NEWSLETTER

In allocating the cash from both positions above, we purchased a new multi-index proprietary structured note (the BMO M/A C/I679F/NL – JHN6906) at the beginning of September. As with the previous notes, this note is a three-tranched, multi-indexed note, comprised of 50% Russel 2000 index, 25% TSX Capped Utilities Index, and 25% TSX High Income Energy Index. Also like previous notes, we took 30% downside protection on each tranche, while hoping to achieve a 7.675% return on this position, with 3.8375% being paid out every six months (so long as the indices have not fallen more than 30%). Another position we started to take profits on was our Eaton Vance Tax Managed Global Diversified Equities (EXG). This position makes covered calls and has shifted where its allocation has been over time from Europe back to the USA. It was trading at a premium compared with its underlying NAV when we began to work our way out of this position, the proceeds from which we have moved to a cash account while searching for another investment opportunity. As we go forward to the end of the year, we still expect the stock market to have its 4th quarter rally as earnings prospects are still expected to beat estimates. I believe NAFTA will come to a conclusion and we will have a deal. However, we continue to monitor all aspects of the market as we search for value.

OCTOBER - DECEMBER 2018

THE PORTFOLIO MANAGERS UPDATEYour Personal Portfolio Managers: Kevin Haakensen, CFA & Kevin Hegedus, CIMHollisWealth, a division of Industrial Alliance Securities Inc., PWM Private Wealth Counsel Insurance Advisors, Hollis Insurance Inc.

As 2018’s third quarter draws to a close, we continue to see rough times within most global markets – the US drove ahead, while global and Canadian markets pulled back and ended up negative year to date. NAFTA and other global trade news continue to linger in the headlines, as Trump continues to proffer his “No NAFTA is better than a bad NAFTA” opinion. Of the S&P500 companies that have reported their Quarter 2 earnings, 80.3% came in above analyst expectations, showing that the US economy is still running strong against the TSX (which only reported 56.5% above expectations). Our portfolios showed a lot of third-quarter activity. At the beginning of August we saw the Kensington Private Equity (KEN115) position complete a sale of one of their individual holdings, allowing the company to pay a dividend. Accounts holding the position would have seen a 9% dividend being paid out, adding to their cash levels. In addition the end of August saw one of our proprietary structured notes having one of its tranches called away. The JHN6185 BMO M/A C/I358F/NL is a three-tranche note comprising of 40% Russel 2000 index, 40% Euro Banks index and 20% TSX utilities index. The tranche containing 40% Russel 2000 reached its callable barrier, and clients received the 40% principal portion, plus the 3.9% semi-annual coupon from the entire position, all in cash.

Sean Meshke, CFA, Portfolio ManagerHollisWealth, a division of Industrial Alliance Securities Inc., PWM Private Wealth Counsel.Insurance Advisor, Hollis Insurance Inc.

“It does not do to leave a live dragon out of your calculations, if you live near him.” - J.R.R. Tolkien, The Hobbit

REMINDER: Our Saskatoon office is now located at 205-210 Wellman Crescent in Stonebridge. We are looking forward to serving you at our new location!

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yourself looking at a marginal tax bracket of around 48% which is payable on nearly the entire proceeds of the sale of your farm auction sale.So what is the solution? For our proprietors and partnerships, you may want to consider incorporating. When incorporating we invoke a section of the Income Tax Act which will allow you to transfer in all of your farm property on a tax deferred basis. In the spring when your auction is held, your assets are now sold from inside of your corporation and taxed within that structure. As a result the recapture as well as the proceeds from the sale of your inventory are taxed at a flat rate of 12% (11% in 2019) on income up to $500,000. This is a significant decrease from the marginal tax rate of 48% if sold personally. You may then spread out the remaining income over multiple personal tax years by systematically declaring dividends throughout retirement. If your proceeds are over and above $500,000, you may want to consider electing to have your fiscal year end at a date which will allow you to stagger your inventory sale and auction sale over two tax years. Bear in mind your $500,000 limit will be prorated for the amount of months in the year that your corporation has existed, so for those of you who will be having spring auctions and are considering this strategy; get a hold of us at PWM sooner rather than later to take full advantage.What about those who are already incorporated? There are still great tax planning options available to you. If you are anticipating triggering income over and above the $500,000 threshold next spring as a result of an auction, consider the usage of your optional inventory adjustment (OIA) in order to shift income to previous years in which you have not fully utilized your full $500,000 small business deduction limit. Or alternatively, you may pay income tax at the general rate of 27%, at which point you will then be able to experience a lower rate of personal income tax when your future dividends are deemed eligible. Whether you’re just getting started, or in the twilight years of your farming career – there are always opportunities available to explore which could reduce your tax bill. If you’re already a client of PWM or are a seeking some farm tax advice, we here at PWM are always willing to help.

