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The Basic Types of Derivatives Explained
2008-04-07 04:27:00
Many investors are familiar with mutual funds, stocks and bonds to a certain extent. I think a less well understood category of investments are derivatives which get their name because they are "derived from other underlying investments" or because the value of the specific derivative investment fluctuates in value based on changes in value of something else (investment values, interest rates, exchange rates, etc). There are actually only two main types of derivatives: option-based and forward-based. Either type can be traded on a recognized exchange or OTC (Over The Counter). The exchanges are public and provide for standardized, liquid contracts whereas the OTC market is private and allows for much more customization of the individual contracts between parties.Option Based Derivatives  Option-based derivatives represent the right, but not the obligation, to engage in a transaction within a set period of time. In other words, an option is exactly that: an option. Just...
More About: Basic , Types

A Lap Of The Blogs
2008-04-04 01:26:00
It seems like this week really flew by - and I'm glad because I've been dying for the season premiere of Battlestar Galactica (yup - big nerd!). My girlfriend and I have been watching seasons 1 through 3 on DVD for the last month or so and we're actually all caught up. I wasn't ever into the series until after Christmas because our family had the actor who plays Dr. Gaius Baltar and his wife over during the holidays - and it piqued my interest to see his work after meeting and chatting with him. He was also in the Bridget Jones' Diary movies. I was a big Star Trek fan as a kid and never thought anything would compare, but I have to admit Galactica blows Star Trek away for me. Anyways, enough of my geekdom - behold the musings from around the blogosphere. (Gee that doesn't sound any less geeky does it...)People Still Read BooksThere were a few book reviews this past week. Canadian Financial DIY gave his usual eagle-eyed review on "The Equity Risk Premium" by Bradford ...
More About: General , Blogs

RIMM Releases Stellar Earnings Report, Up In After-Hours Trading - But Not
2008-04-03 02:33:00
Research in Motion (RIM on the TSX, RIMM on NASDAQ) released their Q1 earnings after the closing bell today (April 2nd, 2008) and reported that quarterly profit was up over 100% from a year ago. However, after-hours trading yielded an increase of "only" around 5% with RIMM reaching around $123 before ending at $121.30. I say "only" because previous quarterly earnings had caused double digit increases in after-hours trading before.Perhaps people are still a bit cautious given the climate of the US economy or they are wising up to the fact that the price pops a bit with each successive earnings release? Investor psychology plays a part in stock price movements and one could posit that after seeing all the news reports on TV tonight that many people will be bidding up the price of RIM tomorrow when regular trading resumes - after having a night to digest the news.If you would like to learn a bit more about after-hours trading, you can read this post on it. Speaking ...
More About: Trading , Report , Earnings , Hours

Winner of March's Money Movie Giveaway!
2008-04-02 00:32:00
I'm happy to announce that Mike (comment #6) is the winner of March's Money Movie Giveaway contest! Congratulations Mike! I will be contacting you via email to get your address and your movie will be in mail this week.There were a total of 24 comments and 195 people who purchased The RRSP Book directly from the secure book purchase website who were eligible to win. A random number generator picked number 201. Mike has his pick of the following movies:1. Wall Street2. Boiler Room Selected by January's Winner 3. Casino4. Trading Places5. Glengarry Glen Ross6. Ocean's Eleven (The original from 1960)Every two months in 2008 WhereDoesAllMyMoneyGo.com is running a Money Movie Giveaway Contest where the winner has their pick of a movie on the above list. Once a winner picks a movie, it will be removed from the list. The next contest will be running during the last week of May. Anyone who wins any of the previous contests is eligible to participate again, so feel free to enter again...
More About: General

The Equity Monetization Strategy
2008-04-01 03:33:00
With the recent fall of Bear Stearns and the not too distant collapse of Enron, the concept of not holding all your eggs in one basket often gets mentioned. If you work for a certain company and own many shares of the company that have been acquired over decades of service you are putting yourself into a very precarious position! Scores of people who worked for Bear or Enron not only lost their ability to earn an income (their jobs), but they may have simultaneously lost the bulk of their retirement savings - a crushing blow to say the least.Some people who own a large number of shares in a non-registered account may feel that they do not want to realize potentially significant capital gains even though they understand they are poorly diversified. Conversely, if the stock falls in value, your portfolio could be hit with some serious declines in value.Enter the Equity Monetization Strategy . This strategy essentially allows you to sell your economic interest in your shares without hav...
More About: Lending

