La Cible

Octobre 2020

La Cible, magazine officiel de l’IQPF, est destinée aux planificateurs financiers et leur permet d’obtenir des unités de formation continue (UFC). Chaque numéro aborde une étude de cas touchant les différents domaines de la planification financière.

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27 value of $27,270 (4.53% more than the reference scenario) by structuring the portfolio based on a specific order of asset classes and accounts. The added value is equal to additional after-tax return of 0.22% per year. The combination that allows this maximum after- tax value to be achieved is as follows: Part of the outcome is explained by the low interest rate and the preferential tax treatment of Canadian dividends. It is best to put preferred shares and fixed- income securities into the non-registered account. Then we should prioritize the investment of equities in Order of asset classes Order of accounts 1- Preferred shares 1- Non-registered 2- Fixed-income securities 2- TFSA 3- US equities 3- RRSP 4- International equities 4- Holding 5- Canadian equities tax-free or deferred tax accounts (TFSA and RRSP), since rebalancing triggers a capital gain each year. But you should avoid holding international and US equities in the holding account, because taxation is higher on foreign dividends than on Canadian dividends. Another point to note is that the average of the 2,880 scenarios is similar to our base scenario. This means that distributing the investments equally among all the accounts is not the very worst scenario. The worst outcome would be to put the preferred shares and fixed-income securities in the holding account and then in the RRSPs and to put the US and international equities in the non-registered account, despite the recovery of foreign income tax. Conclusion The goal of tax optimization is to find the highest after-tax value at a given moment. It can create additional value if it is wielded properly, but even though there may be some similarities, the optimal combination is not the same for everyone and depends on the amounts available in each account. For example, TFSA rights are created annually, which could change the asset allocation in each account. Another major challenge for tax optimization strategies is behavioural finance. It is hard for clients to interpret the different returns in each account. Instead, you have to look at the portfolio's overall return. Rebalancing also weighs down the administrative task. You have to be able to rebalance the overall portfolio based on target allocations, not by account. By judiciously applying this decision-making tree, however, you can improve the overall return of the client's portfolio without exposing them to higher risk. FEATURE ARTICLE Présenté par :

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