As farmers are beginning to close the books on Harvest 2019, many operators around the country are already beginning planning for spring auctions as hundreds of farmers around the province and Western Canada head into retirement.

Preparing for an auction is no simple task and requires a great deal of effort. Your tools need to be shined up and organized, machinery and equipment needs some extra spring maintenance, and the yard could probably use some work too. But what about the work that is to be done in the office? Many farmers will groan about the expenses of the auction when it comes to the fees that are paid to the auction company, but what about the biggest expense of all? The largest farm auction expense will likely be the cheque you sign off to Canada Revenue Agency at tax time.If you are farming as a proprietor or partnership and have not done any tax planning, you may be in for a surprise when it comes time to settle up with the CRA and you discover the amount of tax that you need to pay after the sale of your farm. For many farmers - years of crop deferral, equipment purchases, and depreciation has kept their income at a manageable level but now the bill has come due. To be more specific - throughout the duration of your farming career, you are able to reduce your taxable income by charging depreciation against the value of your equipment, while this expense will lower your personal income in a given year, it reduces the amount of your Capital Cost Allowance (CCA) and as a result the cost of your equipment for tax purposes is near or equal to zero. When you in turn sell that piece of equipment, any amount of fair market value over and above your remaining CCA balance will be considered what we call recapture and will be taxed at your marginal tax rate. Currently the combined federal and provincial marginal tax rate on income over $200,000 is 48% in Saskatchewan (source), and it is often the case to see auction sale proceeds in high multiples of this amount. With no ability to defer further you may find

LIFE AFTER HARvEST PRESENTS – PLANNING FOR yOUR SPRING AUcTION SALEBy Riley Sittler, CFA Investment Advisor, Mutual Funds, HollisWealth, a division of Industrial Alliance Securities Inc. PWM Private Wealth Counsel

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LIFE AFTER HARVEST

A TRANSITION PLANNING SOLUTION FOR THE FAMILY FARM

We will walk you through how to:

• Enjoy a financially-protected retirement• Increase the value of your farm• Maintain the success of your operations• Minimize the stress of operating

a business

• Reduce your income taxes• Create a transition plan that works

for you• Preserve your family harmony

We appreciate that not every farm family is the same. That’s why our team of highly accredited advisors works with you – at every stage in life – to ensure the success of your farm and your family from one generation to the next.

HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Insurance products provided through Hollis Insurance Inc. PWM Private Wealth Counsel is a personal trade name of Kevin Hegedus and Kevin Haakensen.

lifeafterharvest.com

Assiniboia, SKPrince of Wales Cultural & Recreational Centre

Tuesday, November 6 @ 7pm

Wednesday, November 7 @ 10am

UPCOMING WORKSHOP DATES

Regina, SKLocation: TBD

Wednesday, November 7 @ 7pm

Thursday, November 8 @ 10am

306.975.9500Space is Limited - Register Today

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1. Integration of your investment & insurance decisions with your tax planning & preparation. Some of these decisions would include any of the following:

a. Should I meltdown my RRSPs and how does it affect my taxes?

b. RRSP withdrawals or dividends from my holding company for my annual income?

c. Take money out of the holding company to make TFSA contributions?

d. Who should own my insurance policies; corporation or personally owned?

e. Should I take CPP now or wait a few more years and take from my RRSPs now?

2. Easier estate planning for executors & administrators to have all functions within one office

3. Very reasonable rates compared to other accounting firms in Saskatoon & surrounding areas

4. Discounts (10 to 25%) for existing investment clients on any tax services

In addition to the reasons listed above, here are two case studies that we have helped clients with in the past year.