Dying Intestate with No Living Blood Relatives? Your Estate Goes To The Gov
2008-03-31 02:11:00
There are many Canadians who don't update their will and estate plans on a regular basis or upon significant life changes, but even worse there are those of us who do not have a will at all! I thought I would point out that if you die intestate (without a "last will and testament"), and you have no living blood relatives then your entire estate goes to your provincial government.Suggestion: write a simple holograph will (a will written and signed by you in your own handwriting). It doesn't require witnesses, but there are some drawbacks if your estate is complex and if you make directions that are not accurate or allowed. You can name me as the beneficiary of your estate (after-tax please!). Or, you know, a charity or a friend.I think these are all better options than leaving it to the Crown, don't you? :)Of course, my suggestion to leave it to me is a joke and you should seek independent legal counsel on matters such as this. Happy Monday!P.S.: Today is the last day to...
More About: Living , Estate , Relatives , Blood , Dying

A Lap Of The Blogs
2008-03-27 19:02:00
If you would like a chance to win a free Money Movie DVD, don't forget to enter the contest I'm running by entering a comment in the Contest Entry Post. It's free to enter and your odds are much better than winning the lottery. :)I'm FamousNot really, but I was fortunate to have articles appear or linked to from two of the largest Canadian Blogs in the blogosphere. The Canadian Capitalist hosted a guest article written by yours truly on Charitable Remainder Trusts. Meanwhile, over at the Million Dollar Journey on Monday was this week's edition of the Carnival of Personal Finance which included a link to my article on the Jim Cramer Controversy over Bear Stearns.Other Interesting Articles From Around the BlogosphereFinancial Jungle wrote about a stock trading simulator that lets you adjust the universal constant of time, thereby allowing you to examine the results of your trading strategies that would normally take months to determine in dramatically shorter times. Okay, they ju...
More About: General

Revocable or Contingent Life Insurance Beneficiary Designations for Charita
2008-03-27 01:28:00
If you are considering using life insurance to donate to charity but aren't quite ready to irrevocably assign the policy ownership to charity or irrevocably designate the beneficiary, you have a couple of options:1. Name the charity as a contingent beneficiary2. Name the charity as a revocable beneficiaryBoth options are not final and can be changed at any time (before death!). By naming the charity as a contingent beneficiary (which you can do right now), you are basically providing for the possibility that your first intended beneficiary either pre-deceases you or even dies at the same time (i.e. you both die in the same car accident). In this case, if you had no other beneficiaries, then your charity of choice will receive the death benefit.By naming the charity as a revocable (as opposed to an irrevocable) beneficiary, you can change your mind should something arise in life that would necessitate you leaving money to your heirs, your estate for liquidity purposes, etc. instead ...
More About: Life , Insurance , Life Insurance

Donating Old Life Insurance Policies to Charity Instead of Cancelling Them
2008-03-26 01:33:00
Note: Don't forget to enter the Money Movie Giveaway for March! Click here to enter (all you have to do is leave a comment on the contest post) If you've read my post on Charitable Gifts of Life Insurance , you'll know that you can substantially increase your donations to your favourite charities with life insurance policies. However that post dealt with initiating a new policy specifically for charitable giving. It is also possible to donate an existing life insurance policy that was originally purchased for other reasons.As you get older and your assets grow, eventually you might reach a point in life where you are self-insured or otherwise no longer have a need for life insurance. Some people will cancel any existing policies while others will continue paying the premiums since it may be more beneficial to do so.If you are considering cancelling any existing policies, note that another option exists: you can donate this policy to your favourite charity. If you assign the o...
More About: Charity , Life Insurance , Policies

What My Broker Terminal Looks Like
2008-03-24 23:07:00
I thought I would share with you what my broker terminal looks like. The screen below is a direct feed provided by Reuters through their BridgeChannel software. In the morning this is the first thing I load up on my terminal at work to survey where the market is going to open and to survey what's been happening in the overnight markets, etc. The software is very versatile and can provide more data and types of analyses than you can imagine (I still don't think I've seen every screen). All data is provided in real time. The particular screen shot I took shows a chart on BCE. The drop-down menus on the left can be expanded and can bring up screens such as earnings estimates, mutual fund ownership of the security in question, option prices, RSI spreads, pre-market activity... even the price! :)This is only one of about 44 different programs I use on a regular basis for research, analysis, etc. And each one has a password... ugh!Don't forget to enter the Money Movie Giveaway Contest...
More About: Terminal , Broker

