2020 year-end tax tips: COVID-19 edition
Your taxes this year may look different due to COVID-19. For example, no tax was deducted at source from CERB payments, so you may need to pay tax on CERB amounts received when you file your 2020 income tax return.Transcript
2020 year end tax tips: COVID-19 edition
[Jamie Golombek, Managing Director, Tax & Estate Planning, CIBC Private Wealth Management]
It's that time of year where we talk about year end tax tips, and things are a little bit different in 2020, of course, because of COVID-19.
[Pay attention to your taxes payable]
So, let me begin with the first tip that we will suggest to everyone this year, is pay attention to your taxes payable. And I say this in particular, if you've been receiving the CERB, the emergency response benefit, because that amount, which was two thousand dollars per period for up to seven periods—that's 14 thousand dollars. That amount was not subject to any tax deductions at source. And that means that the amount of tax that you owe on that CERB will depend on your 2020 income. So, it's probably a good idea between now and the end of the year to really do an estimate of what your 2020 income was.
[A hand types on a calculator. A coffee and scone are brought on a tray by a waitress. An empty cafe. A waitress walking through a café.]
Did you receive income, let's say prior to March, when you perhaps lost employment and went onto the CERB? Or did you regain employment over the summer? And estimate what your total income is for 2020. For some people, there may be no tax at all owing on the CERB, because their tax rate is very low. And in fact, maybe the basic personal amount covers all of the taxes. For others, who may have received a bonus in January and then were let go as a result of COVID-19, the tax on that CERB could be as high as 54 percent, depending on what province you live in and how much income you have for the year. So, a good idea is to take a look at your 2020 income, estimate that money and then you set that aside, so it doesn't come as a surprise next April when you have to pay the taxes on the CERB. The other government benefits that were recently announced over the summer are subject to a 10 percent withholding tax. Again, that may not be sufficient.
[A hand types on a laptop. A woman types on a laptop in a home office. A computer in a home office shows Tax Savings tips on the CIBC website.]
So, again, take a look at your income for 2020. There are a variety of online tax calculators where you can sort of judge the amount of tax you are expected to pay, and if there's a shortfall based on the withholding on the new government benefits, then you may want to set aside that money as well.
[Advice for investors]
The second area that we talk about every year, of course, is tax loss selling. Depending on what you were invested in in 2020, you may have lost money in a non-registered account. Whether it makes sense to then crystallize those losses will depend on the investment decision. Does it make sense to continue to hold that name in your portfolio? If not, it may make sense to rebalance that portfolio. Capital losses can be used against any other capital gains this year, carried back three calendar years to get a refund, or carried forward indefinitely. One of the things you want to pay attention to when looking at your losses is the superficial loss rule. If you buy that stock or security back within 30 days, or your spouse buys it back, your partner buys it back, your corporation buys it back, even a trust that you're affiliated with—like an RRSP or TFSA—buys it back, the loss is denied. So, it's best to, if you're going to recognize that capital loss, realize the loss and then wait at least 30 days before buying back that identical security.
[Tax sheltered accounts (RRSP, TFSA and RESP)]
In terms of other stuff that we talk about near year end, RRSPs, of course, you have the RRSP deadline, 60 days after the end of the year. TFSAs – there are no deadlines. There are certain restrictions on RESP contributions depending on the age of the child.
[The 2020 year end tax tips: COVID-19 edition, is visible on a laptop screen]
Our year-end report covers all these different planning opportunities. We encourage you to take a look at it.
One final thought to leave you with. If you do have expenses that you want to claim on your 2020 tax return, some of them do need to be paid by the end of the year.
[Hands types on a laptop. Tax documents are placed on a desk. A hand types on a calculator.]
And I'm thinking things like interest. If you have deductible interest expense because you borrowed money for the purpose of investing, you must pay the interest by December 31st, to get a tax deduction for the 2020 year.
Similarly, with charitable giving, many people make most of their charitable giving towards the end of the year in October, November and December. If you want that charitable donation receipt, make sure that the gift is made by December 31st. And, a final reminder that if you do have some appreciated securities that have gone up in value over the last number of years, consider making a donation in-kind. If you do it by the end of the year, you get a tax receipt for the fair market value, and if you donate securities, mutual funds, segregated funds “in-kind” to charity, not only do you get that receipt, but you pay zero capital gains tax on any accumulated depreciation. All of these tips, and more, are contained in our brand new, updated 2020 year end tax tips COVID-19 edition.