WHy cHOOSE PRAIRIE WEALTH MANAGEMENT TAx AND AccOUNTING SERvIcES

CASE STUDYA corporate client of our office was completely unaware that they had the ability to payout a tax free capital dividend from their corporation to them personally due to transactions prior to becoming a tax client. After some research, this allowed the client to transfer up to $900,000 of investments and assets from their corporation. This will allow them to accomplish several goals throughout their retirement. One is to sell some corporate owned farmland to them personally that they wish to transfer to their children through their estate in a simpler fashion. Two was to complete the build and renovation of their new home. Three is to allow us to better control their cash flow and incomes personally throughout their retirement without worrying as much about the personal tax implications of funds from their corporation paid out to them personally.

CASE STUDY We assisted a client of our office navigate the process of submitting a disability tax credit certificate for his seven year old daughter. He initially thought his daughter would not qualify. We recommended he speak to his family doctor and we coordinated the process with their doctor and the submission to CRA to qualify for the disability tax credit. After a few months, the tax credit was approved for all seven years that the disability had existed. This opened up refunds from 2010 to 2016 totalling over $25,000 for him and his family. The client has decided to use portions of this money to setup a Registered Disability Savings Plan for his young daughter to access some of the government grants within that program. Areas of expertise Setting up Corporations & Holding Companies Structuring Final Sales of Farming & Business assets Tax Returns - Corporate, Farm & Personal Agri-Invest & Agri-stability applications for personal or corporate clients

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About Robb Nash: It’s not complicated. We love playing music and we took that passion and used it as a platform to talk about serious topics that are often hard to talk about. We’re not afraid to talk about our own struggles with mental health and how we’ve overcome those struggles. We tell stories of hope and stories of tragedy, making sure to balance the two. We travel from coast to coast sharing this message and starting these conversations. This is our mission and there has never been a more important time than now. Through the power of music and words, he encourages youth to make positive life choices and lead lives of significance and purpose. He inspires youth to stay hopeful and recognize their unique strengths. Audience feedback from students and educators consistently includes stories of remarkable personal breakthrough, realization of self-worth and personal growth. The Robb Nash Project is a message of strength and hope at a time when many youth need it most.

We Play Music and Tell Stories. We talk about Suicide, Addiction and Mental Health.

After sponsoring Robb Nash events for the past 3 years at individual high schools and witnessing first hand the incredible impact, we have been working to bring Robb back to reach as many kids as possible in our community and province. We are very pleased to be helping to bring Robb back to Saskatoon for a SuperShow at the end of November, reaching thousands of local youth.

UPcOMING EvENTS - THE RObb NASH PROjEcT

“If you wake up looking for pain you will find it. If you wake up looking for strength, you will find that too”. - Robb Nash

ROck FOR RAPPlease join us in downtown Saskatoon, on the fourth floor of Saskatoon’s coolest technology company where you’ll be greeted with sparkling wine, acoustic tunes, fun eats and a cash beer and wine bar. Doors open at 7 pm with a sparkling wine reception and a bustling crowd, then get some roll to go with that rock -- live music will take the stage around 8 pm! Balloon popping for prizes, silent auction, photo booth and bountiful refreshments will keep the party swinging until 11 pm. The best thing about Rock for RAP is that your evening of fun is all for a good cause: 100% of the money raised goes to Saskatoon’s Restorative Action Program. Friday, November 16th, 20174th Floor - Avenue Building, 220 - 3rd Avenue South, SaskatoonDoors open at 7:00pm

Live music, a short program, appetizers, cash bar, silent auction and other awesome prizes will be throughout the evening. Tickets are $50, and you will receive a charitable tax receipt in the full amount thanks to a generous donation covering all the hard costs of this event.Proudly hosted by Vendasta Technologies in Saskatoon.https://www.canadahelps.org/en/charities/rap-saskatoon/events/rock-for-rap-2018/

What is RAP?The Restorative Action Program (RAP) is a community driven program providing dispute resolution training and services, leadership development, and life skills to over 4675 youth in Saskatoon.RAP directly deals with bullying, relationship breakdown, violence, and crime that stand in the way of academic success and personal growth. The Restorative Action Program transforms the cycle of conflict affecting youth into opportunities for learning, change, and growth. The Restorative Action Program supports and responds to the needs of all youth so they can live in safer communities.