Win a free DVD! Money Movie Giveaway Contest For March is On!
2008-03-24 01:33:00
It's time for Round 2 of the Money Movie Giveaway on WhereDoesAllMyMoneyGo.com! Our Winner from January selected 'Boiler Room' so that is off the list for the remainder of the year, but everyone else will have the opportunity to win one of the five remaining movies from the following list. All you have to do is enter a comment on this post for a free entry!1. Wall Street2. Boiler Room Selected by January's Winner3. Casino4. Trading Places5. Glengarry Glen Ross6. Ocean's Eleven (The original from 1960)Every two months in 2008 WhereDoesAllMyMoneyGo.com is running a Money Movie Giveaway Contest where the winner has their pick of a movie on the above list. Once a winner picks a movie, it will be removed from the list. To enter this month's contest, you just have to leave a comment on this post before midnight, March 31st, 2008. Anyone who has bought a copy of The RRSP Book is also entitled to a bonus entry, so if you have bought the book you have an automatic entry, and you can al...
More About: Free

Jim Cramer Controversy Over Bear Stearns...
2008-03-22 05:01:00
If you are a fan of late night television you will have no doubt seen the countless video replays of Jim Cramer (of Mad Money fame) pounding the table that "Bear Stearns is fine" just days before Bear Stearns collapsed. I don't know the actual figures, but I'm sure there are just as many people who watch Cramer for stock picking advice as there are those who watch him for pure entertainment purposes.Before I get to the controversy, I will point you to a post by Michael James On Money that discusses analyzing Jim Cramer's picks as an investment strategy.But now on to the controversy. You have probably heard that the U.S. investment bank Bear Stearns was acquired for a measly $2/share after recently trading in the $160/share range only 1 year prior. The collapse of this bank has made the headlines round the world in a very public way. What was also public was Jim Cramer's answer to a question from a viewer about Bear Stearns days before this downfall occurred, which you ...
More About: General , Controversy

A Lap Of The Blogs
2008-03-21 04:25:00
I have to apologize for not posting yesterday as I was tied up with my day job from 7am until 10pm and fighting a case of minor food poisoning to boot! However, we now return to our regularly scheduled programming...Investing 101The Motley Fool explains the basics of stocks. Interesting Articles Thicken My Wallet shows us how to Increase our chances of obtaining a loan.Larry MacDonald thinks it's time to do some due diligence on potentially snapping up some shares in Google and makes a case as to why.Mr. Cheap from The Quest for Four Pillars met Bill Gates in Boston... or did he? :) The Million Dollar Journey did a book review on "Rich Dad's: Increase Your Financial IQ". I had errently pointed to the book giveaway post before, but the contest is now closed.The Canadian Capitalist discusses The Costs of Home Ownership. Racing Video of the WeekThis is a short video of an F1 engine being tested for the first time after being mated to the car. A Formula 1...
More About: General , Blogs

Using Life Insurance to Increase Donations to Charity
2008-03-18 23:55:00
If you donate to a certain charity on a regular basis you may want to consider using life insurance to generate a substantially larger gift. Let me give you a quick example. If we had a 40 year old who donated $30/month to his favourite charity and we assume that he lives to the ripe old age of 100, he will have donated a total of $21,600 to this charity. Additionally, his out of pocket cost would be closer to $13,600 since he would be entitled to the charitable donation tax credit for his contributions.If he had instead taken out a term-to-100 life insurance policy (this is the cheapest form of whole-life insurance you can get), a $30/month premium would provide almost $100,000 in death benefit to the beneficiary of his choice. Even better still, it is possible for the monthly premiums to be claimed as charitable donations if he assigns ownership of the policy to the charity and irrevocable designates the charity as the beneficiary of the policy. He would continue to pay the premiu...
More About: Life , Insurance , Charity , Life Insurance , Donations

Double Your Donations to Charity Through Employer Matching
2008-03-18 01:48:00
If you happen to work for a larger company, chances are they have a program where they will match employee contributions to charities dollar for dollar. So in other words you could double the amount of money you donate with no extra cost.It's one of those things where when you hear about it you think, "Hey, that's a great idea!" but then it gets filed away and forgotten. More often than not, when a company newsletter comes around reminding you of the program you think about the $20 or $50 you've given to charity and how you forgot to take advantage of the free-matching. You probably say to yourself, "I'll remember for next time!" and then next time comes, and you forget again. I remember that happening a few times when I first started working in the financial services.So here's my suggestion: Send an email to your HR person to ask two things.  1) Is there a charitable donation employer-matching program available? 2) Ask if you can get 2 copies of the fo...
More About: Charity , Double , Employer , Donations

