JMRD Market Observer for December 9th, 2016 – Year End Tax Reminders

December 9, 2016

In This Week’s JMRD Market Observer

 

 

  • Tax Reminders

  • BoC Policy Monitor – Economic slack in Canada and risks of overheating in the US

  • JMRD Basket Corner

  • Retirement Corner

  • Reads of the Week

  • Economic Calendar

  • Earnings Report

 

 

Year End Tax Reminders

 

  • Last day for Tax Loss selling of Canadian Equities – Friday, December 23rd, 2016 (Canadian Markets are closed December 26th and 27th)
  • Last day for Tax Loss selling of U.S. Equities – Tuesday, December 27th, 2016
  • 2016 RSP contribution deadline – Wednesday, February 29th, 2017. The 2016 maximum RRSP contribution limit is 18% of “earned income” in 2015, to an annual maximum $25,370. The 2017 contribution limit is a maximum of $26,010.
  • If you have turned 71 in 2016; December 30, 2016 is the last day you can contribute to you own RRSP. 
  • 2016 TFSA contribution deadline – Friday December 30th, 2016– contribution limit $5500.00.  The contribution can be made in cash or securities.
  • Note that the 2017 TFSA contribution limit has not yet been announced.
  • If you are planning a TFSA withdrawal in early 2017, consider withdrawing the funds by December 30th, 2016. The advantage is that you will not have to wait until 2018 to re-contribute that amount.
  • The last date to make an RESP contribution is Friday December 30th, 2016.
  • As a reminder, in order to benefit from the entire government grant, the contribution per child per year is $2,500.  If by chance, there are unused grants from the past, $5,000 can be contributed and still receive the full 20% grant.  If your child turns, or already turned 17 in 2016, this will be your last year to receive the government grant, which makes the December 31st deadline all the more important for you.
  • Deadline for making a charitable donation that can be claimed for the 2016 tax year is December 30th, 2016.

 

Year-end tax tips:

 

  1. Pre-pay any 2017 Children’s Arts & Fitness Activities 
    • There won’t be children arts or fitness tax credits in 2017, so pay for next year’s activities before Dec. 31 to take advantage of the final year of credits. This could save clients up to $250 of expenses on artistic or cultural activities and up to $500 of expenses on physical activity programs.
  2. Renovate for home accessibility
    • The new Home Accessibility Tax Credit will permit a claim equal to 15% of up to $10,000 for renovations to assist seniors and those eligible for the disability tax credit to be more mobile or functional in their home.
  3. Stock up on school supplies
    • The new School Supply Tax Credit will help compensate teachers and early educators for school supply expenses they incur in the year.
  4. Re-balance Corporate Class Mutual Funds
    • Currently, switching between corporate class mutual funds isn’t taxable, but starting Jan. 1, 2017, new federal rules mean it will be. Re-balance portfolios by the end of the year to avoid triggering a taxable disposition in the New Year.

 

 

BoC Policy Monitor – Economic slack in Canada and risks of overheating in the US

 

As widely expected, the Bank of Canada left the overnight rate unchanged at 0.50% today. The press release did not include an assessment of the balance of risk around the inflation outlook. Still the Bank’s Governing Council judged that the current policy stance remains appropriate. Already in October the Bank pointed out the heightened uncertainty around its economic projections. This time around, the Bank referred to the “uncertainty, which has been undermining business confidence and dampening investment in Canada’s major trading partners”, saying that it remains undiminished. The Bank made reference to the higher bond yields which it saw partly reflecting expectations of fiscal stimulus in the U.S. Keeping a dovish tone, while acknowledging the strong growth in Q3, the Bank said it is expecting more moderate growth in Q4. It also pointed out that economic slack remains in Canada while the United States is near full capacity, a hint the Bank does not have to move in step with the FOMC. Moreover, echoing the concerns expressed in October regarding Canada’s exports, the Bank mentioned this time that non-energy goods exports continue to disappoint. The same assessment was also made as far as business investments were concerned. Turning to the inflation outlook, it was mentioned that the effect of past exchange rate depreciation on core inflation is dissipating while the Bank expects persistent economic slack to put downward pressure on inflation. Bottom line: By dropping the balance of risk assessment from the press release, the Bank is indicating that the uncertainty around the economic outlook is larger than usual at a time when it is unclear how things will evolve south of the border. Fiscal expansion in the US might be coming at a time when the economy is operating near full capacity. This is adding uncertainty to the inflation outlook. In that context, the Bank is in fact leaving its options open, after having said in October that it had actively discussed the possibility of adding more monetary stimulus. So the Bank is in a wait and see mode, however it is doubtful that by January 18, when the Bank will present its economic update, that the US situation will be much clearer.