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MyPortfolio+ Many of you will already have signed up for our online service. For those of you who haven’t, here are the instructions:• Firstly, you will need to go to www.my-portfolio.ca, and click on the “sign up for my porfolio website” link at the top. You will then be prompted to enter the first 6 digits of your account number, which you would have received in your letter from Industrial Alliance at the time of the transition. Please be sure to use an individual account number, and not a joint account, as these are not eligible for sign on. You will, however, be able to see your joint accounts online attached to your profile once everything is set up. • Once you have done this, you will be asked for the three middle digits of your SIN, and your contact information. The page will then assign you a digital username and an alphanumeric password. Please note you will need to write these down in order to proceed .

• Click on the login button, and enter the information provided on the previous page. You will then be asked to change your password (your username will remain the same), and to enter your security questions. • Once you have accepted the terms and conditions, you will then be able to select your delivery preferences for trade confirmations, statements and tax slips. You can change your password, security questions and delivery preferences at any time. • If, once you have logged in, you do not see all of your accounts, there may be additional account numbers that need to be linked. We can do this through a request to our head office. In doing so, if you wish to have access to a spouse’s accounts, we will need them to sign a form granting their permission to do so. We understand this is not the same process as before; however, as this is a new system, with a new company, their requirements are slightly different.• Please note, you can also call the support line from 8 a.m. to 8 p.m. Eastern at 855-844-0172, and they will walk you through the steps above if you find it easier. They will also provide you with your username and password over the phone.

TFSA ContributionsIf you have not yet made your Tax-Free Savings Account (TFSA) contribution for 2017, now would be an excellent time to do so. Canadian residents who are 18 years of age and over are permitted to contribute up to $5,000 each year from 2009 to 2012 inclusive, $5,500 for each of 2013 and 2014, $10,000 in 2015, and $5,500 in each of 2016, 2017 and 2018 to a TFSA. Any income earned inside the TFSA is completely tax-free. If you are unable to make your contribution in any given year, you can make it up in a future year, but you gain the most advantage by making your TFSA contributions as soon as possible, in order to enjoy the tax-free growth of your investment. If you have made withdrawals from your TFSA in 2018, you will need to wait until 2019 to deposit those funds back into your TFSA in order to avoid any penalties for re-depositing the funds too soon. ** Please note: Available room is carried forward should you not contribute the maximum. You should always verify how much you have contributed to your TFSA before making additional contributions. This will avoid penalties from CRA for over contribution.

IMPORTANT INFORMATION FROM yOUR ADMINISTRATIvE TEAM

Holley Frost Associate Investment Advisor HollisWealth, a division of Industrial Alliance Securities Inc. Insurance Advisor, Hollis Insurance Inc.

Leslie Wong Licensed Assistant HollisWealth, a division of Industrial Alliance Securities Inc.

April Seitz Investment Advisor HollisWealth, a division of Industrial Alliance Securities Inc.

RESPs You only have a six-month window to make an RESP withdrawal for a specific school term (ie, if a student graduated in April 2018 and you forgot to make a withdrawal until now, October would be the latest that you could make the withdrawal). Please note that the RESP contribution deadline is December 31 of each calendar year.

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Tax Information As in prior years, this year you will be receiving the fund company statements (i.e. Dynamic, Mackenzie, CI, etc) in the mail. These are extremely important to keep on hand as they provide you with valuable information, such as ACBs (adjusted cost base), and realized gains/losses. Your accountant will want to see these statements, as it makes it easier for them to complete your tax return, which in turn should save you money! Please note that our office does not receive copies of these statements, so you will be in the best position to provide your accountant with what they need in this regard.

Please also note, it is important for you to keep your tax slips in a safe and accessible place. During tax season, we receive hundreds of calls for duplicates of the information that has been sent out to you through the year. Though it may seem easier to have your accountant call us for duplicates than to locate the originals, please be aware that, because of privacy laws, this may not be the case. We are required to obtain your

written approval (via signed release) EACH YEAR for these duplicates. This means, if your accountant is contacting us for things that haven’t been provided to them, we (or they) will be contacting you for your signature before they can request these documents. Further, because of the inundation of calls we receive, there is a standard 48 hour turnaround period on these requests. In addition, because we are unable to email anything with a SIN on it (this includes most tax slips), we are limited to mail, pickup and fax for delivery of these documents. As our office is attempting to Go Green, this can also be an unnecessary duplication of printing tens of dozens of pages to provide copies. Please bear these things in mind when looking for the documentation to provide to your accountant in the Spring!It has also been noted that accountants frequently miss the ACB information needed on the T5008 form because it comes in a separate mailing. Please note, the adjusted cost base and realized gain/loss information is available to you on the realized gain/loss summary mailed by Industrial Alliance.