Donating Investments Instead of Cash to Charity Has Big Tax Advantages
2008-03-17 00:30:00
If you have a capital gain on some of your investments in your non-registered investment account and you are planning on donating to charity, you should know that instead of donating cash you might want to look at donating the investments directly to the charity instead (an 'in-kind' transfer). Recently the government legislated that any capital gains on investments donated directly to registered charities (or other qualified donees) would be free from taxes on the gains of the investment. Let's examine how this would be of benefit:Suppose that you had stock that was worth $50,000 today for which you only paid $10,000 ten years ago. Let's also suppose that you are planning on selling that stock and giving the proceeds to charity. Your capital gain on that stock is $40,000 (Today's value of $50,000 less your purchase price of $10,000). The amount of that gain that is taxable is known as the 'taxable capital gain' and is 50% of the capital gain. So in this case the taxable capi...
More About: Charity , Cash , Investments

A Lap of the Blogs
2008-03-14 23:49:00
A-ha! I have found my trademark name for a weekly post on linking back to the community! Let me explain where the name comes from: I was in the auto racing industry for a few years (open wheel) and of course you can imagine that not only did I like driving, I was also a fan of the sport. There was a video series called "Lap of the Gods" which consisted of footage of top Formula 1 drivers taken from on-board of some of the most famous racetracks in the world. See below for a sample on-board video (although not an F1 car, and not part of the "Lap of the Gods" series).Anyways, here we go through a "Lap of the Blogs ":The Canadian Capitalist reviews a survey that found people don't like free money.The Million Dollar Journey provides a plentiful resource on The Smith Manoeuvre.The Quest for Four Pillars hosted the Carnival of Personal Finance (Canadian Edition!). Jonathan Chevreau uncovers a great resource for fixed income investors. Thicken My Wal...
More About: General

Breaking News: RESP Bill gets Killed
2008-03-14 14:59:00
The RESP bill proposed by Dan McTeague which would allow RESP contributions to be tax-deductible like contributions to a Registered Retirement Savings Plan (RRSP) has been effectively killed. The House of Commons passed a confidence motion yesterday to that effect.You can read more about the story here.  Subscribe to the free Email Updates to learn more about personal finance.If you use a feed reader, you can click here to add my RSS feed.If you like this blog, you might like my book:  RRSPs: The Definitive Book on Registered Retirement Savings Plans
More About: News , Breaking News , General , Breaking , Bill

Donate $10,000 to Charity for only $718 using Flow Throughs
2008-03-14 03:45:00
You can substantially increase your donations to charity by using Flow -Through investments. If you understand that Flow-Through Shares or Flow-Through Limited Partnerships are volatile investments and you have a desire to give to charity, there is actually a common planning strategy that marries the two together. To summarize, a donor would first make a purchase of a Flow-Through Limited Partnership (or a Flow-Through Share, but I tend to stick with the LPs since they are more diversified) and once the liquidity event occurs, they would then donate the rolled-over mutual fund in-kind to a registered charity. The donor would first receive a 100% income deduction on the Flow-Through purchase and then again receive an eligible donation tax credit on donating the rolled over mutual fund.The Baseline CaseLet's assume the donor intends to give $10,000 to charity. If they were to just donate the money to charity, they would be able to claim the $10,000 as a charitable donation and re...
More About: Charity , Donate

Buying an Annuity from a Charity as way to Make a Donation
2008-03-13 01:29:00
This strategy was much more effective if you purchased the annuity on or before December 20th, 2002. The strategy is not as common now as the tax rules have changed, but you could still purchase an annuity from a charity now and receive some tax savings. A donation would be eligible for the tax credit if the amount you pay the charity for the annuity is more than what you would normally have paid for it from a financial institution offering annuities.For example, if you had gone to a life insurance company and asked for a quote for an annuity they might tell you that every $100,000 given to them will give you $1,000/month for the rest of your life (this is based on their actuarial estimation of your life expectancy, prevailing interest rates and interest rate forecasts, an added cushion for profit, etc).To be eligible to receive any type of tax credit for a donation, you would have to pay more than $100,000 to a registered charity for that same $1,000 monthly payment. If you just pa...
More About: Buying , Charity , Donation , Make , Annuity