 

See the full article.

 

 

JMRD Basket Corner

 

DIG Basket

 

Dollarama (DOL) – Dollarama earnings continue to exceed expectations

 

Industrial Alliance (IAG) – Industrial Alliance to buy advising firm HollisWealth from Scotiabank

 

Northland Power (NPI) – China Three Gorges, SDIC among Bidders for Northland Power

 

All-Cap Growth Basket

 

Premium Brands Holdings (PBH)Three acquisitions while we were restricted: PBH acquired B.C-based Island City Baking (Artisan breads) and Conte Foods (Specialty & Pasta) for a combined price of $20.3 million, as well as Larosa Fine Food (Italian) for $0.7M in cash. While the combined acquisitions generated ~$24 million in annual sales, Island City represents the largest and most profitable chunk (NBF estimate: $18M in revenues at 10% EBITDA margin). Management seeks tremendous synergies between Stuyvers (PBH’s existing bakery operations) and Island City and also intends to merge Conte Foods and Larosa’s operations to better position them in a fast growing, niche segment of the specialty food space. We calculate ~2% accretion on these tuck-in acquisitions.

 

See the full article.

 

Spartan Energy (SPE) – SPE recently announced the $700 mln acquisition of ARX’s southeast Saskatchewan light oil assets, including 7,500 boe/d (98% liquids) of low decline (12%), high netback ($31/boe at US$50/bbl WTI and $2.85/GJ AECO) production. Transaction metrics stand at ~$93,000/boed and 8.2x P/CF (vs. 12-month average oil-weighted transactions at $48,000/boed and 7.5x), and is forecast to be ~30% accretive on a free-cash-flow basis. Financing of the transaction was provided by a now closed $542.6 mln equity financing, including the issuance of 180.9 mln common shares (~50% outstanding) at a price of $3.00 per share, and bank debt (against its newly increased $350 million credit facility). The acquisition has now closed and has an effective date of Oct. 1, 2016. 

 

See the full article.

 

Teck Resources (TECK’b)Teck Hopes to Join Glencore in Dividend Boost as Metals Soar

 

U.S. Growth Basket

 

Broadcom (AVGO)Broadcom Blows Past Estimates, Now What?

 

Vail Resorts (MTN)Vail Resorts (MTN) Misses Q1 EPS by 13c – shares traded higher by 3% on Friday to a year-high of $169.89, with positive forward guidance for 2017

 

 

Retirement Corner

 

 

 

Reads of the Week

 

 

 

 

 

 

 

 

 

 

 

Economic Reports

 

Monday December 12th – None

Tuesday December 13th – US Retail Sales, US Empire State Index

Wednesday December 14th – Canada Teranet/National Bank Home Price Index; US Industrial Production

Thursday December 15th – Canada Manufacturing Sales; US Inflation, US Housing Starts, US Initial Jobless Claims, US Philadelphia FED Index

Friday December 16th – US Leading Indicators, US Manufacturing PMI

 

 

Earnings Reports

 

Monday December 12th – None

Tuesday December 13th – Northwest Company

Wednesday December 14th – None

Thursday December 15th – Oracle, Rite Aid, Transat

Friday December 16th – Magor Corp.

 

 

Have a good weekend!

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