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Client Meetings with your AdvisorIt is no secret that the financial industry has seen many changes over the years, primarily focusing on ensuring our clients receive the best care possible, while ensuring that processes and fees are more transparent than ever. We uphold these standards, and do our best to maintain very accurate information about our clients on file so that we can always be in a position to provide the most appropriate advice tailored to your specific needs. In order to do this, we have to collect certain information, and update certain documents throughout the course of the year. In light of this, we ask that when booking an appointment, our valued clients make every effort to attend with all parties involved in investing. This makes it easier on everyone when it comes to collecting information and signing documents, as well as reducing follow up times when items are sent home. It also saves you from having to send back documents, and allows you to ask any questions you may have about them during the meeting.

Registered Retirement Savings Plans (RRSPs)The deadline for RRSP contributions may seem a long way off right now, as you can still make RRSP contributions for the 2018 tax year in the first sixty days of 2019. Still, for those that we’ve recommended RRSPs for, the sooner you make your contribution, the sooner you can put the funds to work in a tax-deferred environment. In addition, for those who are turning 71 in 2018, your RRSPs must be dealt with by December 31st in one of three ways: fully withdrawing the funds; transferring them to an annuity; or converting the RRSP into a Registered Retirement Income Fund (RRIF). So, if you have employment income this year and you wish to make any final RRSP contributions, they will need to be completed before the end of the year.

Changes to Appointment Cancellation PolicyEvery client is as unique as their financial needs. As such, your appointment time with us is tailored to you. Preparation can often take anywhere from an hour to five or six hours, depending on the type of meeting. In addition, the same time slot has often been requested by many people, who have already been turned down in favor of your coming in at that time.Unfortunately, we frequently receive calls to cancel an appointment at the last minute. Because of the time-sensitive nature of investment data, this not only discards the preparation done for the meeting, but also negates the possibility of being able to fill that spot with another client in a timely fashion. We do understand that life events happen, and by no means wish for you to feel penalized when having to cancel for an emergency, for harvest, etc. However, in order to ensure all spots are used effectively, we kindly request that you provide our office with no less than 48 hours’ notice when calling to cancel your appointment. This will enable us to attempt to fill that spot with another client.Please note, when rebooking, dates offered may be up to a month in the future. Because of this, please ensure cancelling your first appointment is the best decision for you, as it may be difficult to find another time closer at hand!We appreciate your working with us to ensure everyone’s financial needs are met in a timely fashion, and look forward to continuing to work with you toward retirement and beyond!

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“The only person who will take care of the older person you will become is the younger person you are now.”

- Unknown

PLANNING LIFESTyLE cHOIcES IN RETIRMENTDynamic Funds - Snapshots

You are now making the transition to what may be the most rewarding and satisfying period of your life, retirement. Over the years you have no doubt had some pleasant daydreams about the pleasures of retirement and the rewarding and relaxing time to be spent. In many cases those daydreams have been of a very general nature; I want to relax, I want to play golf, or I want to travel. However, now that retirement is actually here, you should probably spend some time considering what retirement will mean specifically for your time and lifestyle. If you have a spouse you should approach this pleasant task together to ensure that you both enjoy the coming years as much as possible. Some issues you may want to consider:Deciding Where to LiveYou may be living in the home where you have lived for many years and raised a family, a home to which you have strong emotional ties. Consequently, you may decide to continue living there. But, you should start thinking about the future. Maintaining a home and garden when you are 65

may be quite different from when you are 75. On the other hand, you may want to sell your home and ‘downsize’ or relocate. Should you decide to sell your home there will generally be two options to consider: buy or rent.When you sell your home you will be receiving what is probably a substantial amount of cash. If you purchase a smaller and less expensive home you will then be able to use the difference to help fund your retirement. In this way you are gaining access to some of the equity in your home. Another factor to be considered is estate planning. If you have children and want to leave an inheritance to them, you will need to consider the implications of selling your home and what it means to your children’s inheritances.If you decide to sell your home and rent you will receive the home sale proceeds but will now have an ongoing expense which may eat into your savings. Selling and renting also has implications on the eventual estate to be left to your family.To avoid misunderstandings and hard feelings, it is probably a good idea to bring your children into the discussion about your plans for the family home.

