On the roughly two-mile walk to the elementary school, a dirt road shortcut led through a thick rainforest, ending in a small meadow. The grassy area was graced by a small, but storied, wooden building. The Paper Shack, as it was known, which was just out of sight of the schoolyard through the trees.
There were numerous adventures in the lush rainforest - salmonberries, huckleberries, frog ponds, mud bogs and trees to climb, but the Paper Shack was the most notorious by far. Primary schoolers invariably stepped up their pace as they approached, and kept heads down, rather than make eye contact with its ominous dwellers.
Here gathered the paperboys, all muscles, pimples and scornful gazes. Their cracking early-adolescent throats, bellowing, swearing, spitting and inhaling tobacco; their strong arms hefting the heavy newspaper sacks. Humble as their title might sound, they might as well have been the Mafia to youngsters sporting Mr. Dressup lunchboxes and freshly-pressed corduroy pants. My big brother was a paperboy. That alone proves that the position was reserved for the perpetually angry.
This rustic cabin, painted Boy Scout green, had glassless windows and a doorless entry, and was barren inside, except for a few well-supported shelves lining the walls.
These heavily-constructed ledges could each support several bundles of afternoon newspapers. The Vancouver Sun owned and operated these types of buildings all over the region, generally situating them where their cheap labour could easily access them.
With its proximity to the schoolyard, and its largely-obstructed view from anyone in authority, the shack was also the perfect place for a menacing sort of toll.
"What's in the lunch kit, sweetheart? Let's have it!" they'd say.
They were highway robbers for kids who were late for school - a sort of trail tax, ruthlessly enforced.
This playhouse for bullies was beyond the reach of authority, so the Paper Shack was also the meeting place for anyone at the school who had a score to settle. It was thrown down as a challenge to a fist fight - a dare.
"Meet me at the Paper Shack after school... if you're man enough."
Don't pay more tax
than you have to
Being mugged for a trail tax of a PBJ and a Wagon Wheel is tiny compared to a typical investor's annual tax bill, but which one invokes more dread?
Paying tax means you're making money - doing life right - but never pay more than you should. Never walk the long way to school. And pay no taxes you don't have to.
As we do each fall, we now undertake our annual look at year-end tax planning, all within the full view of the CRA schoolyard, and even blessed (grudgingly) by them.
There are competing interests in strategizing on these things. Triggering investment gains versus taxes. Triggering tax losses, versus future gains, etc.
Each is based on its own merits, but as a principle, making money is good, and that sometimes means paying tax.
If you've already triggered gains this year, and you're holding securities with unrealized losses, consider selling them.
This is called tax loss selling. But if the investment still has strong fundamentals and meets your investment needs, think twice, or consider a substitution.
The sale for Canadian tax purposes will be deemed to have taken place on the settlement date. Assuming a two-day settlement period, in order to utilize this strategy for 2018, transactions must be initiated by Dec. 27, 2018 for both Canadian and U.S. But seriously, I'm on vacation that day and so probably are you so... early December makes more sense.
In order to ensure that your capital loss can in fact be claimed, be aware that a superficial loss will occur when a security is sold at a loss and both of the following occur:
1) During the 30 days before and 30 days after the settlement date, you or a person affiliated with you buys the identical property, and;
2) At the end of that period you or a person affiliated with you owns or has rights to acquire the identical property.
This applies to holdings across all of your accounts, an affiliated person or company.
A capital loss must first be applied against any current year gains. Then the balance of the loss can be either carried back three years (to gains from 2015, 16, or 17) or carried forward indefinitely. This is your last chance to carry back your losses to 2015.
If you plan on triggering a capital loss in a corporation, speak to your qualified tax advisor, as this gets more complex.
As we approach the end of 2018, if you have unrealized gains on investments you are thinking about selling, consider deferring until early 2019 if you expect your taxable income to be lower in 2019 than in 2018. Waiting the short time to January 2019 means a full year deferral on the tax.
Before losses can be carried back three years, they must first be used to offset capital gains in the current year. Therefore, realizing capital gains at the end of 2018 would reduce the amount of capital losses you could carry back. This cries out for a spreadsheet detailing the data.
Mark Ryan is an investment advisor with RBC Dominion Securities Inc. (Member-Canadian Investor Protection Fund), and these are his views, and not those of RBC Dominion Securities. This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article. Ryan can be reached at mark.ryan@rbc.com.