Help Me Name This Post!
2008-03-12 05:05:00
Most other personal finance blogs that I follow have a weekly post dedicated to linking to other blogs that contain articles they think might be of interest to others. Up until now, I haven't really had a regimented weekly post doing such a thing - and the reason is stupid: I don't have a fancy title for such a weekly post!Bear witness:The Canadian Capitalist has a traditional Friday "This and That"The Million Dollar Journey has a  "Weekend Reading"The Quest for Four Pillars has a "Saturday Weigh-In and Linkstuff"I've been trying to come up with something unique, and I'm open to suggestions. Some names I've jotted down (and feel free to add some creative suggestions):BlogwatchArticles of InterestWeekly WeedingsWeekend PotpourriI'm Not Allowed to Blog on Saturdays Anymore... That last one just came to me and I like it best so far! :) Subscribe to the free Email Updates to learn more about personal finance.If you use a feed reader, you can ...
More About: General , Post

Charitable Bequests in Your Will
2008-03-12 04:41:00
You can make a charitable bequest in your will - which means that the charity of your choice will receive your charitable donation upon your death similar to how the other beneficiaries in your will receive their inheritances. Normally, a donation can only generate a credit for your taxes up to 75% of your income for the year - but an exception arises when a charitable bequest is made upon your death - in this case, you are allowed to make a donation equivalent to 100% of your net income in the year of death. Additionally, if it is advantageous to do so, you can also carry back donations to the immediately preceding tax year and claim a donation of up to 100% of your net income for that year as well. (Your personal representative will have to amend your prior tax returns if you had already filed the last year's return.)So for example let's assume our investor Andreas earns $100,000 per year and dies half way through his final year. Let's assume that he has a $150,000 bequest made...

You Can Claim Donations to U.S. Charities in Certain Cases
2008-03-11 03:03:00
Normally if you want to claim a donation to charity and have that donation eligible for the charitable donation tax credit as an individual, the donation needs to be made to a registered Canadian charity or other qualified donee. However, there are a few exceptions in which you can receive tax advantages for donations made to U.S. charities.If you live and primarily work in Canada you can claim donations made to U.S. charities if that type of donation is recognized as a charitable donation in the United States and only to the extent that the donation represents no more than 75% of your U.S. income. So in other words, it would only be of use to you if you had income originating in the United States.If you live in Canada and work primarily in the United States (and most of your income is earned in the United States), than you will be able to claim charitable donations made to U.S. charities up to 75% of your total world income. So if you earned 60% of your income in the United States,...
More About: Cases , Donations , Charities

Public Foundations versus Private Foundations
2008-03-10 04:23:00
There are three types of designations registered charities may hold:1. Charitable Organization2. Private Foundation3. Public FoundationCharitable OrganizationsA charitable organization generally engages in charitable activities. An example of this would be a hospital.Private Foundations A private foundation can carry out charitable activities, but it normally gives funds to another registered charity (or other qualified donee). The foundation will be classified as Private if more than 50% of its board of directors or trustees deal with each other in a NON arm's length manner (meaning there are close ties) OR if more than 50% of the money donated comes from people who are not dealing at arm's length with each other. Many private foundations are single family foundations.Public FoundationsA public foundation gives more than 50% of its annual income to other charities (or other qualified donees), although it can also carry out its own charitable activities. Contrary to private foundat...
More About: Versus

Receiving an "Advantage" Reduces Your Eligible Charitable Contribution
2008-03-08 05:12:00
When you make a donation to certain charitable organizations, it is possible that your entire contribution will not be eligible for the Charitable Donation Tax Credit. This is because you must subtract the value of any "advantage" you receive from the organization in return for your donation.For example, if you made a $500 contribution to a charitable organization and in turn they provided you with tickets to an event that were worth $100, the "advantage" you received was $100. Therefore, the amount of your donation that is eligible for the charitable donation tax credit is $500 - $100 = $400.The good news is that you don't have to keep track of this yourself as the tax receipt provided to you by the charity will indicate the amount of the advantage and the eligible amount of your donation that you can claim.  Subscribe to the free Email Updates to learn more about personal finance.If you use a feed reader, you can click here to add my RSS feed.If you l...
More About: Contribution

Corporations Get a Deduction for Charitable Donations, Not a Credit
2008-03-07 21:02:00
Some of the biggest sources of charitable donations come from corporations. While a donation made by an individual receives a tax credit, a donation made by a corporation receives an income deduction. Tax credits are different from tax deductions.Let's explain the difference by looking at a few examples. Tax DeductionLet's assume we have an individual who has a marginal tax rate of 40%. If they had a $100 tax deduction, this means they can write off $100 from their income. They would normally have paid $40 in tax on that $100 of income. By having written down their income by $100, they conversely have saved $40 of tax in this case. The value of tax deductions vary according to your marginal tax rate - so they are more valuable to higher income earners.Tax Credit If this same person has a $100 tax credit, this translates directly into a $100 tax savings. So you can see that $1 of tax credit is worth more than $1 of tax deduction. But note that a $100 charitable donation does no...
More About: Corporations , Donations

Breaking News: RESP Contributions To Become Tax Deductible?
2008-03-07 04:16:00
Thanks to reader Nicolas for providing a gentle nudge to write a post on a private members' bill that was passed last night that would allow Canadians to deduct contributions to RESP plans (Registered Education Savings Plans). The bill (which is not final), proposes that contributions up to $5,000 per year (and up to a lifetime maximum of $50,000) be deductible from the contributor's income.I have not found anything that indicates whether the CESG (Canadian Education Savings Grant) would still be awarded but my guess is that since there is stiff opposition to this bill (from the Conservative Party), the grant would be eliminated. Fingers crossed for both though! :)For an Ontarian in the highest tax bracket, an annual $5,000 contribution to an RESP would yield  $2,320.50 in tax savings. Also, this program could be of benefit to older Canadians as it would provide an incentive to go back to school. Currently, the CESG is not available for adult Canadians themselves (only childr...
More About: News , Breaking News , Breaking , Contributions

No Hype: The Straight Goods on Investing Your Money
2008-03-06 04:13:00
I had the pleasure of being contacted by self-published author Gail Bebee who recently launched the book 'No Hype Investing : The Straight Goods On Investing Your Money '. We sat down for a coffee yesterday and chatted about our experiences with self-publishing. I have yet to read the copy she provided for me so I can't offer up a review just yet, but there have been many reviews published on the internet so far and they have all been predominantly favourable. I'll provide links to the reviews so that you can read for yourself, and the very last link will be to Gail's website where you can purchase the book if you so choose:Reviews:Jonathan Chevreau (National Post)Larry MacDonald (Canadian Business Online)Canadian Capitalist (A blog I read regularly)Canadian Financial DIY (Another blog I read regularly) The Author's Website:www.nohypeinvesting.com Subscribe to the free Email Updates to learn more about personal finance.If you use a feed reader, you can click here to add...
More About: General

No Hype Investing: The Straight Goods on Investing Your Money
2008-03-06 04:13:00
I had the pleasure of being contacted by self-published author Gail Bebee who recently launched the book 'No Hype Investing : The Straight Goods On Investing Your Money '. We sat down for a coffee yesterday and chatted about our experiences with self-publishing. I have yet to read the copy she provided for me so I can't offer up a review just yet, but there have been many reviews published on the internet so far and they have all been predominantly favourable. I'll provide links to the reviews so that you can read for yourself, and the very last link will be to Gail's website where you can purchase the book if you so choose:Reviews:Jonathan Chevreau (National Post)Larry MacDonald (Canadian Business Online)Canadian Capitalist (A blog I read regularly)Canadian Financial DIY (Another blog I read regularly) The Author's Website:www.nohypeinvesting.com Subscribe to the free Email Updates to learn more about personal finance.If you use a feed reader, you can click here to add...
More About: General

You Can Carry Forward Charitable Donations for 5 Years
2008-03-05 20:07:00
If you made a charitable donation to a registered Canadian charity (or other qualified donee) in the 2007 calendar year, you may claim it on your 2007 tax return OR you may defer claiming the donation on your tax return until one of the following 5 tax years (2008, 2009, 2010, 2011 or 2012 in this case).This is advantageous if you want to avoid the lower credit for donations up to the first $200 every year. For example, let's assume that our donor Rajiv makes charitable contributions of $200 per year and is domiciled in Ontario.Scenario 1: Rajiv claims the donations every yearEvery year Rajiv would claim $200 on his tax return and would receive a tax credit equal to the donation amount multiplied by the lowest marginal tax bracket for Ontario of 21.55%. Therefore, $200 x 21.55% = $43.10 in tax savings per year. If we multiply this out for 6 years, his total tax savings on $1200 of charitable contributions is $258.60.Scenario 2: Rajiv carries forward the donations every other yearIn...
More About: Years , Donations , Forward , Carry