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Leisure ActivitiesYou have probably been looking forward to spending time on leisure activities you have not had a chance to enjoy as much as you would like – sailing or golf for example. However you should now spend some time considering exactly what sort of time and financial commitment these activities will require. Joining a golf club can be expensive and you are probably not planning to golf eight hours a day as in most parts of Canada this is a seasonal activity. You should consider how you are going to occupy your time in the winter months.Working in RetirementIt is a growing trend for more retirees to continue to work to some extent. Some people choose to take a part-time job in retirement because they enjoy the social interaction and like to feel that they are still contributing. Others may feel a financial need. A part-time job that you enjoy while earning some extra income can be a very attractive way to spend some of your retirement time. One factor that needs to be considered however, is how the additional income may affect your Old Age Security benefits. VolunteeringAs with taking a part-time job, volunteering can be a very rewarding activity in retirement. Not only is this a great way to socialize with like-minded people but volunteering can be a source of real satisfaction by giving back to your community. Look around your community and find an activity where you may be able to use the experience of a lifetime to make a difference. However, consider the time commitment, it might be substantial and volunteering should be a pleasure, not drudgery.

TravelFinally getting the opportunity to do some traveling is often at the top of people’s lists when asked about their retirement plans. Now is the time to consider what exactly your travel plans are and how those plans will affect your time and financial situation. For some people, travel means visiting exotic locations around the world, for others it is spending an extended time in a southern location such as Florida during the Canadian winters. Here are some issues you should consider if you want to travel internationally or become a ‘Snowbird’ heading for a sunny southern climate.Health coverage in the U.S.When contemplating travelling to the U.S., either for a short trip or extended stay, it is very important to understand the type and amount of health insurance coverage required. Your provincial/territorial health plan will cover you for health costs incurred while in the U.S. but only to the extent that you would be covered while in Canada. This can have severe financial consequences since a particular health need may not be covered at all, or the amount of the expense incurred in the U.S. can be dramatically higher than the coverage provided at home. You have to pay the difference. As well, the government coverage typically will not be in place when you are out of Canada for more than 183 days. Consequently, buying private travel health insurance is highly recommended. If you are 75 years old or less you can usually obtain coverage through a simple application. However, if you are over 75 your coverage will probably be subject to some medical underwriting so, depending on your health and medical background, travel insurance may be

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difficult to obtain. As mentioned above, your provincial/territorial plan will cover you to some extent in the U.S. but different provinces/territories do provide different levels of coverage and you should take a look at your particular coverage to determine its adequacy.Tax impact of spending time outside CanadaNot surprisingly, there are serious tax consequences relating to residency. For example, the US authorities will apply what is known as the ‘Substantial Residence’ test. The test says that the number of days that you spend in the US in the current year, plus 1/3 of the days you spent in the US last year, plus 1/6 of the days you spent in the US two years ago cannot add up to more than 182 days. If you exceed that limit, you will be subject to US taxation on your worldwide income. Looked at another way, you can consistently spend up to 121days (about four months) in the US annually before accumulating the 182 days that will make you subject to US tax.121 days (Yr1) + 40 days (1/3 of Yr2) + 20 days (1/6 of Yr3) = 181 days, just under the limit.If your primary residential ties are with Canada, paying U.S. tax may be avoided by filing Internal Revenue Service form 8840, The Closer Connection Exception Statement for Aliens. To get more information in detail, please speak with your financial advisor.To maintain your Canadian residency status, the same 182-day rule applies for any other country. However, the tax

situation is different in other countries and is affected by whether Canada has a tax treaty with the country. When considering taking up partial residency and/or buying property in a different country you should be speaking to a qualified tax and/or legal advisor.Purchasing real estate in the United StatesThere should not be any immediate implications of purchasing another property in the United States. However, for estate planning purposes there can be issues. If you die and at the time of your death you own assets in the United States, these will be subject to US tax. The tax may be offset through tax credits but again, this is an area where you should definitely seek professional advice.Renting Out Real Estate in the United StatesIf you have purchased a U.S. property it is likely that you will only be there for a few months of the year and may want to rent it out in your absence. This can certainly be done but there are tax consequences. On the U.S side, the renter has the choice of either paying a 30% withholding tax or else filing tax form 1040NR with the IRS. As far as Canadian tax, the rental income earned in the U.S. must be included in income but there are usually offsetting tax credits available. Professional advice should definitely be consulted to determine your tax status.

