Canadian Gov't Drops Capital Gains Tax Changes Canadian Gov't Drops Capital Gains Tax Changes

by Mike Godfrey,, Washington

20 October 2017

The Canadian Government has dropped plans to prevent the conversion of a private corporation’s regular income into capital gains.

The proposal had formed one of the three key elements of the Government’s intended crack down on tax planning tools used by private corporations. The Government was concerned that high-income individuals were able to avail themselves of a significantly lower tax rate on income that was converted from dividends to capital gains.

Income is normally paid out of a private corporation in the form of a salary or dividends to the principals, who are taxed at their personal tax rate (subject to a tax credit for dividends). However, only one-half of capital gains are included in income.

The Government had wanted to amend the tax rules to prevent the surplus income of a private corporation from being converted to a lower-taxed capital gain and stripped from the corporation.

However, Finance Minister Bill Morneau has now announced that the Government will not move forward with the measures.

The Finance Department said that during the consultation on the reforms, the Government had been told by business owners, including many farmers and fishers, that the changes “could result in several unintended consequences, such as in respect of taxation upon death and potential challenges with intergenerational transfers of businesses.”

The Finance Department also said that the Government intends to work with family businesses, to make it easier to hand down their business to the next generation.

The decision was welcomed by the Canadian Federation of Independent Business (CFIB). President Dan Kelly said the changes would have made it costlier for small business owners to sell or transfer their business to their children.

The Government earlier this week announced changes to the passive income and income sprinkling elements of its reform package. It will not be moving ahead with a proposal to limit access to the Lifetime Capital Gains Exemption. It also said that it will cut the small business tax rate from 10.5 percent to nine percent.

Ron Bonnett, President of the Canadian Federation of Agriculture, said both the limit to the lifetime CGT exemption and the rules on conversion to capital gains “would have led to enormous complexity and added costs for inter-generational farm transfers and could’ve even encouraged farmers to sell their businesses to non-family members.”

Published at Thu, 19 Oct 2017 20:00:00 -0400

U.S. Senate paves way for Trump tax cuts

U.S. Senate paves way for Trump tax cuts


President Donald Trump promised tax cuts Friday “which will be the biggest in the history of our country!” following Senate passage of a $4 trillion budget that lays the groundwork for Republicans’ promised tax legislation.

Republicans hope to push the first tax overhaul in three decades through Congress by year’s end, an ambitious goal that would fulfil multiple campaign promises but could run aground over any number of disputes. Failure could cost the GOP dearly in next year’s midterm elections.

The budget plan passed on a near party-line vote late Thursday includes rules that will allow Republicans to pass tax legislation through the Senate without Democratic votes and without fear of a Democratic filibuster. Nonetheless, the GOP’s narrow 52-48 majority in the Senate will be difficult for leadership to navigate, as illustrated by the Republicans’ multiple failures to pass legislation repealing and replacing “Obamacare.”

The final vote on the budget was 51-49 with deficit hawk Sen. Rand Paul of Kentucky the lone opposing GOP vote.

Trump insisted over Twitter Friday that Paul would be with him in the end on taxes, even though the senator has been critical of the tax package as it’s emerged thus far.

Trump wrote:

The House has passed a different budget but House Republicans signalled they would simply accept the Senate plan to avoid any potential of delaying the tax measure.

“I look forward to swift passage and to working with the president on tax reform,” House Budget Committee Chairman Diane Black, R-Tenn., said Friday.

Republicans are looking for accomplishments following an embarrassing drought of legislative achievements despite controlling both chambers of Congress and the White House. Republican lawmakers publicly admit that failure on taxes would be politically devastating with control of the House and Senate at stake in next year’s midterm elections.

“It would be a complete disaster,” Sen. Lindsey Graham, R-S.C., said after the final budget vote.