[Disclaimer: CIBC advisors provide general information on certain tax, investment and estate planning matters; they do not provide tax, accounting or legal advice. Please consult your personal tax advisor, accountant, licensed insurance professional and qualified legal advisor to obtain specialized advice tailored to your needs. This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this document should consult with his or her advisor. All opinions and estimates expressed 4 in this video are as of the date of publication unless otherwise indicated, and are subject to change. ®The CIBC logo is a registered trademark of Canadian Imperial Bank of Commerce (CIBC). The material and/or its contents may not be reproduced without the express written consent of CIBC.]
Biden Wins - Investment View
Luc de la Durantaye discusses how the results are likely to benefit tech companies and Asian economies, while the U.S. dollar could lose ground and push up the loonie.Transcript
Biden Wins - Investment View
[Midtempo upbeat music plays]
[Biden Wins – Investment View]
[Luc De la Durantaye, Chief Investment Strategist and CIO CIBC Asset Management]
Both parties after the election have an interest now to come up with a fiscal package to support the U.S. Economy in the time of a continued sort of deterioration of coronavirus cases. So we do expect some fiscal stimulus from even a split Congress, but a milder or smaller one. Lower fiscal stimulus means also that the Fed needs to, is going to need to step in a little longer, maintaining interest rates lower and potentially increasing their quantitative easing in at the December meeting.
[The United States Federal Reserve.]
So that means lower rates even for longer. It means a bit flatter curve. That has also some positive impact to risky assets, a positive impact for credit spreads and interest sensitive sectors. The other important element are on the regulation front. For big tech, it probably means less risk of pursuing a breakup of big techs or having strong regulation against big techs. So that's been positive for the tech sector.
[A large computer server. A computer technician standing at the end of a hallway of large computer servers. A young tech businessperson making a presentation with a large screen to three other businesspeople.]
And the last piece, that's also given those results, is we're not going to have or very low chances of a tax hike, corporate tax hike.
[Soft music plays]
[Impact of Biden presidency]
The impact will be more at the international front.
[A photo portrait of Joe Biden. The U.S. and Chinese Flags. A large shipping boat docked at a shipyard.]
We think that a Biden administration will be a bit more inclusive in terms of trade negotiation, less aggressive towards China, still disputes, but probably less use of tariffs, intervention and a more cooperative environment. That is positive for global equities in general and non U.S. equities in general, and particularly for Asia and China, which have already also have an ace in their pocket, having managed the coronavirus pandemic better than other regions. So the continued outperformance of Asian assets would be likely and we would continue to tilt in that direction our strategy. Climate change, energy changes will take longer to be implemented.
[Wind turbines in a lightly mountainous area.]
So from that perspective, it delays these types of policies.
[Soft music plays]
From a currency perspective, the main implication is with the Fed increasing and having to step in as fiscal spending will be lower than originally expected, that translates into likely a weaker U.S. Dollar and from a broad perspective, as the U.S. continues to deal with lower fiscal spending and continued impact from the pandemic. On the reverse side, from a Canadian dollar perspective then part of the strength of the Canadian dollar will be from U.S. Dollar weakness.
[Several Canadian one dollar coins. Several different denominations of Canadian coins. A pile of old U.S. dollar bills.]
And over time, with a continued economic expansion, we continue to think that the Canadian dollar will outperform the U.S. Dollar at a moderate level.
[Soft music plays]
[Delayed election results?]
Will there be continued delays into the official results? Most probably. There's already been a legal dispute being implemented by the Trump administration.
[A photo portrait of Donald Trump.]
We don't think, though, over time that will result in a very different result for the final election results. And so from that perspective, that is not something that we see as a major impediment for investors at this stage of the game.
[Midtempo upbeat music plays]
[Disclaimer: This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this document should consult with his or her advisor. All opinions and estimates expressed in this document are as of the date of publication unless otherwise indicated and are subject to change.
®The CIBC logo is a registered trademark of the Canadian Imperial Bank of Commerce (CIBC), used under license.
The material and/or its contents may not be reproduced without the express written consent of CIBC Asset Management Inc. Certain information that we have provided to you may constitute “forward-looking” statements. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or achievements to be materially different than the results, performance or achievements expressed or implied in the forward-looking statements.]
Biden Wins - Economic View
Avery Shenfeld, CIBC Chief Economist discusses how the outcome may soon lead the U.S. to pass a scaled down version of a stimulus bill.Transcript
Biden Wins - Economic View
[Avery Shenfeld, Chief Economist CIBC World Markets]
So, we certainly had an eventful election period, and there's still a hair of doubt given legal challenges on the result, but it looks like we're headed for Joe Biden being president of the United States.
[A Whitehouse portrait photograph of Joe Biden. A time-lapse of the Capitol Building.]
But the Republicans, by a hair, continuing to run the Senate. And what that means is that, we will get some flavour of a Biden presidency.
[An American flag waves on the Capitol Building. Representatives talk on the Senate floor. A wide shot of the senate floor. A time-lapse of the Capitol Building.]
But those who watch U.S. politics will understand that the Senate has a lot of power to block and prevent some of the more dramatic changes in U.S. policy.
[Impact on investors]
For investors, that means that we will likely still get a stimulus bill.
[A slow zoom out on the Treasury Department building.]
In fact, we may even see one in December before the new president takes office. But it could be a bit scaled down from the two trillion or so that the Democrats were seeking, perhaps somewhere in that one to one and a half trillion range. And that's why we've seen bond yields actually drift a little bit softer on anticipation that perhaps government financing needs won't be as strong.
[Computer-generated images of stock market data.]
The equity market actually may like this combination because, if we get that stimulus package, it is good for the economy. But what looks less obvious is that we're going to get some other items in the Biden agenda that weren't as favorable for equity markets.
[A Whitehouse portrait photograph of Joe Biden.]
And in particular, I'm speaking about the plan to raise corporate taxes.
[The door to the Senate floor.]
That's something that a Republican Senate is likely to block, as well as perhaps some of the personal tax increases on high income individuals that the Biden administration might have otherwise pressed for.
[Energy policy and climate change]
[Aerial views of wind farms. An aerial view of flooding in a city.]
Even on other policy files, things like energy policy, climate change, while we will still see a drift in that direction, because some of that is in the hands of states.
[The exterior of the Utah state senate. The doorway to the Utah governor’s office. President Donald Trump and First Lady Melania Trump wave to the camera on the steps to Air Force One.]
And as we saw under the Trump administration, the president can do a lot in terms of regulatory policy changes that affect things like the energy sector. On other matters, you do need legislation. And again, we're expecting a slower turn there.
[A time-lapse of the Capitol Building. Aerial views of wind farms and solar panels. Oil derricks at dusk. An aerial view of an oil refinery.]
And so, a bit less drama on the public policy front for individual equity sectors like alternative energy that we've seen, for example, as a winner had the Democrats swept this election and perhaps U.S. oil companies being less concerned politically.
[A tracking shot along a gas pipeline. A timeline of the Canadian Parliament building at dawn.]
For Canada's energy sector. We have to remember that Biden was an opponent to the Keystone XL pipeline, but there's not necessarily a clear blocking of that yet.
[An aerial view of a natural gas production facility.]
On the other side of that, tougher regulations on U.S. shale oil production is actually a little bit of a positive for Canada, by leveling the playing field in the oil and gas sector. And perhaps reducing the competitive threat to Canadian oil producers from a return of more shale oil production as the global economy recovers.
We're still going to be watching now for how the new administration responds on the other key issue, and that's the coronavirus.
[A man getting tested for COVID-19. An aerial view of an empty highway in a city. A woman in a mask outside walks towards the camera holding paper towels.]
It's still true that the virus is the number one threat to economic growth globally and in the U.S.
[Two officials talk at a desk in a medical lab. A scientist tests blood samples.]
And we can hope that a more concerted effort to centrally manage some of the response to that virus and contain it can help the U.S. avoid what we're seeing now in Europe, which is the need for a deeper economic shutdown again, to bring things under control.
[An aerial view of an empty Berlin by the Brandenburg Gate.]
So, those are the files worth watching most closely. The stimulus bill coming up, which we do expect we'll still see one, as well as, can, when the new administration takes over, can they do a better job containing the coronavirus that we've seen so far?
[Rows of vials. A hand puts down a clear vial labeled “COVID-19 Vaccine”.]
And further down the road, of course, managing that all important process of getting the vaccine out and into American arms, because that will be the shot in the arm for the U.S. economy and by extension, the Canadian economy as well.
[This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this document should consult with his or her advisor. All opinions and estimates expressed in this video are as of the date of publication unless otherwise indicated, and are subject to change.
®The CIBC logo is a registered trademark of Canadian Imperial Bank of Commerce (CIBC). The material and/or its contents may not be reproduced without the express written consent of CIBC.]