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Selling a Property in the United StatesIf you sell a U.S. property you will be subject to tax in the U.S. on the gain on the property. Several factors can come into play but generally, if the property has been held for less than 12 months the tax rate will be at the U.S. graduated rates and if held longer than 12 months, at 15%. The gain on the sale of a U.S property must also be reported for Canadian tax purposes and adjusted for foreign exchange. However, this potential double taxation can usually be offset by the foreign tax credit.Foreign Exchange IssuesWhen you exchange Canadian dollars for U.S. dollars you will be subject to the ‘spot’ rate at the time or the rate determined by the foreign exchange markets on a given day. However, ‘forward’ transactions can be made where you can lock in a specific rate for a specified time period. This can be beneficial in situations where a property is bought or sold but there will not be an actual exchange of cash until some time in the future, perhaps three months. A forward currency contract will ensure that the amount of cash to be paid or received can be guaranteed. Your advisor can help you decide if this is a strategy suitable to your personal circumstances.Bank Accounts in the United StatesMany ‘Snowbirds’ prefer to have a U.S. bank account and these can certainly be established. A few of the major Canadian banks have established a presence in the U.S. through the purchase of U.S. banking institutions and they will provide a variety of account options for Canadians. It is important to appreciate that U.S. securities regulations will prevent you from opening an investment account. However, U.S. laws have been relaxed to some extent and ‘Snowbirds’ can now make transactions in their Canadian registered accounts such as RRSPs and RRIFs while in the U.S. You should definitely consult with your Advisor to ensure that your dealings will conform with U.S. law

“Travel isn’t always pretty. It isn’t always comfortable. Sometimes it hurts, it even breaks your heart. But that’s okay. The journey changes you; it should change you. It leaves marks on your memory, on your consciousness, on your heart, and on your body. You take something with you. Hopefully, you leave something good behind.” – Anthony Bourdain

Estate Planning and the United StatesU.S. tax law will levy tax on death on the fair market value of certain assets held in the U.S. by Canadians. These taxable assets will include real estate, certain personal assets such as vehicles and shares of U.S. corporations among others. Canadian tax law will also tax these assets on death which implies double taxation. However, U.S. law does allow for certain tax credits that will serve to reduce and even eliminate the U.S. taxes depending on the specifics of the situation. While U.S. law has varied over the last decade or so, the American Taxpayer Relief Act was passed in January 2013 and should be applicable ongoing. The actual rules under the Act are quite complicated and although your Advisor will be able to provide some further explanation, it is always strongly advised to seek out competent legal/tax counsel when dealing with cross-border tax issues.Immunizations when travelingYour risk of contracting disease depends on where you are traveling. Some countries will require proof of immunization to be allowed to visit. As with visas, you should be contacting the embassy or consulate of the country of interest to find out what immunizations are required. There may also be the risk of diseases for which immunization documentation is not required but it is still prudent to get the immunization. The MD Travel Health website provides a guide by country of which diseases to guard against.Traveling to risky locationsThe Foreign Affairs and International Trade Canada website provides updates on situations in countries around the world and whether it is deemed safe to travel there.

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Don’t forget to check out our Money$ense Video Blog and Meshke’s Minute, which can both be found via www.pwmprivatewealth.comAs always, and to stay on top of both these new features as well as the Money Sense Radio Show, be sure to follow us on Facebook, Twitter, LinkedIn, and now YouTube.

OUTSTANDING INTERNET PRESENCETHE B2B BANK AWARD FOR MULTI-SERVICE ADVISOR OF THE YEAR

WINNER

Saskatoon 205-210 Wellman Crescent in Stonebridge. (306) 975-9500 or 1-800-652-7472

Prince Albert 25-11th Street East

Swift Current Unit 14-600 Chaplin Street

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This information has been prepared by Kevin Hegedus and Kevin Haakensen who are Portfolio Managers for HollisWealth® for HollisWealth and does not necessarily reflect the opinion of HollisWealth. The information contained in this presentation comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors.

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HollisWealth does not provide any income tax preparation services and does not supervise or review any income tax returns.

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