But Republicans are split on taxes. A restive rump of House Republicans from high-tax states like New York, New Jersey, Illinois and California staunchly oppose the tax plan’s proposed elimination of the federal deduction for state and local taxes. They maintain it would hurt low- to mid-income taxpayers and subject them to being taxed twice.

Their vocal opposition has led Republican leaders in Congress like House Speaker Paul Ryan and Rep. Kevin Brady, R-Texas, who heads the tax-writing Ways and Means Committee, to hear out the fractious GOP members and seek a compromise with them.

At the same time, the White House is making overtures to conservative Democrats in the House and Democratic senators from states that Trump won in the 2016 election. Most heavily courted have been Sens. Claire McCaskill of Missouri, Joe Manchin of West Virginia and Heidi Heitkamp of North Dakota. The trio dined this week at the home of daughter Ivanka Trump and her husband, Jared Kushner, both top advisers to Trump.

But Manchin said after Thursday’s vote, “I fear that passage of this budget today will make it difficult to pass bipartisan tax reform in the coming weeks.” In his conversations with Trump, Manchin said, “we have discussed our shared goal of ensuring any tax-reform package passes with both Republican and Democratic votes, and focuses on providing tax relief for working Americans. The current tax-reform proposal … does not reflect my conversations with the president.”

The Democrats were excluded from the drafting of the tax blueprint, and they continue to demand that any tax-cutting plan not add to the mounting $20 trillion national debt. The newly-adopted Senate budget plan provides for $1.5 trillion over 10 years in debt-financed tax cuts, busting earlier Republican pledges of strict fiscal discipline.

The money would be used for the tax plan’s cut in the corporate tax rate from 36% to 20%, reduced taxes for most individuals, and the repeal of inheritance taxes on multimillion-dollar estates. The standard deduction would be doubled, to $12,000 for individuals and $24,000 for families, the number of tax brackets would shrink from seven to three, and the child tax credit would be increased.

Trump and the Republicans pitch the plan as a boon to the middle class and a spark to economic growth and jobs. Democrats charge it mainly would benefit wealthy individuals—like Trump—and big corporations.

Published at Fri, 20 Oct 2017 11:38:55 -0400

How to moderate family meetings

How to moderate family meetings


“Hey! Let’s all get together to talk about our family’s money!”

As invitations go, that one’s a hard sell. But, says Nancy Golding, QC, a tax partner in BLG’s Calgary office, clients today are generally amenable to family meetings to discuss wealth and estate planning. Long a mainstay for rich families, these kinds of discussions are becoming standard for many clients, including those with moderate amounts of wealth and straightforward estates.

That may be because the rewards are so great: better communication and healthier family dynamics around money; an integrated set of financial, tax, legal, philanthropic and family governance plans; and fewer surprises when someone dies. “It takes a tremendous amount of stress off clients,” says Ian Hull, a certified legal specialist in estates and trusts at Hull & Hull LLP in Toronto.

Advisors meet with clients and their families for a variety of reasons. Experts offer several:

  • To give children the big picture of their parents’ overall estate and financial plans: what they have, what they’re doing with it and why.
  • To create a holistic family understanding around its wealth.
  • To help families articulate and enact their philanthropic goals, and to groom younger members to take on increasing responsibility for the clan’s charitable giving.
  • To teach younger generations about investing and money management. Golding, for instance, will often bring in a family’s financial advisor or accountant to discuss investing, and set up trial accounts and investing plans.
  • To provide information to younger adults about cohabitation or prenuptial agreements, and other strategies, like trusts, to safeguard a family’s wealth and its members’ well-being; here, Golding will sometimes bring in a family lawyer.
  • To create business succession plans: Which, if any, children are interested in taking over a family business? What if children’s desires don’t align with their parents’ goals and expectations?
  • To respond to a crisis, like a death or diagnosis.

