JMRD Market Observer for February 3, 2017 – Taxation issue

In This Week’s JMRD Market Observer



  • JMRD Taxation Issue 2017

  • National Bank’s 2017 Dividend All-stars

  • NBF Asset Allocation Strategy: Alternative policies, real confusion

  • JMRD Basket Corner

  • Retirement Corner

  • Reads of the week

  • Economic Calendar

  • Earnings Reports



JMRD Wealth Management – Taxation Issue 2017


We’re approaching that time of year again – Tax Season!  This can a busy time of year as we rush to get our tax slips in order to ensure that we file our returns before the deadline.  We wanted to make your lives a little easier by providing a few helpful tips and by highlighting a few key dates that you need to know about for the 2016 tax season.


NBF Tax slips are available online!

Through our Online Documents Service, you can elect to receive your 2016 tax slips electronically, as soon as they are issued! Enjoy easy, secure access to all of your account documents – trade confirmations, prospectuses, portfolio statements and tax slips – in one place!  If you do not already have online access please call Joe Di Brita at 519-439-6452.


2016 Tax Year Tax Reporting Info


Tax Document Reminder


How to adjust your delivery preferences:

Sign into our Online Services website by clicking on the “Client Access” button and select the Accounts tab, then the Electronic Documents option. It’s that simple!


Haven’t signed up for Online Services yet?

  1. Go to
  2. Click on the “Client Access” button
  3. Click on the “Sign up for Online Services” link at the top of the page
  4. Follow the instructions and submit


Tax Slip Availability

  • T4RIF tax slips will be available through online.  A paper copy will also be mailed to you before February 28, 2017.





RRSP Contribution slips





Please take note of the following:


  • The 2016 RRSP contribution limit is $25,370.  You have until March 1st, 2017 to make your contribution to deduct the amount on your 2015 tax return.


  • If you are ahead of the game and want to make your maximum contribution for the 2017 taxation year, the 2017 contribution limit is $26,010.


  • The 2017 TFSA contribution limit is $5500 and you can contribute anytime up to December 31, 2017.  Note that if you have not maxed out your TFSA in previous years, you are able to carry forward any unused room. TFSA General Info


  • The 2017 RESP contributions can be made at any time. If you have not maxed out your contributions we can verify any catch up possibilities.


  • Other tax notes:
    • If you hold foreign property with a cost base greater than $100,000, you must file the foreign income verification statement (CRA Form T1135).  As of June 2014, new rules apply to disclosure of this information.


  • If you are a U.S. Person for tax purposes, understand your IRS reporting requirements.  U.S. Persons (even those who are resident in Canada, have tax reporting requirements in the U.S.  For example, U.S. persons are required to report any holdings in Passive Foreign Investment Companies (PFICs), which includes mutual funds and exchange traded funds.


Taxation (Ontario + Federal) 2016 and beyond





Taxation changes to be aware of:


  1. New Personal Tax Rates: This year saw a federal tax cut for average income earners, and a tax hike for high income earners. (see chart above) The federal tax rate on the portion of income over $45,000 up to about $90,000 is now 20.5% instead of 22%. But if you make over $200,000 net income per year, the portion of your income over that amount will be now taxed at a rate of 33% (as opposed to 29% last year). Of course there are also provincial taxes to pay as well, and those will depend on where you live.


  1. New Charitable Giving Rules: The taxman is rewarding those who help others. Under new rules this year, you’ll get a federal tax credit of 15 per cent for the first $200 of annual charitable donations, and a credit of 29% for cumulative donations over $200. But, now, if you’re net taxable income is over $200,000, the tax credit increases to 33 per cent for your cumulative donations above $200, but only for the amount equal to your taxable income over $200,000. Only donations made in 2016 and beyond are eligible, and there are also provincial tax credits which may apply.


  1. Child Benefit No Longer Taxed: In mid-2016 the Canada Child Benefit replaced the Canada Child Tax Benefit. How much you get now depends on your family’s income. While the old benefit was added to your taxable income, the new Canada Child Benefit is tax-free, meaning it doesn’t need to be declared on your 2016 tax return as income.


  1. Say Good-Bye to the Family Tax Cut: Income-splitting allowed parents with children under 18 to split their income to shrink their tax burden. It was introduced in 2014 but was cancelled this year. However, there may be other ways to share income with family members, so talk to your tax professional about the best way to structure your taxes this year.


Tax Tips! Don’t forget to claim the following:


  • Charitable donations
  • Give shares rather than cash
  • Medical expenses for the family
  • Child care expense
  • Professional dues
  • Public transport amount
  • Investment expenses (Management Fees)
  • Tuition fees
  • Home Accessibility Tax Credit (HATC)
  • Eligible Educator School Supply Tax Credit




CRA Q &A on Taxation:


Why did I get a T3 Slip?


  • The T 3 Slip is a statement of Trust Income. If you hold investments in income trusts (usually referred to as mutual funds), royalty trusts and real estate investment trusts (REITs) you will receive a T3. Along with the T3 slip you will also receive a Summary of Trust Income showing income in chronological order allowing you to reconcile the information on each of your T3 slips.


  • Some of the income that will be reported includes: Interest; dividends; capital gains/losses and capital income.


Why did I get a T5 Slip?


  • The T5 slip is used to report dividend income, interest and foreign taxes paid on your investments held in a non-registered account. If you hold a US dollar account, you will receive a separate T5 slip for this account. If you own shares of a split share corporation you will receive an additional T5. 


Good reads:








National Bank’s 2017 Dividend All-Stars (Thematic Research)



National Bank analysts collectively cover 300+ TSX-listed equities, of which roughly half offer investor’s income in the form of dividends or distributions. To help navigate this universe we assemble a portfolio that contains 27 of NBF’s favorite yield ideas, the basket spanning a variety of industries, sizes and liquidity.


Key Takeaways:

The 2016 All-Stars performed in-line with the S&P/TSX composite over the last twelve months (29.2% total return vs. 29.1% for the benchmark), with dividend/distribution increases from fifteen equities (there have been 70 increases versus five cuts from this portfolio since its 2012 inception). The average total return is 10.6% for the All-Stars versus 7.4% for the TSX in its five year history, and for investors seeking stable, predictable, elevated income and exposure to high quality companies the enclosed basket reflects our best ideas.


See the full article.



NBF Asset Allocation Strategy: Alternative policies, real confusion



  • Investors who hoped that President Trump would be more moderate than “Campaign Trump” are slowly realizing that this will not be the case. While the cloud of uncertainty toward the policies of the new Administration is very gradually fading, we are still left wondering about the exact timing of their implementation as well as their potential impact.


  • Short term, the Keystone XL announcement is a non-event as we are still two to three years away from any tangible effect. However, once the pipelines are built, the impact on energy prices will be positive for the Canadian economy, as they will offer more flexibility for producers to sell south of the border. The differential between Western Canada Select prices and WTI should contract, and this will improve Canadian producer margins.


  • For the first time since the great financial crisis, the unemployment rate has now reached levels where labor costs will contribute to inflation. This is only one factor among many others that point toward higher inflation this year. While U.S. dollar strength may drag down import prices, crude oil’s base effect (up 57% on a 12-month basis) will act as a counterweight.


  • It becomes clearer to us that equities seem priced for perfection. The potential for disappointment is high given the current mindset permeating the markets. Even if the VIX showed some signs of life at the end of the month, we can’t shake off the feeling that complacency is prevalent. The White House is now an X-factor and uncertainty, even concerning tax policy, remains and increases the potential for extreme movements. Consequently, we suggest an underweight in US equities in favor of cash.


See the full article.



JMRD Basket Corner


DIG Basket


BCE (BCE) – BCE’s 4Q results were in-line with expectations with better wireless metrics while TV/Internet Subscriptions were below expectations. The company did increase their annual dividend by 5% to $2.87


Open Text (OTC) – Open Text reported Q2 2017 results on Thursday, after the close. “Bottom line, we continue to believe OTC / OTEX is an attractively valued name that’s not pricing in a growing base of recurring revenue through acquisitions. We also have an increased level of confidence with respect to its ability to effectively deploy capital, especially considering the Company’s flexible capital structure post recent financings and closure of the ECD transaction. Of our large cap names, we believe OpenText is one the most compelling. Our US$45 DCF-based target price implies EV/Sales of 5.1x and EV/EBITDA of 15.4x (was 5.3x and 15.4x, respectively) on our revised F2017 estimates. Outperform.”


All-Cap Growth Basket


CGI Group (GIB.a) – NBF’s investment thesis on GIBa is unchanged following Q1 results; NBF’s Technology analyst Richard Tse believes CGI is once again in the midst of another transition – one that’s moving the Company up the value chain with an increasing proportion of revenue from intellectual property (IP) and digital, organically built and acquired. Tse likes CGI’s defensive (recurring cash flow and deleveraging) characteristics and optionality attributes (M&A, expanding margins via IP), particularly given a consistent record of execution. He reiterated his Outperform rating and increase his DCF-based target to $80 (from $76). This remains a core holding in Canadian Tech.


Savaria (SIS) – Savaria, one of North America’s leaders in the accessibility industry, announced that it has entered into an agreement to acquire all of the assets of Premier Lifts, Inc., a leading elevator dealer in the Baltimore – Washington area, for a purchase price of approximately US $3.5 million (CDN $4.6 million). Premier Lifts has been a strong dealer installer for Savaria for 15 years and is expected to deliver net sales of approximately US $4 million (CDN $5.2 million) and earnings before interest, income taxes, depreciation and amortization (EBITDA) of approximately US $500,000 (CDN $655,000) annually. The transaction is expected to close in February 2017.


U.S. Growth Basket


Facebook (FB) – Facebook (FB) Tops on Q4 Earnings Driven by Mobile & Video

MSCI (MSCI) MSCI tops Street 4Q forecasts MSCI moved higher by 10% on Thursday/Friday, following Q4 results announced on Thursday

Visa (V) – Visa quarterly profit up on higher payment volumes growth Visa moved higher by 5% Friday, to a new all-time high


Retirement Corner






Reads of the Week


  • Geopolitical Briefing:  Trump and protectionism: Separating the rhetoric from reality This report examines President Trump’s ability to fully implement his protectionist agenda. More specifically, it looks at what he can do unilaterally, what parts of his agenda require congressional approval, and what his limitations are from a political perspective. It also covers the impact that all this could have on Canada. 


See the full article.


  • NBF Economics & Strategy Special Report – Canada’s prospects amidst changing U.S. trade policy: The arrival of new leadership in Washington brings both opportunities and threats to Canada. While the energy sector is set to benefit from U.S. President Trump’s executive order on Keystone XL, the outlook for non-energy Canadian exporters is less clear amidst calls by the new administration to re-negotiate the North American Free Trade Agreement or even scrap the latter in favour of a separate bilateral agreement. Should policymakers fail to reach an agreement to exempt Canada from upcoming U.S. trade barriers, Canada’s exports and hence economic growth would take a significant hit. For instance, if the U.S. imposes a 10% border adjustment tax on imports and nothing else changes, Canada’s total goods exports to the U.S. would drop roughly 9% based on U.S. import price elasticities, enough to chop about 1.5% from Canada’s GDP growth. Under that scenario, Ontario and New Brunswick would be the worst hit among provinces given their relatively high exposures to the U.S. U.S. protectionism could do more than just derail Canada’s plan for export resurgence. It would keep the country’s economic growth model skewed to housing/consumer spending to an unhealthy extent. Whether or not Canada-U.S. trade relations suffer, expect Ottawa to keep working hard in establishing new trade relationships and reinforce existing ones. An enhancement in interprovincial trade is a laudable objective. Policymakers will also have to find ways to make Canada more competitive not just via a weakening Canadian dollar but through more sustainable methods including measures to enhance investment and boost productivity.


See the full article.










Economic Reports


Monday February 6th – None

Tuesday February 7th – Canada Building Permits

Wednesday February 8th – Canada Housing Starts; US Mortgage Applications

Thursday February 9th – Canada New Home Price Index; US Initial Jobless Claims

Friday February 10th – Canada Employment Change and Unemployment Rate; US Consumer Sentiment



Earnings Reports


Monday February 6th – Toromont

Tuesday February 7th – BP Plc, GM, Microchip Technologies, Mosaic Co., Tidewater Inc.,

Wednesday February 8th – ARC Resources, Atrium Investment Corp, Birchcliff Energy, Mullen Group, Rio Tinto, Syngenta,

Thursday February 9th – Agrium, Canfor, Kellogg Co., Merus Labs, NVIDIA, Precision Drilling, Syncordia, TransCanada Corp. Transalta Renewables, Twitter, Wi-Lan Inc.

Friday February 10th – Emera Inc., Hydro One



Have a good weekend!

By | 2017-02-06T15:40:39+00:00 February 3rd, 2017|JMRD Updates|0 Comments

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