by Brad Russell and Madison Mailey
May 3, 2024
The Hat Tax
|
April 2024 |
Year to Date |
1 year |
3 year |
5 year |
10 year |
S&P/TSX Composite |
– 2.04 0% |
+ 3.61% |
+ 5.22% |
+ 4.35%/yr. |
+ 5.54%/yr. |
+ 4.01%/yr. |
S&P 500 (U$) |
– 4.16% |
+ 5.57% |
+ 20.78% |
+ 6.39%/yr. |
+ 11.32%/yr. |
+ 10.33%/yr. |
S&P 500 (C$) |
– 2.62% |
+ 9.95% |
+ 22.58% |
+ 10.47%/yr. |
+ 11.88%/yr. |
+ 12.88%/yr. |
MSCI EAFE (C$) |
– 1.41%% |
+ 6.22% |
+ 7.97% |
+ 4.02%/yr. |
+ 4.01%/yr. |
+ 3.99%/yr. |
Source: Equity Index and Currency Data: Bloomberg Data as of April 30, 2024.
A pullback in April snapped a five-month positive streak for markets. Inflation remains sticky, with the hope for interest rate cuts dimming in the near future. Meanwhile companies continue to report reasonable earnings leaving us content to continue to hold well diversified high-quality companies. Interest rates remain high allowing us to earn a good return with safe secure savings. A well-diversified portfolio of stocks, bonds, alternatives, and cash remains the best allocation for most of our clients.
On April 16, 2024, in Ottawa, Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, delivered the 2024 Federal Budget (2024 Budget), titled “Fairness For Every Generation.” The federal government has focused this year’s budget on three overarching pillars: building more affordable homes, making life cost less and growing the economy in a way that’s shared by all. Advanced Planning and Services Wealth Management Taxation Team Summary.
The Hat Tax[1]
A hat tax was introduced in 1784 and was aimed at raising revenue for the government in a way that would mostly correspond to a person’s wealth. It was the rich who could afford numerous hats, whereas the poor might have one cheap hat, or none at all. Heavy fines were doled out to those who failed to pay. The tax was repealed in 1811.
The Beard Tax[2]
In 1698 Emperor Peter I of Russia created the beard tax. It was thought to be a move that would help westernize the appearance of Russian society, as he deemed it an old-fashioned fashion choice. Those who wanted to keep their facial hair had to pay their way and were given a token to carry as proof of payment. Henry VIII had also brought out a similar tax for Tudor England. Given the costs associated, beards quickly became a symbol of stature and wealth.
The Capital Gains Tax
In 1972, Canada underwent a significant reform of its tax system, which included the implementation of the capital gains tax for the first time. Ottawa brought in capital gains taxes, in part, to make up for doing away with inheritance taxes. Since then, Canadians have had to pay tax on a portion of their capital gains, with the rules, rates, and exemptions changing several times since 1972.[3]
Before January 1, 1972 |
0% |
1972 – 1987 |
50% |
1988 – 1989 |
66.66% |
1990-1999 |
75% |
In 2000 |
66.66% and 50% |
From 2001 |
50% |
The 2024 Budget proposes to increase the capital gains inclusion rate from 50% to 66.67% for corporations and trusts, and from 50% to 66.67% on the portion of capital gains realized in the year that exceed $250,000 for individuals, for capital gains realized on or after June 25, 2024.
The increase will add to our already complicated tax code and impact Canadians in many needless ways. While we don’t agree with this tax, we think clients should remain calm and not make hasty decisions without proper planning. We’ll monitor the upcoming details over the coming months and keep you informed of potential strategies to reduce your tax burden.
Update from Madison
As many of our clients know, the Mailey Rogers Group was Seasons sponsor for the Kay Meek Theatre for 10 meaningful years. Not only are my parents, Kim and Victoria, passionate patrons of the arts, but they also used Kay Meek as a conduit of keeping involved here in the community of West Vancouver. I am now in my second term sitting on the Board of Directors at the Kay Meek Arts Center continuing the legacy of my parents energy and passion.
Although one could say our team is more of a sports team with my Olympic Rowing and Brad being a Professional Golfer, we also love our music. Bryce’s wife Andrea even sings with a local choir in North Vancouver!
Last weekend I had the honour of being the Soprano Soloist for the Chilliwack Metropolitan Orchestra, where we performed at the Horner Suites in honour of the 112th Anniversary of the Titanic’s sinking. A few clients, friends and my family were there, and it was an outstanding show full of playful and powerful moments.
Events
Our next lunch and learn will be held on May 15th, 2024, at 1 PM at our office and also offered on MS Teams for those who prefer to join us virtually. Monique, our Will and Estate Consultant, and Min Jones, Aqueduct Foundation Manager, speak on the topic of Estate Planning and Philanthropy. We hope you can join us as I know it will be an impactful conversation.
Register here Please do not forget to register in advance as we have limited seating in person.
We are here to help – let us know how we can.
Sincerely,
Mailey Rogers Group
1555 Marine Drive, West Vancouver
Tel: 604.913.7013
www.maileyrogers.com
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[1] https://kaplan.co.uk/blog/features/9-strangest-taxes-in-history
[2] https://kaplan.co.uk/blog/features/9-strangest-taxes-in-history
[3] https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/you-calculate-your-capital-gain-loss/inclusion-rates-previous-years.html
Source: Equity Index and Currency Data: Bloomberg Data as of March 31, 2024.
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