Generally, it’s older clients (e.g., parents with adult children) who initiate these meetings as a way of communicating their desires and plans to the younger generations. But Alphil Guilaran, co-founder of Vancouver-based Financial Literacy Counsel, is often called in to facilitate meetings by clients in their late 30s and 40s. “They’re midcareer, they’ve got young families and siblings, their parents are aging, there’s a certain amount of wealth and possibly a family business, and they want to know where they stand.”

Read: Lessons from family offices

Sometimes, he says, those meetings are “catalyzed by children’s sense of inadequacy”; they may not want to or feel they can take over a business they’ve been groomed to lead. Or they feel they’ve been raised in the shadow of their parents’ success, wealth and expectations.

That’s one reason a certified family counsellor is a standard member of the critical-care team that Guilaran assembles for these discussions. The team also includes a facilitator or mediator (Golding and Hull, for instance, both have mediation and conflict resolution training); the family’s lawyer or accountant (or CFO of its business); speakers on special topics like charitable giving or family law; and sometimes a personal family advisor or concierge who knows about family relationships and roles.

Background work

All three experts agree that preparation and structure are key to minimizing strife. Through meetings and questionnaires, they’ll gather background information from their clients about each participant, and discuss the goals of the meeting and how it should run. For instance, what level of information do they want to share? Parents of teenagers and children in their 20s or 30s, for example, may not be comfortable disclosing precise portfolio numbers until their children are older. Other considerations: should spouses be invited; which children get along; who should be seated next to whom; and who has the capacity and desire to take over the family business?

A business setting

Based on this reconnaissance work, the experts create an agenda for a meeting or set of meetings, which they share, along with ground rules around basic decorum. Hull’s rules also emphasize that the process is confidential and that participants can’t sue each other as the result of the exchange.

“It sounds a little bit controlling on my part,” says Hull, “but I like to remind people that this is a business meeting.”

To create businesslike environment, all three experts recommend holding meetings in neutral, professional settings: at a law or accounting firm’s boardroom, a private hotel conference room, or a resort or retreat centre. Guilaran once hosted a series of family meetings on a cruise ship, and has seen successful meetings built around beautifully catered meals. “People come together around food.”

Read: Prevent estate battles


Once everyone’s in the room, meetings can be highly structured or more organic, depending on goals, agendas and personalities. It’s important to be flexible in these discussions, says Golding, because “things come up.” For example, a parent thinks that a child wants to take over the family business, and the child discloses that that’s the last thing they want to do. “So the meeting will need to be very different at that point.”

All three experts see these meetings as a chance for children and parents to understand more about each other’s hopes and dreams, and for younger generations to learn, proactively, how to manage wealth.

Golding remembers working with a family where the parents never discussed their wealth — which turned out to be considerable — with their children. The inheritance, she says, “bowled them over. They weren’t prepared for it, and it was a really steep learning curve. I think these parents did a disservice to their kids in not helping them be more prepared.”

Read: How to retain your clients’ kids

Published at Fri, 20 Oct 2017 13:00:07 -0400

BoC to hold interest rate, analysts say

BoC to hold interest rate, analysts say


Canadian financial institutions are predicting the Bank of Canada won’t change its target for the overnight interest rate at its announcement next week.

In a research note on Friday, CIBC Capital Markets chief economist Avery Shenfeld suggested the central bank wouldn’t raise the interest rate for a third time this year.

Citing strong economic growth, the BoC raised its key interest rate in July and again in September, up to 1%.

Read: What Canada’s hot streak means for interest rates

But analysts don’t expect a third hike when the central bank announces its decision on the overnight rate target on Oct. 25.

While the Canadian economy is close to full employment and coming off strong growth in the first half of 2017, the central bank will likely opt to “monitor” it further before making another move, Shenfeld said.

“Core inflation readings are still enough below target, having been there for some time, that there’s no reason to panic about an inflationary overheating just yet,” he wrote.

Shenfeld also pointed to uncertainties around NAFTA and Ontario’s minimum wage hike, and the “data lags” that prevent economists from measuring the quarterly impact of the September rate increase until March 2018.

“If the Bank needs to ‘monitor’ how the economy is doing with higher rates and other changes in the landscape, we won’t see the next rate hike until the spring of 2018,” he wrote.

Derek Holt, head of capital markets economics at Scotiabank Global Economics, also cited concerns around NAFTA as a reason for the bank to stay put.

“Rules governing trade with the U.S., which accounts for about one-quarter of Canadian GDP plus associated investment, are faced with a degree of uncertainty unseen in at least 25 years,” he wrote in a research note Friday.

Holt predicted no increase next week, and while Scotiabank continues to forecast a hike in December, he has “reduced confidence in such expectations.”

September numbers from Statistics Canada released Friday morning showed the annual inflation rate rose to 1.6%, up from 1.4% in August and a two-year low of 1% in June. The agency also reported that retail sales declined slightly in August.

Read: September inflation rate approaches BoC target

Citing those numbers, Desjardins also predicted the central bank would maintain the status quo.

“Today’s results confirm that Canada’s runaway economic growth started to wind down in the third quarter, which reduces the urgency to swiftly proceed with monetary tightening in Canada,” senior economist Benoit P. Durocher said in a research note.

Read: What an interest rate rise would mean for prescribed loans

Published at Fri, 20 Oct 2017 13:05:47 -0400

Institutional investors want women on boards: study

Institutional investors want women on boards: study

Copyright: rmarmion / 123RF Stock Photo

The support of institutional investors is key to driving any meaningful increase in female representation on corporate boards and in the executive suites, a new analysis suggests.

The review authored by lawyers from Torys in Toronto says increased scrutiny on board composition has become a growing area of focus for big investors.

“While they have traditionally engaged with boards behind closed doors to advocate for governance or other strategic initiatives, institutional investors are becoming more openly vocal about the value of a diverse board that includes women,” the analysis said of the situation in Canada.

Read: New Mackenzie funds focus on SRI, women, China

It pointed to the Canadian Coalition for Good Governance’s gender diversity policy and the Ontario Teachers’ Pension Plan, which expressly encourages gender diversity on boards.

The report noted that the number of women have increased in recent years, but women in director seats continue to account for a significant minority.

A report earlier this month by the Canadian Securities Administrators found the percentage of board seats filled by women has edged higher in recent years.

Read: Number of women on boards going up, but still low

The report found the total percentage of board seats occupied by women increased to 14% compared with 12% last year and 11% in 2015 when the report was first published.

The Ontario Securities Commission is set to hold a roundtable on women on boards and in executive positions on Oct. 24.

Read: OSC eyes gender diversity on corporate boards

Published at Fri, 20 Oct 2017 15:23:03 -0400

Tax proposal summary: what’s in, what’s out

Tax proposal summary: what’s in, what’s out


If you’re unclear on changes to Finance’s tax proposals for business, that might be because the changes were announced at three different times this week, with full details yet to be fleshed out.

Read: Liberals to cut small business tax rate to 9% over 2 years

For example, the government says it will simplify the proposals for income sprinkling, referring to the reasonability test for family members’ contribution to the business.

That means only a small number of businesses that pay “obviously” unreasonable amounts to family members with no active contribution to the business will be targeted, says Dave Walsh, tax service line leader for BDO Canada.

For passive investments, clients should wait to act until draft legislation comes out with Budget 2018, suggests Ryan Ball, tax partner with EY Canada’s Private Client Services.

And, though proposals were dropped for surplus stripping, “that doesn’t mean other changes won’t be announced in the future,” says Ball, referring to those specific proposals.

Here’s a summary of the changes.

Target of proposed measures On or off the table Changes or next steps Effective date
Income sprinkling On
  • Simplification of proposals to come
  • Draft legislation might be released in the government’s fall economic statement
January 1, 2018
LCGE (lifetime capital gains exemption) Off
  • Details needed on how relief from proposals will aid transfer of family businesses to the next generation
Passive investments inside a corporation On
  • $50K of passive income investment annually won’t be subject to the proposed measures
  • Effective on a go-forward basis only, so past investments and the income earned are protected
  • Details needed on how the $50,000 is determined
  • Details to come, after further consultation, on maintaining incentives for venture capitalists and angel investors
Not known; draft legislation will be released with 2018 federal budget
Conversion of a corporation’s regular income to capital gains (surplus stripping) Off
  • Pipeline planning stands
  • As with withdrawal of LCGE tax proposals, more detail is needed about tax-efficient intergenerational business transfers


Tax proposals modified to allow $50K in passive income

Morneau to change surplus stripping proposals

Understanding the lifetime capital gains exemption

Also read:

How tax rules disadvantage family business succession

Finance tax proposals threaten family business planning

Problems with Finance’s passive investing proposals

How proposed tax changes target income sprinkling

Urgent: Talk to business clients ahead of income sprinkling measures

Published at Fri, 20 Oct 2017 15:38:53 -0400 Canadian Tweaks Reforms To Taxation Of Passive Investment Canadian Tweaks Reforms To Taxation Of Passive Investment

by Mike Godfrey,, Washington

19 October 2017

The Canadian Government has said that it will press forward with measures to limit the tax deferral opportunities related to passive investments, but will seek to ensure that business owners remain able to build a “cushion of savings.”

The Government believes that an increasing number of Canadians are using private corporations in ways that allow them to reduce their personal taxes. It recently concluded a consultation on proposals to crack down on three tax planning strategies: income sprinkling among family members, the retention of passive investments in private corporations, and the conversion of the surplus income of private corporations to lower-taxed capital gains.

In the case of the tax treatment of passive investment income, the Government was seeking ways to eliminate the tax-assisted financial advantages of investing passively through a private corporation.

Finance Minister Bill Morneau has now announced that the Government will move forward with the passive investment measures, with the aim of ensuring that “Canadian-controlled private corporation (CCPC) status is not used to reduce personal income tax obligations for high-income earners rather than supporting small businesses.”

The Government will release draft legislation as part of Budget 2018, and any proposals will apply on a go-forward basis. The new rules are intended to target high-income individuals who can benefit under the current rules from “an unlimited, personal, tax-preferred savings account via their corporation.” The Government said that this goes far beyond the pension, RRSP, and TFSA limits available to other Canadians, and is “inherently unfair.”

The Finance Department did however state that during the consultation it heard from business owners that “the flexibility afforded from savings accumulated in the corporation is important to their success.” It explained that such savings can be held with the intention of financing an upcoming business expansion or facing contingencies, and are sometimes also used to provide flexibility for dealing with a range of personal circumstances.

The Finance Department said that it will ensure that investments already made by the owners of private corporations – including the future income earned from such investments – are protected. The measures will only apply on a go-forward basis.

The Government will include a passive income threshold of CAD50,000 (USD40,111) per year for future, go-forward investments. It said that this is equivalent to CAD1m in savings, based on a nominal five percent rate of return. The aim is to provide more flexibility for business owners to hold savings for multiple purposes.

There will be no tax increase on investment income below this threshold.

The Government also wishes to ensure that incentives remain in place for venture capital and angel investors, and that businesses remain able to save for contingencies or future growths in investment.

The Government will examine all deferral benefits from passive investment, and will continue to assess key aspects of the design of the measures. It will consider the appropriate scope of the new tax regime with regard to capital gains, including whether the rules should exclude capital gains realized on the shares of a corporation engaged in an active business.

The changes to passive investment will not apply to income from AgriInvest, which is a self-managed, producer-government savings account that allows producers to set money aside. The investment income from an AgriInvest account is currently treated as active business income, and it is the Government’s intention to maintain this approach.

The Government believes that the vast majority of businesses will remain unaffected by these changes. According to the Finance Department, more than 80 percent of passive income is earned by just two percent of CCPCs.

Morneau said: “Every small business owner knows that success often means taking risk. I’ve met with and listened to small business owners all across Canada and I know that their success also depends on flexibility in how they save for things like maternity leave, sick leave and their retirement. The changes we will make, including lowering taxes on small business to nine percent, are helping us take one more step towards an economy that works for the middle class.”

Commenting on the proposals, Dan Kelly, President of the Canadian Federation of Independent Businesses, said: “It is good news that the Government is beginning to recognize the many important roles passive income plays in the life of a business and its owners. If administered properly, this change will be helpful in allowing many small firms to continue to use passive income to ride out challenging times, save for investments or set aside money for a leave or retirement.”

However, Kelly added that the CAD50,000 annual threshold may be too low for small firms that are saving to grow their business. “Canada has a dearth of medium-sized businesses and the size of the threshold may not be enough to help businesses looking to get to the next level,” he said.

Published at Wed, 18 Oct 2017 20:00:00 -0400

China’s growth buoyed by retail spending, exports

China’s growth buoyed by retail spending, exports


China’s economic growth stayed relatively stable in the latest quarter, buoyed by strength in retail spending and exports, giving the ruling Communist Party a boost as President Xi Jinping prepares for a new term as leader.

The economy expanded at a still-robust 6.8% annual pace in the three months ending in September, a marginal change from the previous quarter’s 6.9%, government data shows Thursday.

Forecasters expect the unexpectedly strong growth this year to weaken as Beijing tightens controls on bank lending to cool a rise in debt cited by analysts as the biggest threat to economic stability.

Read: New Mackenzie funds focus on SRI, women, China

Beijing also faces wider challenges, including surplus industrial capacity that is depressing prices of steel and other goods. That has aggravated trade tensions with Washington and Europe, which complain low-cost Chinese exports threaten jobs.

“The risk of a China economic slowdown or downside risk scenario of a hard landing remains a significant risk to the medium-term global outlook,” says IHS Markit economist Rajiv Biswas in a report. “The rest of the Asia-Pacific is particularly vulnerable.”

Communist leaders are trying to steer China to slower, more sustainable growth based on consumer spending instead of exports and investment. By using repeated infusions of credit to prevent activity from slowing too abruptly, however, Beijing has pushed up debt and delayed the economic rebalancing.

Read: Upcoming economic data to watch

In a speech Wednesday at a ruling party congress, Xi says China’s “prospects are bright but the challenges are grim.” He adds the party would have to take big risks and overcome “major resistance.”

Still, companies and investors are looking for signs of the direction and speed of economic reform.

“We will be watching for indications of lowering growth expectations and reining in credit growth,” says Standard & Poor’s economist Paul Gruenwald in a report.

Xi’s speech Wednesday repeated promises to give market forces the “decisive role” but also affirmed the party’s intention to build up state industry, a strategy reform advocates say that might waste money and drag on economic growth.

Read: Energy stocks rebounded in September: Morningstar

The speech “does not imply a significant change in the stance on key policy areas,” said Louis Kuijs of Oxford Economics in a report.

More on growth

Thursday’s data showed retail sales rose 10.3% in September over a year earlier, down slightly from the 10.4% rate of the first three quarters.

That was helped by a 34.2% rise in e-commerce spending over a year earlier, an 8.1% improvement over the same period of 2016.

The party’s decision to go ahead with announcing the data during its politically sensitive congress had prompted expectations they would be positive.

Read: Global growth makes way for equities exposure

Trade data reported earlier showed export growth accelerated in September to 8.1% from August’s 5.5%, at least temporarily averting concern about politically dangerous job losses in export industries that employ millions of workers.

Investment in factories, office buildings and other fixed assets rose 7.5% in the first three quarters, down from the first half’s 8.6% rate. Factory output rose 6.7% in the first three quarters, up from 6% at the same time last year.

The IMF has forecast China’s full-year growth will hold steady at last year’s level of 6.7%. The IMF raised its outlook twice this year, citing strong government spending.

The government’s growth target is 6.5% “or higher if possible.”

Kuijs says, “We project a further cooling of growth through 2018.”

Read: Which country knows the most about sustainable investing?

Regulators have cited reducing risk in China’s financial system as a priority this year. Banks have been told to look closely at borrowers, especially those trying to make acquisitions abroad, to ensure they can manage their debts.

The ruling party’s plans call for doubling incomes from 2010 levels and achieving a “relatively prosperous society” by 2020. In a report, UBS economists say that should require growth of just 6.3% for the rest of the decade.

Xi’s speech Wednesday included no growth target but he says “development is the foundation and the key to addressing all problems.”

Published at Thu, 19 Oct 2017 10:27:06 -0400

Most Canadian cities to see GDP growth in 2017, 2018

Most Canadian cities to see GDP growth in 2017, 2018


Major cities across Canada will see their GDPs rise this year and next, finds The Conference Board of Canada’s Metropolitan Outlook: Autumn 2017.

Here’s a breakdown by city.

Vancouver and Victoria

Vancouver’s real GDP is forecast to grow 3.2% in 2017 and 2.5% in 2018, after expanding nearly 4% annually on average during the previous five years, according to the report.  Likewise, Victoria’s economy is expected to remain healthy over the next two years, expanding by 2.4% in 2017 and 2.2% in 2018.

Read: Is Canada’s housing market too hot?

“The more moderate outlook for Vancouver and Victoria reflects the fallout from a cooler housing market, as well as factors like increased protectionism in the U.S. and a slightly higher dollar that is shaving export potential,” says Alan Arcand, associate director, Centre for Municipal Studies, The Conference Board of Canada.

Calgary and Edmonton

The two cities are forecast to be the fastest growing census metropolitan areas in Canada this year, with real GDP forecast to grow by 4.6% and 3.9% respectively.

Winnipeg, Saskatoon and Regina

Winnipeg and Saskatoon can expect to see economic growth of 3.6% each this year, while Regina’s real GDP is forecast to rise 2.9% in 2017, finds the report.

Read: Canada lags in business investment: Fraser Institute

“The worst appears to be over for Saskatoon and Regina. Both cities are benefiting from a modest firming in oil, potash, and crop prices,” says Arcand. “Winnipeg’s economy is also enjoying robust growth this year. But economic growth is projected to moderate in all three Prairie cities in 2018, with Winnipeg expected to experience the sharpest deceleration.”

Montreal and Quebec City

Following modest economic growth last year, Montreal and Quebec City have seen their economies heat up this year.

Montreal’s economy is forecast to grow by 3.2% in 2017, while Quebec City’s is following closely with a 2.9% spike in real GDP, finds the report.

Read: Canada adds jobs for 10th straight month

“Fuelled by a pickup in manufacturing and construction, and continued strength in the services sector, Montreal’s economy is on track to post its fastest expansion since the turn of the century,” says Arcand. “Similarly, Quebec City will see its fastest economic gain in 13 years. Real GDP growth is forecast to moderate to 2% in both cities next year.”

Overall, a Scotiabank Global Economics report finds the province will grow by 2.8% this year, the strongest gain since 2002.

Toronto and Ottawa

Toronto is expected to boast the fastest-growing metropolitan economy outside of Alberta this year, and is forecast to be a growth leader again in 2018. The economy is forecast to grow 3.7% this year and 2.5% in 2018, finds the report.

“Toronto’s economy was firing on all cylinders during the first half of 2017, but growth has moderated since then and this trend will continue through 2018, as government housing market cooling policies have their desired effect,” says Arcand.

Read: BoC can’t afford to delay normalization: report

Meanwhile, Ottawa-Gatineau’s economy is on track to post solid gains this year. It is forecast to grow 2.5% in 2017, and 2.2% in 2018, the strongest back-to-back increases since 2007, notes the report.

Arcand adds, “In Ottawa-Gatineau, many key pillars of the region’s economy are posting solid advances this year: the public sector is growing and hiring, the construction industry remains busy, and tourism is having a banner year.”

A Scotiabank Global Economics report adds Ontario as a whole will grow 3% this year.

Published at Thu, 19 Oct 2017 11:05:59 -0400

Help clients protect themselves against fraud

Help clients protect themselves against fraud


When former financial planner Daniel P. Reeve was convicted this month of defrauding 41 investors out of about $10 million, it was a bitter lesson.

As with many financial frauds, the victims didn’t see it coming, and there’s little to no chance they will recover their money.

At the outset, Reeve sold legitimate products, such as mutual funds and insurance. However, unbeknownst to clients, in 2007 he lost his insurance license and by 2008 he was no longer presenting himself as a financial planner, although people at his offices did have official designations.

Read: CSA bans binary options

Impressed by past performance, clients stuck by him.

In the meantime, Reeve begain directing investors to other investments, such as restaurants and hotels that he was developing, often promising little or no risk, despite the shakiness of his failing ventures.

“Yet, Daniel (Reeve) continued to flog his investments in the summer and fall of 2008 either knowing that the investors would never get their money, or not caring whether they would,” Justice Toni Skarica wrote in an October 13 ruling.

Reeve pleaded not guilty to the charges of fraud and theft against him, but the judge did not believe his testimony and convicted him.

“This had a devastating impact on the victims,” says Crown prosecutor Fraser McCracken, who presented the case against Reeve through a trial in Kitchener, Ont., that spanned 18 months.

Read: Man sentenced to 11 years in jail over tax evasion, fraud

“That’s why we remind people to take steps to avoid fraud in the first place,” says Tyler Fleming, director of the OSC’s Investor Office.

Red flags

Fraud comes in many forms and can be difficult to detect.

“The unfortunate reality is that the bad guys are always thinking up new ways to separate you and your money,” Fleming says.

But he says there are several warning signs that should raise red flags for investors.

  • Promises of big returns for little or no risk. (Generally low-risk investments have low potential returns.)
  • Advice based on hot tips and insider information. (They’re usually false and potentially against the law to act upon.)
  • Pressure to buy or decide quickly. (Haste is usually not in the investor’s best interest.)
  • Lack of registration with a provincial securities commission or other financial service regulator.

McCracken says the victims represented a cross-section of people with varying levels of education, investor sophistication and occupation.

Read: Cross-border clients could be affected by Equifax hack

Among the dozens of people who trusted Reeve’s record as a money-maker were:

  • A retired teacher who attended one of his investment presentations in early 2007. She and her husband wanted safe investments but lost at least $250,000.
  • The owner of an international trucking firm, who had been advised by Reeve since 1993 with good results until things began to unravel. He lost $683,000 in principal plus unpaid interest.
  • A nurse who asked in 2007 for safe investments, shortly before her husband died of pancreatic cancer. She lost $775,000.

Andrew Kriegler, CEO of the IIROC, stresses investors should always ask advisors who they are regulated by, and what their disciplinary history is.

He adds that it’s not always clear where to look, but insists it’s always worth the time and effort. “If it’s under our jurisdiction, then we can look into it. If it’s under somebody else’s jurisdiction, we will send that person to the right place.”

Read: Investor education initiatives to leverage

IIROC operates two call centres in Toronto and Vancouver that take questions from the public.

The provincial commissions have a national registration search for individual advisers and investment firms at

The OSC also operates and its own call centre.

And the Canadian Anti-Fraud Centre has contacts with several federal agencies, including the RCMP.

Published at Thu, 19 Oct 2017 11:10:39 -0400