11 pm

BigBrownEyes29 wrote:
Trinnity wrote:
I can't read about RSP's or anything financial without my eyes going cross-eyed. :lol:

Technically.. I should know all about this stuff since I'm taking Business at school, but
even so, it's like reading jibberish to me everytime.

Untill I get my butt into gear, I won't be saving or investing money any time soon.

:lol: I hear ya!

I was going through some papers yesterday and came across a pamphlet that was sent to me in the mail when I got my HST deposited into my bank account. There was a part on the pamphlet that says

"Ontario's tax changes and the HST will help create nearly 600,000 more Ontario jobs over the next 10 years."

What I don't understand is some of the maritime provinces have already had this tax in place for a few years now. I still don't see if creating more job in the maritime provinces, maybe it is IDK. But I do see a lot of people moving from the maritime provinces to Ontario and Alberta (mainly Alberta because that's were the jobs appear to be now).


Hmmm, probably because we have the highest taxes in Canada and one of the lowest federal investments......I honestly think Ottawa is hoping there will be an earthquake strong enough to cut us adrift and someone else will claim us. Then they'll no longer have to pretend they care.

I live 30 miles outside Halifax in a 'bedroom' community. Friend's of my daughter just rented a two bedroom apt. here in a nice (not luxury building) for $1150. My other daughter lives two blocks from English Bay, Vancouver....walking distance to downtown and Stanley Park....she pays $1450 (for yup, two bedrooms). No way in hell she could make the kind of money here that she makes out there. And I still haven't gotten over the fact that shopping...groceries or whatever is really no different than what we pay here. Won't touch the housing costs though......they are nothing short of insane. I'm homegrown Maritimer, all my family, my ancestors were as well.......but I'd move to BC tomorrow if I had the chance.
Back to top Go down
pooperscooper
Admin
Admin
pooperscooper

Posts : 1570
Join date : 2009-10-22

PostSubject: Re: With the HST coming into play do you think it will be ....   Wed 07 Jul 2010, 12:40 am

JJ wrote:
All I know about the HST at the moment is that everyone in BC does not like it.
We are pissing and moaning. ...lol...
I am because an XL Tim's coffee used to be $1.75. As of July 1st is now $1.87. 12 frickin cents for the same coffee? Yesterday when I got 2 coffees they got paid in dimes, nickles and pennies. We told the kid at the window he needed to learn to count the old fashioned way anyway.

Sorry for high jacking your thread BBE.

Ack...coffee....lol. Taxes always suck. BTW hubby is the same as you...kids don't know how to do change the old fashioned way. Smile Smile
Back to top Go down
Sponsored content




PostSubject: Re: With the HST coming into play do you think it will be ....   

Back to top Go down
 
With the HST coming into play do you think it will be ....
Back to top 
Page 1 of 1
 Similar topics
-
» Banned User keeps coming back
» malicious web page notification coming from my forum
» Avatar for Bleach Role-Play Forum
» Gateway to Role-Play
» Role play [Pets]

Permissions in this forum:You cannot reply to topics in this forum
Yorkie's Place :: Chit Chat-
Jump to: