Available again this year (for 2010, not 2002, this time) ... limits about $25,000. single and $35,000. married. I was pleased with myself last year, in having arranged my affairs (via substantial charitable and some political contributions) ... ... to reduce my Federal tax load to zero. And the provincial liability was low, possibly nil, till I got down to the recently-initiated Health Levy and had to pay a few hundred for that. But I should not complain ... as I made substantial use of the healthcare services, for nil or minimal cost, during this past year. And I used to say that we should all be willing to pay a portion of the cost of running the country ... ... and then light fires under our legislators when we believed them to be running it/them improperly! At least ... we can do that, most of the time, without getting banged on the head for our trouble. Or locked up. ole joyful

time for this to drop down

Hi again, all you Canadians, Suppose, when the bank stock was at about $105.00, I'd decided to borrow $40.00 using those certificates as collateral (a lot more that the $4.00 original value!), and having certificates issued for the new shares and giving them to the bank to add to the collateral. When the original stock dropped to $68, a drop of about 1/3, (thanks almost entirely to that dratted U.S. sub-prime mortgage debacle - smells a lot like a hot shot lender-generated scam, to me) ... that would have been a real "loss" had I lost my nerve and sold it. If I'd used that $40. to have bought more stock of the same bank (not a good idea - best to own a variety of issues), that $40. stock value bought with the loan, having also declined by 1/3, to $26, would, added to the $68 of the original, produce $92.00 total current value ... more than double the $40.00 that I'd borrowed. So I'd have avoided a margin call on the loan, i.e. bring in some money to reduce the lender's loan to below 50% of total asset value, or more shares to add to the worth of the collateral ... by late today, tomorrow at the latest! And it would have been a lot wiser had I had stocks in about three not only actual companies, but types of industry, used as the collateral: less risky ... or, rather, spreading the risk over a wider area. Also, I still owed the bank $40. .. but the asset that it had bought was now worth only $26. By the way: note this aspect of calculating. The stock price dropped from 105 by a third to 68 ... but it's gotta gain by a half to break even: 68 + 34 = 102. It's a quality stock - it'll recover. I've got time to let it happen ... well, if, at 79, I don't, the executor of my will does. Neither of my major beneficiaries are under any more pressure to liquidate under pressure than am I. The pressure would be to pay income tax, about a year or slightly more later ... and there are other assets at close to real value to take care of that. Or, if everything were undervalued, she could use some of them to borrow to pay the tax, repaying the loan after recovery ... but the trouble with that would be that the loan interest wouldn't be deductible. Further to the rule of 72. At the price of $68., the stock price has doubled from the original $4.00 or so about 4 times: 8, 16, 32, 64. When one divides the 41 year period by the number of doubles, or 4, one gets 10.25, i.e., it took 10.25 years on average to double. Divide 72 by 10.25, one gets 7.02: the growth rate of the basic asset was about 7%. On the other hand, if you know the rate of interest that you expect a certain investment to achieve and divide that number into 72, say, 6%, you'll get a result of 12 ... it'll take your investment about 12 years to double (with no allowance for erosion of the income by tax, or of the value of the asset by inflation). In addition to the approximately 7% growth rate that my bank shares achieved, over the years they paid me about 3% in dividends, for a total growth rate of 10% or so: not too shabby ... especially when it's tax-advantaged, deferred and also tax-advantaged. And the annual rate of dividend grew since my last report to $3.48, which I think that they will make a strong effort to maintain, despite the drop in value of the stock. If they drop it back somewhat, it'll likely hit the stock price for a while, but I won't cry too hard. Earlier, at $105., or 4.5 doubles (8, 16, 32, 64, 128), dividing the 40 years by 4.5 gives 8.888, which is the rate of growth that the stock developed. Add about 3% or a little more of dividends that the shares paid over the years, and you get a total growth rate of close to 12%. I can handle that ... especially when I remember that I pay a low rate of tax on all of those dividends. I use the full amount earned by the loan-purchased stocks, plus part of that earned by my original cash amount invested to pay the interest on the loan, which interest is deductible (as it would not be were I to borrow to purchase an RRSP) and I think that you may get an idea of the reason that I prefer non-RRSP investing in a number of situations. Especially since, were I to cash out at either $105. or $68., after I deducted the $4.00 of original investment, I'd get half of the difference with no tax liability. But every dollar that I withdraw from an RRSP (or successor RRIF after age 69) ... gets added directly to income, and taxed at regular rate. If you can't avoid tax, defer it. But if you can pay some tax now and not only arrange for ongoing income to be taxed at a low rate ... but defer a substantial portion ... and then arrange for a major portion of it to be tax-free ... so much the better. So ... I think that sometimes it makes sense to pay some now, in order to arrange major tax benefits ... not only ongoing ... but later, as well. Not only that, when you have a major portion of your assets in an RRSP ... ... supposing that you need some money during those years of living and want to ask your lender for a loan. Can you use your RRSP assets as collateral for a loan? Officially, no ... unless you have a very accomodating lender, who'll make one without collateral (since they already carry your RRSP). Some will - some won't. Even so, the rate of interest might be higher. Good wishes for increasingly effective management of both your income and your assets. ole joyful P.S. Have you read my thread somewhere around here that outlines how to borrow to invest at almost no net cost (without making any allowance for possible increase in value of the invested asset)? Plus another asking which ordinary person/investor gains from the erosion in value of one's investment by inflation? o j

Recently a number of (mainly seniors) have been using a certain type of investment (unit trusts) that paid quite a high rate of return, some of it tax advantaged in the recipient's hands, plus some of it return of part of one's originally invested money. Such companies that structured themselves to pay out most of their earnings to shareholders were allowed to escape paying corporate tax. Some people who owned a somewhat different type of investment, stocks of Canadian companies, paying a much lower rate of return felt that they were being unfairly treated, and quite a few were leaving the type of investment that they'd been using to buy the other type. So the government changed the rules of calculating tax on the second type of income relative to 2006, with a view to encouraging a number of taxpayers to stay put. Until 2005, a single "taxpayer" who'd earned somewhere around $27,000 - 30,000. of solely that kind of income had a couple of types of credits work to allow them to have their tax liability reduced to zero. The differing method of calculation in 2006 allowed the level of the single "taxpayer's" income from solely that type of income to increase to $46,345. before becoming liable to pay one cent of income tax ... except the $600. Ontario Health Levy in this province. Would that my Member of Parliament's office were to notify every constituent annually of all the changes to the tax code, especially ways that some fortunate people could avoid paying tax at all up to over $45,000. ... ... but I'm not holding my breath, waiting for such a day! The person who told me of it was a C.A. who'd been an accountant (I think controller) of a substantial local company, prior to his retirement (with no pension) a couple of years ago. We've attended a monthly study group learning about investments for over 7 years (sometimes travel together to the meeting) ... I've learned a lot in that group. The government recently changed the tax rules relative to the first type of investment ... not allowing the corporations to avoid income tax, even if they agree to pay out most of their income. The value of that market lost billions overnight ... I can send any of you interested some delicious cartoons related to that! Recovered a substantial portion of it, later. In the light of that ... they may change the rules again next year relative to the second type of income, to increase the rate of income tax on it to more or less previous levels. Good wishes for learning more about the effective use of your income and assets. ole joyful